21 EOR Projects will be Upstream Until 2030

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) plans 21 enhanced oil recovery (EOR) projects to start operating until 2030. EOR is planned to support the achievement of the oil production target of 1 million barrels per day (BPD)  by 2030.

Blogger Agus Purnomo in SKK Migas

Head of SKK Dwi Soetjipto said, if there is no effort, national oil production will continue to decline in the future. In order to achieve the target of 1 million bpd by 2030, a number of strategies have been formulated by his party, namely accelerating the transformation from reserves to production, exploration, and implementation of EOR activities.

Dwi Soetjipto

"A total of 21 EOR projects using polymers, surfactants, and CO2, are planned to start onstream until 2030," he said.

He explained that his party had identified which oil and gas fields this EOR activity would apply. In SKK Migas data, there are 42 oil and gas fields that are candidates for this EOR activity. Unfortunately, the implementing agency for upstream oil and gas activities did not specify which fields would start producing additional production by 2030.

"We have identified which arenas [for EOR], and what the reserves and production are like," said Dwi.

The 42 oil and gas fields are Minas, Melibur, Bangko, Medium Water, Widuri, Bajubang, Kenali Asam, Batang, Tanjung, Bekasap, Guruh, Ramba, Jatibarang, Zelda, Eman, Walio, and Duri Ring fields. Apart from that, there were Krisna, Rantau, Limau PQ, Tanjung Tiga Barat, Zulu, Pedada, Rantau Bais, Jirak, Balam South, Tempino, Farmers, Handil, Gemah, Kaji May, Prosperous, Kulin, Zamrud, and Raja fields.

Referring to SKK Migas data, the EOR project is targeted to start increasing national oil production in 2024 with two projects starting onstream. Furthermore, in 2025 and 2027, two projects each are targeted to start producing. After that, a total of 6 EOR projects are planned to start operating in 2028, 5 projects in 2029, and 4 projects in 2030.

Meanwhile, the rest of the EOR projects are scheduled to start production in 2031-2040. In detail, as many as 8 EOR projects will operate in 2031, 5 projects in 2032, 3 projects each in 2033-2034, 2 projects in 2035, 1 project in 2036, 4 projects in 2037, 1 project in 2038, and finally 4 projects by 2040.

Secretary-General of the Indonesian Petroleum Engineering Experts Association (IATMI) Hadi Ismoyo said, there is indeed the potential for additional oil production from EOR activities. However, not only technical aspects but the government must also pay attention to economic aspects so that additional production can be realized.

"The government must open up and provide extraordinary support, including from the fiscal side," he said.

The Rokan Block Chevron

Rokan Block

Dwi added, one of the large potential additional oil production from EOR is expected to come from the Minas Field, Rokan Block. Referring to SKK Migas data, Minas Field will become the backbone of national oil production with production reaching 52 thousand bpd in 2030.

"We hope that EOR Minas can be executed. We depend on Pertamina and partners to make it happen, "he said.

Hadi added that it should be focused on fields that have the potential to generate large amounts of additional oil production, one of which is the field in the Rokan Block. This is because EOR activities are not necessarily economical if they are applied in small fields.

"In Rokan, the original oil base is 8.5 billion barrels. If we talk about 10% recovery, we will already get 850 million barrels, ”he said.

PT Pertamina Hulu Energi (PHE)

Director of Strategic Planning and Business Development of PT Pertamina Hulu Energi (PHE) John H Simamora said, in the EOR planning by SKK Migas, the Rokan Block was included in it. 

PT Chevron Pacific Indonesia 

    He has entrusted the government and SKK Migas with regard to the EOR project, primarily for the implementation of the EOR test which has been carried out by PT Chevron Pacific Indonesia as the current Rokan Block operator. However, his party is concerned about the economic aspects of the EOR project in the Rokan Block if you see the current oil price developments.

"If the price of oil is still like today, I myself don't think we can run EOR economically," he said.

However, this could be different if the government had other perspectives in implementing this EOR. One of them, if the government will provide incentives to increase the economy of the EOR project.

"But primarily, we want oil prices to improve," said John.

When signing the Rokan Block contract, the implementation of EOR activities was one of Pertamina's commitments. This is as stated in the Decree of the Minister of Energy and Mineral Resources 1923K / 10 / MEM / 2018. Some of these activities are the US $ 4 million EOR study, US $ 247 million stage-1 CEOR 7 pattern, and the US $ 88.6 million stage-1 steam flood Kulin or Rantau Bais.

Investor Daily, Page-10, Monday, Nov 23, 2020

Sakakemang Gas Project Development Plan Approved Soon

 

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that the Sakakemang Block's plan of development (POD) will be approved in the near future.

Blogger Agus Purnomo in SKK Migas

Head of SKK Migas Dwi Soetjipto said that his party and Repsol had agreed on the gas price for the Sakakemang Project in line with the gas price policy set by the government. Not only that, but the gas project internal rate of return (IRR) has also been agreed upon. 

Sakakemang Block

    Thus, the POD of Sakakemang Block has been discussed by Repsol with his party and submitted to the Ministry of Energy and Mineral Resources (ESDM).

"The current situation, the proposal [POD] is already in the Ministry of Energy and Mineral Resources. We hope it will be approved in the next 1-2 weeks, "he said.

Dwi Soetjipto

The preparation of POD for Sakakemang Block was hampered by the proposed gas price of US $ 7 per million British thermal units (million British thermal unit / MMBTU) by the developer. 

    Meanwhile, on the other hand, the government has issued Decrees of the Minister of Energy and Mineral Resources, ESDM Minister Regulation number 89K / 2020 and 91K / 2020. This regulation limits the gas selling price to a maximum of US $ 6 per MMBTU for certain industries and power plants. This policy is valid for the next three years and can be re-evaluated.

"We have done a study, and we are also following government rules and regulations for domestic gas prices," said Dwi.

Regarding the POD being prepared, he explained, not all gas reserves in the Sakakemang Block will be developed. For Phase, I development, the gas reserves being developed are only around 0.5 trillion cubic feet (trillion cubic feet / TCF) of the total initial findings of 2 TCF. Meanwhile, the gas production plan is 85 million cubic feet per day (million standard cubic feet per day / MMscfd).

Repsol

Previously, Repsol Group through its affiliate, Talisman Sakakemang BV, had signed a memorandum of understanding (MoU) with PT Perusahaan Gas Negara (PGN) Tbk for gas supply from the Sakakemang Block. This MoU has been in effect since July 12, 2019, and will be followed up with the signing of the Gas Sales Agreement (GSA) by the parties. Repsol SA discovered gas reserves in Sakakemang Block, South Sumatra with an estimated reserve of at least 2 trillion cubic feet through drilling the KBD-2X well at the beginning of last year.

In order to accelerate gas production, the development of this block will be carried out in stages with a reserve certification of 1 trillion cubic feet first. The government hopes that the Sakakemang Block can operate next year. However, in the 2019 second-quarter performance earning call, Repsol SA CEO and Executive Director Josu Jon Imaz San Miguel said he was optimistic that the Sakakemang Block production could be accelerated in 2022. 

    However, in a conference call for the performance of the first quarter of 2020, Imaz admitted that there were delays in the development of the Sakakemang Block. In the Sakakemang Block, Repsol holds a participating interest (PI) of 45% as well as the block operator. Meanwhile, its partners, Petronas, have a participating interest of 45% and MOECO 10%.

Investor Daily, Page-10, Saturday, Nov 21, 2020

Pertamina's Plan to Release Oil and Gas Block Shares is Hampered by Regulations

    PT Pertamina (Persero) 's plan to release a majority share ownership (participating interest / PI) in several oil and gas blocks that it manages has not been implemented due to regulatory constraints. Referring to the prevailing regulations, the company is not allowed to release more than 41% shares.

PT Pertamina Hulu Energi (PHE)

    Director of Strategic Planning and Development of PT Pertamina Hulu Energi (PHE) John H Simamora said that his party has categorized all oil and gas blocks that it manages into several clusters. One of these clusters consists of oil and gas blocks that have the potential to release the majority of their share ownership to another company.

"Some of this needs to be divested, but the current law does not regulate this. We are still in discussion with the government to divest this oil and gas block, so it is still a long way to go, ”he said.

    He explained that in the current regulations, Pertamina can only release PI ownership of a maximum of 41%. In fact, it does not always need to hold such large shares or the operatorship share in all the blocks it manages. Some of the oil and gas blocks to be divested are actually minus for the company. On the other hand, his party has other priorities in developing upstream assets.

"We want to focus on exploration and field optimization, including the EOR (enhanced oil recovery) study," said John.

    Currently, his party is still discussing the PI divestment regulation issue with the government. The number of oil and gas blocks whose shares are released also has the potential to change depending on the development of oil prices. If the price of oil improves in the future, the number of oil and gas blocks to be divested will be smaller.

"Regarding this regulation, we discussed with the Ministry of Energy and Mineral Resources and BUMN, and this can be resolved," he said.

    Previously, Pertamina had divided all of its oil and gas blocks into four clusters based on the number of reserves and the remaining oil and gas block production period. The first cluster includes oil and gas blocks that have a remaining oil and gas production period of more than 10 years. 

    The second cluster is the oil and gas block which can still be produced in the next 5-10 years. The third cluster is an oil and gas block that Pertamina can cooperate with for the medium scale.

    Meanwhile, the last cluster is an oil and gas block, which is actually more suitable to be managed by an oil and gas company smaller than Pertamina. This last cluster is planned to be released by the company. 

    Energy Saver from Trisakti University Pri Agung Rakhmanto assessed that the PI divestment by Pertamina was a normal corporate action for oil and gas companies. This step is usually taken to optimize the investment portfolio.

"In order to focus on perspective and provide a high economy," he said.

    For the national upstream oil and gas industry, Pertamina's strategy also opens up opportunities for other oil and gas companies with different standards to take over the management of these oil and gas blocks. Although, whether the divestment will be attractive or not still depends on the current market.

"It remains the market which will determine later, whether it is considered attractive by other actors or not," explained Pri Agung.

    Currently, Pertamina manages as many as 91 oil and gas assets at home and abroad through several of its subsidiaries. There are 56 oil and gas blocks in the country that are worked on by PT Pertamina Hulu Energi to manage 50 oil and gas blocks, PT Pertamina EP 1 oil and gas block, PT Pertamina EP Cepu (PEPC) 1 block, PT Pertamina EP Cepu (PEPC) ADK 1 oil and gas block, PT Pertamina Hulu Indonesia 3 oil and gas blocks.

    While abroad, as many as 35 assets are managed by and PT Pertamina Internasional EP. Referring to PHE data, this year, the company's oil production is targeted at 412 thousand barrels per day (BPD) and gas 2,710 million cubic feet per day (million standard cubic feet per day / MMscfd). As of August, the realization of oil production was recorded at 414 thousand barrels per day (BPD) or exceeded the target and gas was 2,670 MMscfd or 98.5% of the target.

Investor Daily, Page-10, Saturday, Nov 21, 2020

The IDD project is targeted to start in 2021

 

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) targets the Indonesia Deepwater Development (IDD) project to start rolling again next year. 

Blooger Agus Purnomo in SKK Migas

    This follows the transfer of management of the IDD Project to Eni Indonesia which is expected to be completed by the end of this year.

Eni Indonesia

Head of SKK Migas Dwi Soetjipto said Chevron Indonesia, as the operator of the IDD Project, is still in the discussion stage regarding the transfer of participating share ownership to Eni Indonesia. The administrative process for the transfer of share ownership and management rights is expected to be completed this year.

Dwi Soetjipto

"So we hope that next year there will be changes to the plan of development / POD proposed after being managed by Eni," he said.

He explained that the POD changes were needed because Eni had managed two oil and gas blocks located near the IDD Project, namely the Muara Bakau and East Sepinggan blocks. Thus, the development of the IDD Project can later be integrated with the facilities that Eni already has in the two blocks. 

the IDD Project Chevron

    One of them is the utilization of the floating production unit / FPU Jangkrik block facility. So, IDD development will change from Chevron's plan or POD, ”said Dwi.

Working Area of Chevron

Furthermore, with the integration of these facilities, it is hoped that the development of the IDD Project can be faster and more efficient.

"We are optimistic that the development of IDD will be better and more efficient because Eni already has facilities. We are still targeting to start onstream in 2025, "he added.

Referring to SKK Migas data, the IDD project is targeted to start operating in the fourth quarter of 2025. This project is targeted to reach a peak gas production of 844 million standard cubic feet per day / MMscfd and 27 thousand BPD of oil. The project investment is estimated at the US $ 6.98 billion. This IDD project combines two oil and gas fields, namely Gendalo Field, Ganal Block, and Gehem, Rapak Block.

Ganal Field by ENI

Dwi said that the government supports the extension of the production sharing contract / PSC for oil and gas blocks that are included in the IDD Project, namely the Meeting Block and Ganal. This is because the Rapak Block contract will end in 2027 and the Ganal Block will be completed in 2028. Without the extension, he admits that oil and gas companies will find it difficult to develop the IDD Project.

"Although later asking for approval from the government [regarding the extension of the PSC]. But the government will support the extension if the contractor is serious about carrying out the project, "he said.

In the IDD Project, Chevron is currently the operator and majority shareholder of 63%. Chevron is working on this deep-sea oil and gas project with other joint venture partners, namely Eni, Tip Top, PT Pertamina Hulu Energi (PHE), and partners in Muara Bakau.

Investor Daily, Page-10, Friday, Nov 20, 2020

Feasibility Study for Dumai Sei Mangkei Pipeline Review

 

The government will complete the connection of the gas pipeline network that will connect Sumatra and Java, one of which is the Sei Mangkei-Dumai Pipe. However, the feasibility study / FS of this project needs to be readjusted to the current situation because it has been prepared since 2014.

Director of Planning and Development of Oil and Gas Infrastructure at the Ministry of Energy and Mineral Resources (ESDM) Alimuddin Baso explained, based on the FS, the pipe was designed to be between 12-28 inches in diameter and the investment cost was estimated at the US $ 483 million. 

    The study has not yet determined the funding scheme that will be used. However, there are two alternatives, namely using state funds such as state investment (PMN), or Public-Private Partnership (PPP).

"PT PGN Tbk has made a feasibility study since 2014 and with the development of these 6 years, it needs to be reviewed again. That must be the main consideration, "he said.

His party is worried that if there is no review, many points that will be connected will be neglected. He explained that the Sei Mangkei-Dumai Pipe was needed to maintain the reliability of the gas supply in North Sumatera and Riau. Currently, the gas supply in the area comes from Grissik and Jambi through the Grissik-Duri-Dumai Pipeline, as well as the Arun LNG Terminal, Block A, NSO / NSB Block via the Arun-Belawan-Sei Mangkei Pipeline.

"In addition, it also encourages the growth of new industrial estates along the Sei Mangkei-Dumai gas pipeline," added Ali.

Referring to the National Gas Balance, Aceh and Northern Sumatra regions obtain gas from Block A, NSO, and NSB, as well as Tangguh LNG. In addition, several projects will begin production, namely Lhokseumawe Block and Gebang Block in 2023, and ENI Jau in 2024. 

ENI

    Meanwhile, the main consumers of gas are PT Pupuk Iskandar Muda (PIM) and electricity. Unfortunately, until now there is no certainty regarding gas demand for the retail industry along with the Sei Mangkei-Dumai Pipe.

"This is an empirical condition and must be observed so that when deciding which scheme to use, it must be prudent. We want something that is decided on that will be executable, not planned. So it is important to discuss it carefully, "said Ali.

However, this pipe can also be used to supply gas to other areas such as Labuhan Baru, Asahan, and Medan, as well as power plants in North Sumatra. The Sei Mangkei-Dumai pipeline is one of three gas transmission pipeline projects proposed by the Ministry of Energy and Mineral Resources which was approved as a National Strategic Project (PSN) which will be revised after the Covid-19 pandemic has passed. 

    The other two transmission pipeline projects are the Cirebon-Semarang Pipe and the West Natuna Transportation System (WNTS)-Pemping Island Pipeline. 

Investor Daily, Page-10, Tuesday, Nov 17, 2020

Pertamina and Chevron Still Discussing EOR

 

It seems that the increase in production of the Rokan Block using the Enhance Oil Recovery (EOR) method cannot be realized smoothly, because PT Chevron Pacific Indonesia is reluctant to provide all EOR formulas to PT Pertamina Hulu Rokan so that production can be more than 170,000 barrels per day.

PT Chevron Pacific Indonesia

Secretary-General of the National Energy Council (DEN) Djoko Siswanto said that in order for PT Pertamina to carry out EOR it would need four formulas, but Chevron was reluctant to provide one other formula.

Chevron

"There are four formulas. Chevron has provided three formulas, one other formula is not given, he said.

The management of Chevron Pacific Indonesia has not yet answered confirmation regarding the progress of the transition to managing the Rokan Block and the EOR formula to increase the production of the block. 

the Rokan Block 

    Meanwhile, PT Pertamina (Persero) Senior Vice President for Corporate Communication & Investor Relations, Agus Suprijanto, admitted that until now Pertamina is still discussing with Chevron about EOR in the Rokan Block. However, he could not mention the progress of Pertamina's discussion with Chevron.

"For discussion material with Chevron, we have internal discussions, it cannot be shared yet," said Agus.

the Rokan Work Area (WK)

In general, the work program for 2021 in the Rokan Block is still being discussed with SKK Migas. To be sure, Agus ensures that the transition process for managing the Rokan Work Area (WK) will continue as planned. Pertamina Hulu Rokan will become the Cooperation Contract Contractor (KKKS) managing the WK Rokan as of August 9, 2021.

"Regarding the program details, we will share if there are official results," said Agus.

He also said that Pertamina would still work on the EOR scheme. Although he did not disclose the significant impact of using EOR to increase production in the Rokan Block, Agus assured Pertamina that it already had calculations. Agus said that currently discussions related to the economy were still ongoing.

"The calculation is there. "We are currently in discussions regarding various economic alternatives with the government," said Agus.

Kontan, Page-12, Monday, Nov 16, 2020

Two Oil and Gas Blocks will Get Additional Incentives

 

The government will provide additional incentives for the two oil and gas blocks to boost national oil production. This step is expected to be able to provide additional production reserves of oil of 138 million barrels and gas of 1.7 trillion cubic feet.

Blogger Agus Purnomo in SKK Migas

Deputy for Planning for the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Jaffee Arizona Suardin said the massive depletion plan (MDP) is one of the strategies to pursue the oil production target of 1 million barrels per day (bpd) by 2030.

His party is looking for oil and gas potentials that can actually be produced, but require additional incentives to be realized. This step was taken, he explained, because the government is now increasingly flexible in providing incentives for upstream oil and gas industry players. Two oil and gas blocks are candidates for this additional incentive recipient.

"We have discussed it with the government, there has been the approval of additional incentives," he said in a discussion held by the Indonesian Association of Oil and Gas and Geothermal Drilling Entrepreneurs (APMI) in Jakarta.

According to him, the potential for MDP is not only in these two oil and gas blocks. His party is also evaluating three other MDPs with the potential for additional oil and gas reserves of up to more than 200 million barrels of oil equivalent.

"Then we will maximize the oil and gas block so that it returns to its former glory. That way per year, "said Jaffee.

PT Pertamina Hulu Energi (PHE) Vice President for Drilling and Well Intervention, Anto Sunaryanto, said that the existence of MDP has encouraged his party to be more massive in producing existing oil and gas reserves. Moreover, the government is increasingly open to additional incentive options for cooperation contract contractors (KKKS), including additional profit sharing (splits).

"With a better split, we can change more reserves to production," he said.

His party has submitted additional splits to the government for several oil and gas blocks that it manages and is still waiting for an answer. If the additional split decision from the government comes out this December or January next year, it will add more operational activities to be carried out.

"It's not official yet, but I heard the incentive has been approved," said Anto.

Previously, Director of Development and Production of PT Pertamina Hulu Energi (PHE) Taufik Aditiyawarman said additional splits were proposed for the Mahakam Block and the Sanga-Sanga Block. 

the Sanga-Sanga Block

    In addition, his party is still reviewing the proposed changes to the results of the East Kalimantan Block, Offshore North West Java (ONWJ), and Offshore Southeast Sumatra (OSES). 

    The five blocks are termination blocks managed by the company. Taufik had said that if he obtained an improvement in the profit-sharing, his party was committed to increasing the production of the oil and gas block.

"Of course, with a better economy, it will maximize the monetization of the potentials in the oil and gas block, increase reserves and future production," he said.

Pertamina signed the Production Sharing Contract / PSC for the Sanga-Sanga Block, East Kalimantan, and the OSES Block with a gross split scheme in 2018. Likewise, the Mahakam Block PSC amendment uses a cost recovery investment scheme. Meanwhile, the ONWJ Block contract was signed in 2017.

the ONWJ Block 

Referring to the contract, Pertamina's profit-sharing in the Sanga-Sanga Block is set at 49% for oil and 54% for gas. Meanwhile, in the East Kalimantan-Attaka Block, the company gets 61 percent for oil and 66 percent for gas. Furthermore, Pertamina's profit-sharing in the OSES Block is set at 68.5% for oil and 73.5% for gas.

the OSES Block

In the ONWJ Block, Pertamina previously obtained additional splits through ministerial discretion and changes to the gross split scheme. Initially, Pertamina's profit-sharing in this block was 57.5% for oil and 62.5% for gas. At the end of 2017, this revenue-sharing amount increased to 73.5% for oil and 81% for gas. The five termination blocks that Pertamina is working on are included in the list of 10 largest oil and gas producers in Indonesia.

Referring to SKK Migas data, the realization of oil lifting in the Mahakam Block was recorded at 29,361 barrels per day (bpd) of the APBN-Amendment target of 25 thousand bpd and gas of 558 million standard cubic feet per day / MMScfd) of the target of 510 Mmscfd.

Furthermore, the oil lifting of the ONWJ Block was 28,893 bpd from the target of 27,500 bpd and gas of 71 MMScfd from the target of 58 MMScfd. Next, the oil lifting of the OSES Block was 26,542 bpd from the target of 24,010 bpd, East Kalimantan 9,862 bpd from a target of 11,380 bpd, and Sanga-Sanga 12,515 bpd from a target of 12,030 bpd.

Investor Daily, Page-10, Friday, Nov 13, 2020

Pertamina Hulu Mahakam Deposits State Revenue of US $ 406.64 Million

 

PT Pertamina Hulu Mahakam (PHM) recorded a positive oil and gas production performance until the end of September. This subsidiary of PT Pertamina Hulu Energi (PHE) made a deposit state revenue of US $ 406.64 million from the split portion for the government.

PT Pertamina Hulu Energi (PHE)

According to the General Manager of PHM Agus Amperianto, the realization of the profit-sharing was only slightly below the target in the work plan and budget (WP & B) of US $ 416.97 million.

Agus Amperianto

"This is due to low world oil and gas prices due to abundant supply and exacerbated by weak demand due to the pandemic," said Agus in Jakarta.

PHM always strives to be able to contribute very good state revenue even though the Mahakam Block has entered a natural production decline phase. Through various innovations, especially in drilling and well maintenance, his party tries to make cost efficiency (cost efficiency).

"This saving will also reduce costs that must be repaid by the state to contractors or cost recovery," said Agus.

As of September, the cost recovery optimization value has reached the US $ 303.85 million. Agus revealed that his party will try to maintain a positive performance in the Mahakam Block for the remainder of this year even at the time of the Covid-19 pandemic.

the Mahakam Block

"But in the future, what we have to pay attention to and be of common concern is the impact of the decline in world crude oil prices on our demand for oil and gas production," he said.

As is known, the world crude oil price has dropped and once reached the US $ 30 per barrel. This is due to a flood of supply in the market coupled with weak global demand in the aftermath of the pandemic. In this condition, it is hoped that the government can provide incentives.

"In a situation of weak demand plus low world crude oil prices, we hope the government is willing to provide incentives for the upstream oil and gas industry to reduce pressure," said Agus.

From the production side, it was recorded that until the end of September the realization of Mahakam Block gas production reached 606 million standard cubic feet per day / MMScfd or 18.82% exceeding the APBN-P target of 510 MMscfd. Meanwhile, the actual oil production in this block was recorded at 29.6 thousand barrels per day (bpd), or 18.4% higher than the target of 25 thousand bpd.

According to Agus, the high realization was due to additional production from a number of wells that were drilled last year and started production in early 2020. In addition, the oil and gas production achievement is also supported by the application of various innovations in workover and well services.

"So that oil and gas production in the Mahakam Block until the third quarter of 2020 remains good and so far has not been affected by the Covid-19 pandemic," he said.

The realization of operations in the Mahakam Block is also very good. This year, his party is targeting development drilling as many as 79 wells. By the end of September, the realization of development drilling had reached 63 wells. Exploration well drilling has also been carried out according to the target, namely one well in the South Peciko structure. 

    According to Agus, his party is trying to drill as many wells as possible to maximize existing oil and gas reserves. This is because oil and gas reserves and production from wells in the Mahakam Block are increasingly marginal.

"What should be proud of is the ability of engineers at PHM to make various innovations to shorten the duration of drilling and save costs," he added.

Furthermore, until the end of September, PHM succeeded in realizing 3,595 well services from the target of 4,178 jobs. Then, reworking the well was recorded as reaching 59 jobs from the target of 69 jobs. One of the innovations developed by PHM in carrying out this activity is the completion of wells (completion) without using a rig which has succeeded in reducing the overall cost of the well.

Investor Daily, Page-10, Friday, Nov 13, 2020

Eni Strong Candidates to Manage IDD Block

The Special Task Force for Upstream Oil and Gas (SKK Migas) said that the transition to management of the deep-sea gas project or Indonesia Deep Water Development (IDD) is entering its final stage. 

Chevron Pacific Indonesia

    SKK Migas confirmed that the transfer of IDD Block management from Chevron Pacific Indonesia to Eni, who is also one of the IDD Block owners, will take place on a business-to-business (B to B) basis and can be completed by the end of this year. 

    Head of SKK Migas, Dwi Soetjipto, confirmed that currently, the discussion of switching the IDD Block operator has entered the final stage.

Dwi Soetjipto

"Eni is a candidate to replace Chevron. Being finalized, God willing, at the end of this year we are targeting a clean "Dwi said at the Ministry of Energy and Mineral Resources.

The finalization is internal between Chevron and Eni. After it was confirmed that it would not continue the management of the Rokan Block, Chevron Pacific Indonesia also decided not to continue the phase II development of the IDD Block.

One of the reasons for Chevron's reluctance to continue with the gas project was that the second phase development of the IDD Block was not included in the global portfolio of the US oil and gas company. 

the IDD Block

    Currently, the IDD project consortium consists of 62% ownership of Chevron, the remaining 20% ​​is held by Eni and 18% by Sinopec. Eni is considered to be a strong candidate to continue the development of phase II of IDD because investment costs can potentially be reduced. This is because this Italian oil and gas company already has facilities that can be integrated.

Sonitha Poernomo

Previously, PT Chevron Pacific Indonesia's Corporate Communication Manager, Sonitha Poernomo, said that the transition discussion process was still ongoing.

Blogger Agus Purnomo in SKK Migas

"We are still working with SKK Migas and potential partners to help realize the potential of this project. However, according to policy, we cannot provide detailed information about commercial negotiations," She said.

Kontan, Page-10, Saturday, Nov 7, 2020

Split Change as Incentive is the Last Option

    The government is still evaluating PT Pertamina (Persero)'s proposal regarding the addition of profit sharing (splits) in several terminated oil and gas blocks. This is because the addition of a split is the last option as one of the upstream business incentives. 

Arifin Tasrif

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif said that the addition of a split is not the only form of incentive for the upstream oil and gas business. His party assessed that several regulations regulate various forms of incentives to facilitate this upstream oil and gas business.

"We are currently conducting an evaluation," he said.

Dwi Soetjipto

    Dwi Soetjipto, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), expressed the same thing. His party is still discussing the proposed additional split between Pertamina and the Ministry of Energy and Mineral Resources. One of them is being studied other incentive options that can replace the addition of this split.

Agus Purnomo in SKK Migas

"We are looking for efforts so that the additional split is the last alternative. So now we are reviewing it, "he said.

    Deputy for Planning of SKK Migas, Jaffee Suardin, revealed that the proposed additional split was through long discussions with his party. The reason is that this proposal was initiated by his party's efforts to seek oil and gas potential that could be developed but had not yet been included in Pertamina's long-term plan. 

    Furthermore, his party issued a recommendation to the Ministry of Energy and Mineral Resources. According to him, this additional split has the potential to generate oil and gas reserves for Indonesia without having to wait for exploration activities to be carried out. Not only that, but this step will also increase the economy of the oil and gas block for up to 10 years.

"What is currently being discussed can add approximately 120 million barrels of oil reserves and 1.7 trillion cubic feet of gas," said Jaffee.

    He said the additional split proposal did not end only for Pertamina. His party will continue to look for oil and gas potentials in other working areas that can be developed in the future.

"The point is, the more aggressive and efficient," he added.

    According to Taufik Aditiyawarman, Director of Development and Production of PT Pertamina Hulu Energi (PHE), the additional split is proposed for the Mahakam Block and the Sanga-Sanga Block. 

    In addition, his party is still reviewing the proposed changes to the results of the East Kalimantan Block, Offshore North West Java (ONWJ), and Offshore Southeast Sumatra (OSES). The five blocks are termination blocks managed by the company. Taufik had said that if he obtained an improvement in the profit-sharing, his party was committed to increasing the production of the oil and gas block.

"Of course, with a better economy, it will maximize the monetization of the potential in the oil and gas block, increase reserves and future production," he said.

the Mahakam Block

    Pertamina signed the Production Sharing Contract / PSC) Sanga-Sanga Block, East Kalimantan, and the OSES Block with the Gross split scheme in 2018. Likewise, the amendment to the Mahakam Block PSC uses a cost recovery investment scheme. The ONWJ Block contract was signed in 2017. 

    Referring to the contract, Pertamina's profit-sharing in the Sanga-Sanga Block is set at 49% for oil and 54% for gas. Meanwhile, in the East Kalimantan-Attaka Block, the company gets 61 percent for oil and 66 percent for gas. Furthermore, Pertamina's profit-sharing in the OSES Block is set at 68.5% for oil and 73.5% for gas.

    In the ONWJ Block, Pertamina previously obtained additional splits through ministerial discretion and changes to the gross split scheme. Initially, Pertamina's profit-sharing in this block was 57.5% for oil and 62.5% for gas. At the end of 2017, this revenue-sharing amount increased to 73.5% for oil and 81% for gas.

Investor Daily, Page-10, Saturday, Nov 7, 2020

KPK Monitors Banyu Urip Oil

 

The process of resolving excess oil production from the Cepu Block Banyu Urip Field continues. The Corruption Eradication Commission (KPK), which was involved in the discussion, stated that there were three solutions to the problem of oil production in the Banyu Urip field that could not be bought. 

the Cepu Block Banyu Urip Field

    First, PT Pertamina can buy as much as possible the production of Banyu Urip Field. Second, if the production is to be sold, it is through an auction scheme. Third, if production is cut, there must be calculations on state revenue.

The Corruption Eradication Commission (KPK)

There are at least four institutions involved in discussing the excess production of the Banyu Urip Field. The four institutions are the Ministry of Energy and Mineral Resources (ESDM), SKK Migas, Ministry of Finance, and the KPK. This Anti-Corruption institution was asked to be involved so that there would be no problems and legal cases in the future. The KPK is still asking for additional data on the calculation of each option.

"The KPK asked for modeling for the three options presented," said KPK Prevention Deputy Pahala Nainggolan.

To Pahala Nainggolan's knowledge, the Banyu Urip oil that Pertamina did not buy because of its type, if processed, would produce diesel products whose demand was said to be decreasing, plus Pertamina's refinery capacity was almost full. When Pertamina did not buy, SKK Migas had also conducted the crude auction. 

Blogger Agus Purnomo in SKK Migas

    However, according to Pahala Nainggolan, the auction was not reached because the price was still below the Indonesian Crude Price (ICP). This is considered contrary to regulations, especially from the Directorate General of Budget, Ministry of Finance.

"So Banyu Urip's production is already full and faced with the burden of renting a container ship and the difficulty of getting the service of a vessel because of the competition," said Pahala Nainggolan.

Even the export option is also facing uneconomical price constraints. The last option, namely cutting production, is deemed inaccurate considering the possible impact on sub-contractors and oil and gas production targets as well as part of the government that will be cut. According to Pahala Nainggolan, the most likely option is that Pertamina is asked to buy Banyu Urip oil at the maximum possible volume, then the rest will be sold at a price below the ICP.

Export is not a problem

"The options taken are not the most profitable, but the ones that are the least detrimental to the state. Perhaps that is the best way, so that the options are taken, for example, sold under (ICP), have a basis," said Pahala Nainggolan.

Deputy Chairman of Commission VII of the Indonesian House of Representatives (DPR) Edy Soeparno hopes that there will be no production cuts.

"If there is excess crude, it can be exported. There are a market and a good price, then it is better to export it," explained Edy Soeparno.

Edy continued, the policy of exporting oil needs to be careful because it involves the government and the domestic market obligation (DMO). Upstream oil and gas practitioners, Tumbur Parlindungan assesses that exports are not a problem. With current conditions. Crude prices may be below the ICP. If it is sold, there is state revenue. Meanwhile, there is no state revenue for cutting production. " he said.

Kontan, Page-12, Tuesday, Nov 3, 2020