Government Seriousness Awaited

The government has decided to take over management of the Rokan Working Area in Riau Province, after 50 Years of being controlled by PT Chevron Pacific Indonesia.

PT Chevron Pacific Indonesia

The government also appointed PT Pertamina (Persero) to become the new contractor in the giant oil and gas block starting on 9 August 2021. The decision was taken on the basis of business and economic considerations after evaluating Pertamina's proposal submission. Unfortunately, the transition process and Chevron to Pertamina are still hampered.

Facilities echoed by the government through the Ministry of Energy and Mineral Resources (ESDM) and SKK Migas were, in fact, unable to smooth Pertamina's steps. In the cooperation contract or the transition to managing the Rokan Block, there is indeed no policy that regulates a smooth transition process. On the side other, every contractor of a cooperation contract (KKKS) certainly only refers to the contract.

The Rokan Block

The Rokan Block Working Area management contract by Chevron will end on August 8, 2021. In accordance with the results of the tender, the management will be carried out by Pertamina, effective from August 9, 2021, for the next 20 years, with a gross split scheme.

Chevron last drilled 91 wells in 2018. In 2019-2021, the company will no longer drill Rokan. This is considered reasonable, considering that the US oil and gas company would leave the legendary oil and gas block.

However, the impact of production decreased dramatically. After that, Pertamina offered alternative investment activities during the transition period, namely the Joint Drilling Agreement (options 1, 2, and 3 JDA). The JDA option is one of the options offered by Pertamina, in which Chevron drills during the transition period at Pertamina's expense.

Chevron

However, the option was rejected by Chevron because it was considered not in accordance with the economy. If so, Chevron has its own standards in drilling activities, while Pertamina also has its own counts. 

Nicke Widyawati

   Pertamina's President Director Nicke Widyawati expressed his concern, given the deadline for the transfer of management of the Rokan Block that is getting closer.

"We have offered joint drilling. So, we did the drilling with funding from Pertamina. However, that effort cannot be accepted, because as a concessionaire, he certainly does not want anyone to enter, "said Nicke.

Pertamina considers Chevron's policy not to issue new investments during a transition period that is unwarranted. If referring to the Minister of Energy and Mineral Resources Regulation No. 24 of 2018 concerning the Mechanism of Returning Investment Costs in Upstream Oil and Gas Business Activities, the operator is obliged to invest in his Work Area and maintain the level of production until the end of the contract period.

The regulation issued on April 20, 2018 is the second revision of Ministerial Regulation Number 26 of 2017. It's just that, in Article 8 of the Minister of Energy and Mineral Resources Regulation No. 24 of 2018 it is explained that in the non-renewed cooperation contract, the contractor is required to settle the investment cost return . Obligations to settle the value of the return on investment costs included in the letter of determination of management of the new work area and new cooperation contract.

Drilling Certainty

With the rejection of the JDA Option by Chevron, Pertamina's Upstream Director Dharmawan H. Samsu assesses that the possibility of his fate will not be much different from the Mahakam Block. Moreover, Pertamina has not been able to ascertain whether drilling can be carried out this year or not.

"We are still talking about it and of course I cannot put the government first. Of course, the government is also trying to be able to do drilling, but the most important thing is to ensure that when the transfer is managed the drilling team is ready to go to the field. So there is no delay, "he said.

Sonitha Poernomo

When confirmed, Chevron's Corporate Communication Manager Sonitha Poernomo confirmed a number of things were being discussed, including the option to optimize production from this strategic asset.

"However, according to company policy, we cannot provide this information in detail," She said.

SKK Migas Deputy for Operations Julius Wiratno instead asked Chevron to drill in the Rokan Block, later with a cost recovery scheme.

"We will try to conduct drilling as soon as possible to support the achievement of production or lifting targets," he said

Teaching Staff of the Faculty of Earth Technology and Energy, Trisakti University, Pri Agung Rachmanto, said there was no party to be blamed in the transition process that was not smooth. He considered the JDA option offered by Pertamina would be difficult to achieve because the existing production sharing contract (PSC) does not regulate the smooth transition process.

According to. he, both parties must refer to the existing contract, so it would be natural if no agreement was found.

"The decline in production, due to a decline in investment and a smooth transition, may instead be said to be an inevitable consequence," he said

The founder of the Reforminer Institute highlights the regulations issued by the government regarding the transition period and the termination of oil and gas blocks. In practice, the policy is not easy to implement because each party refers to the existing contact clause.

"When the Ministerial Regulation is tried to be applied with the B to B approach, it will not necessarily take place unless the B to B agreement is reached," he explained.

With these conditions, it should be questioned again the seriousness of the government to take over management of the Rokan Block. The most important thing is whether the government is willing if the scheme also offers yields and investment opportunities for other portfolios. If there is an agreement there, it is possible that the Rokan Block transition process will run smoothly.

Bisnis Indonesia, Page-23, Wednesday, March 11, 2020

HCML Supports SKK Migas Apply e-CHSEMS Application

The application of the Electronic Contractor Health Safety Environment Management System (e-CHSEMS) received full support from Husky-CNOOC Madura Limited (HCML) as one of the cooperation contract contractors working under the control of SKK Migas.

The HCML HSSE Manager, Rockyanto Sasabone, revealed that the application of e-CHSEMS is an application of the information technology function and HCML supports the efforts to strengthen the data bank that shortens the procurement process of goods and services while maintaining the performance of Health, Safety and Environmental Protection (K3LL) of Work Partners.

Blogger Agus Purnomo in SKK Migas

The e-CHSEMS application was launched by SKK Migas Surabaya in early March. "General Manager and the highest leadership of the procurement and K3LL functions from around 42 KKKS agreed and committed to supporting the application of the e-CHSEMS Application," he explained.

Bhirawa, Page-10, Wednesday, March 11, 2020

Maluku Governor Supports the Acceleration of the Abadi LNG Project

Maluku Governor Murad Ismail supports the plan of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) to accelerate the construction of the Abadi LNG Project, Masela Block in 2021. The government encourages the integrated liquefied natural gas (LNG) project to be integrated. it could start operating in 2026, sooner than originally planned in 2027.

the Masela Block

In its official statement, SKK Migas stated that the Maluku Governor's support was conveyed when he met with the Head of SKK Migas Dwi Soetjipto on Sunday (March 8). The meeting discussed a number of strategic plans for the development of the Abadi LNG Project, the Masela Block.

"In the meeting, at the same time, we discussed the acceleration of land acquisition and the readiness of the local workforce, because the planned infrastructure development for the Masela Block has begun in 2021," Maluku Governor Murad Ismail said in an official statement from SKK Migas, Monday (March 9).

He added, his party would not complicate the licensing process and would be involved in land acquisition efforts. Currently, he has also given permission to use forestry land that will be used for the construction of the Abadi Project production facility, the Masela Block, which is in the form of an LNG refinery.

At present, the Provincial Government through the Governor of Maluku has issued recommendations for 900 to 1,000 hectares of land. The land is expected to accommodate the construction of a gas processing facility of 9.5 million tons per year / MTPA.

"The interests of Maluku so that this national strategic project can take place because it will provide a multiplier effect (double impact) for the regional economy, as well as creating jobs. We must be optimistic that the Masela Block Project will have a positive impact on the people and the Maluku region, "Murad stressed.

Dwi Soetjipto

Head of SKK Migas Dwi Soetjipto revealed that the process of land acquisition and licensing is usually an obstacle in investment. However, the support of the Governor of Maluku and the acceleration of the development of the Abadi Masela Project will have a positive impact on the upstream oil and gas industry as a whole. This gives a signal that licensing and land acquisition are no longer an investment problem.

"So what is happening in the Abadi Project is expected to convince investors, especially world-class oil and gas companies to invest in technology and technology in Indonesia. Efforts to realize the production target of 1 million barrels per day (BPD) must be supported by a good investment climate, "he said.

At present, Inpex is still carrying out an environmental impact analysis (EIA) survey for onshore LNG refineries and Floating Production Storage and Offloading (FPSO) facilities. The EIA survey process has been carried out by Inpex since November 2019 and is targeted to be completed within the next year, after going through a survey in the dry and rainy season.

During the construction phase, Inpex must undertake a number of activities, including the construction and operation of underwater gas wells and the construction of the Subsea Umbilicals, Risers and Flowlines (SURF) facilities off the Arafura coast. Furthermore, Inpex also built a production facility, FPSO, underwater gas pipeline from the FPSO to a gas receiving facility (GRF) on land, and an LNG plant on land.

The Abadi project is projected to produce 9.5 million tons of gas per year in LNG and 150 million standard cubic feet per day / mmscfd for pipeline gas. Previously, Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif said the Abadi LNG Project was still targeted to operate in 2027.

However, his party encourages this gas project to operate faster in 2026, if it is indeed possible to do so. This is so that the country will immediately receive revenue from this project. To be able to speed up the operating schedule in 2026, Dwi explained that the final investment / FID decision must be completed by the end of 2021. 

     While project construction is targeted to begin in 2021 from the plan in 2022. In addition to working on Amdal, Inpex is holding an auction to carry out front end engineering design work. / FEED and FEED are targeted to be completed by the end of 2021.

Investor Daily, Page-9, Wednesday, March 11, 2020

7 Oil Producers Exceed Production Targets

Seven Indonesian oil producers (Cooperation Contract Contractors / KKKS) exceeded the 2020 oil production target set in the State Budget (APBN).

The seven oil producers are ExxonMobil Cepu Ltd (EMCL), Chevron Pacific Indonesia, Pertamina Upstream Energy ONWJ, Medco E&P Natuna, Pertamina Upstream Sanga-Sanga, Medco E&P Rimau, and JOB Pertamina-Medco Tomori Sulawesi LTD. Exceeding the highest target was achieved by Medco E&P Natuna which reached 119.6% of the APBN target.

"We continue to supervise and increase the intensity of coordination with KKS Contractors to discuss steps to improve upstream oil and gas operational performance and program implementation in line with Work, Programs and Budget (WP&B) in 2020," said Head of the Special Task Force for Upstream Oil and Gas Business Activities, Dwi Soetjipto, in Jakarta.

Dwi Soetjipto

Based on SKK Migas notes, until early March 2020, there are a number of KKKS that have not reached their production targets due to several reasons.

"There are KKKS that have carried out activities, but the results obtained are not as high as predicted or have not reached the target, for that we will evaluate the KKKS program and ensure that production is on target," Dwi said.

To monitor the investment and production activities of the KKKS, SKK Migas is calling at the same time finding a solution with the KKKS that cannot realize the production according to the target. 

    Regarding KKKS that have not yet reached the target, Dwi said, his party continues to conduct evaluations to ensure that the activities they carry out can support the achievement of production targets in the coming years, primarily in achieving the target of 1 million barrels.

In addition to the 7 oil producers, there are four KKKS gas producers that exceed the channeling targets, namely Pertamina Hulu Mahakam, ENI Muara Bakau BV, Premier Oil Indonesia and Petrochina International Jabung LTD. The highest production exceeding was achieved by Premier Oil Indonesia, which reached 121.2% of the APBN calculation target

Investor Daily, Page-9, Wednesday, March 11, 2020

Operatorship Switch, Pertamina Directly Drills Well

PT Pertamina (Persero) said it would immediately drill wells once the management of the Rokan Block switched to Pertamina in August next year. This is to anticipate if the company cannot drill wells during the transition of the operatorship transition or management of the Rokan Block.

the Rokan Block

     Pertamina Upstream Director Dharmawan H Samsu said, his party had offered a joint drilling agreement (JDA in the transition period) to PT Chevron Pacific Indonesia as the existing operator of the Rokan Block, but until now, his side had not reached an agreement with Chevron.

PT Chevron Pacific Indonesia

As a precautionary measure, if there is no agreement, Pertamina has now started preparing well drilling in the Rokan Block. The target is, once the block management switches, the company will immediately drill a well.

"The options we are making now are more to make sure we have the readiness to drill in August 2021. This is the most basic option," he said in Jakarta.

Because, without an agreement with Chevron, Pertamina could not do the drilling in the transition period. Dharmawan acknowledged, with this condition, the condition when the transfer of management of the Mahakam Block could be repeated ie the production of the Rokan Block could go down very large.

Referring to Pertamina's data, Rokan Block's oil production could go down to 140 thousand barrels per day (BPD) if there is no drilling in the transition period. Because of that, his party tried to do well drilling without pause once the management of the Rokan Block turned to Pertamina. It has formed a special team that will prepare drilling in this Rokan Block, including the procurement of rigs and other equipment needed.

     Dharmawan explained, this was important because Pertamina's speed in preparing well drilling would greatly determine whether Rokan Block production could be prevented from continuing to fall.

"The reference is not how many wells can be drilled, but how fast we can procure the equipment and equipment needed," he said.

From discussions that have been carried out, there is indeed a target to drill 70 wells in the Rokan Block. According to him, the figure is a good reference to start drilling preparation.

"So every month we will review the progress of the existing preparations," Dharmawan said.

The drilling equipment procurement usually takes one year, so that the company still has enough time to remember since there are still 15 more months until the existing Rokan Block contract expires. Parallel to the preparation of drilling, it will continue to discuss with Chevron. He believes the government will also try to make the company be able to drill wells in the transition period for the management of the Rokan Block.

"But the most important thing is to ensure that when the transfer is managed, the drilling team is ready to go into the field. So there is no delay, "he stressed.

Earlier in a meeting with Commission VII of the Indonesian House of Representatives, PT Chevron Pacific Indonesia President Director Albert Simanjuntak said it would no longer drill wells in the Rokan Block because the contract would expire in 2021.

This policy is likely to last until the contract expires. Even though the Rokan Block has become one of the mainstays of the government to pursue the national oil production target.

Deputy Head of SKK Migas Fatar Yani Abdurrahman had said that if Pertamina could drill at least 70 wells in the Rokan Block this year, the country could get an additional oil production of around 20 thousand BPD. During its heyday in 1973, Rokan Block's oil production reached almost 1 million BPD.

  

     However, oil and gas block production continues to decline over time. In 2011, the Rokan Block still produced around 356.98 thousand BPD oil or contributed 39.56% of the total national oil production at that time 902.35 BPD. But referring to SKK Migas data, this year, oil production from the Rokan Block is targeted at only 160 thousand BPD.

Investor Daily, Page-9, Wednesday, March 11, 2020

Pertamina EP Will Drill 2 Wells in Papua

To support the 2020 performance target, PT Pertamina EP plans to start drilling two exploration wells in Sorong Regency, Papua, in the third quarter of 2020.

Nanang Abdul Manaf

Pertamina EP President Director Nanang Abdul Manaf said that at present his office was still in the process of acquiring land from the two wells. As for the location of Kembo-A, the company is currently taking care of a lease-to-use forest area (IPPKH) permit, because it has entered the forest area. 

    Meanwhile, for the location of Buah Merah-A until now it is still in the process of arranging a discussion with PT. HIP as the holder of the business use rights (HGU).

"The target is in the third quarter of 2020, we hope that the coronavirus problem will be finished in the second semester," he said.

In addition to the two wells, Pertamina EP will accelerate drilling of development wells to support the 2020 oil production target of 85,000 barrels per day (BPD) and natural gas 932 million standard cubic feet per day (MMscfd).

Nanang explained the plan was a company's strategy to realize production targets faster. Some drilling activities that have been carried out towards the end of last year, namely in Rantau Field, Sangasanga Field, Bunyu Field; and Subang Field.

"We also have waterflood inject wells in Jirak Village and Kusuma Arum (KUM) -Q01 exploration wells, both in South Sumatra," he explained.

Based on Pertamina EP's performance records, the oil production of a subsidiary of PT Pertamina (Persero) throughout 2017-2019 showed an upward trend in line with the increased activity in the well development of the company's development.

In 2017, oil production reached 77,154 barrels per day (bopd), rising to 79,445 bopd in 2018, and last year it increased to 82,213 bopd. Meanwhile, gas production was recorded at 1,018 boepd in 2017, an increase compared to 2016 which recorded 989 MMscfd, then 1,017 MMscfd in 2018, and 959 MMscfd in 2019 because buyers were unable to buy gas produced by the company.

Bisnis Indonesia, Page-23, Tuesday, March 10, 2020

Pertamina Focuses on Increasing Oil Drilling

PT Pertamina (Persero) will focus on drilling activities in a number of oil wells to reduce the decline in oil and gas production. Pertamina is optimistic that it can contribute more than 70% to the national production target of 1 million barrels per day (BPD) in 2025.

"Towards Indonesia 1 million barrels, Pertamina gets around 753 thousand barrels or more than 70% of the national target will come from Pertamina," Pertamina President Director Nicke Widyawati said at a gathering with the Media Leaders in Jakarta.

Nicke Widyawati

According to Nicke, drilling was not only carried out on Pertamina's existing field but also on the transition block.

"There are four strategies carried out. If nothing, production decreases. We will increase it by drilling from around 300 to 411, and that will continue to increase. Pertamina's investment is 60% for this, "said Nicke Widyawati.

the Mahakam Block

Nicke explained, in the Mahakam Block, which is a transition block from the old contractor, in the last year before the contract period ended, only 6 wells were drilled, which should have been around 60 wells.

"When it was handed over to Pertamina, it had already been 57% declining rate to be able to hold the declining rate so that our products could increase slightly. We had to drill 122 wells per year. Imagine from previously only 6 wells, "said Nicke Widyawati.

Nicke Widyawati

Nicke revealed the following strategy to increase production was by conducting a seismic survey from off the coast of Bangka in western Indonesia to Papua in eastern Indonesia with a 30 thousand kilometer (km) track. This survey aims to find new reserves because there are 13-17 basins that have oil and gas potential. He said in the next 6 months the results could already be seen.

Another strategy according to Nicke is to increase oil production with the enhanced oil recovery / EOR method. EOR method with water, steam flood, chemical, and surfactant.

Nicke said that the 14 Pertamina EP and PHE working areas had implemented this method. Later the Rokan Block in Riau has the potential to conduct an EOR. It's just that Pertamina can enter the Rokan Block in August next year after the Chevron contract expires.

"Block Rokan is one of the potential ones," said Nicke.

Nicke revealed that activities in the upstream sector were able to increase the production of 1 million BPD as targeted by the government. But he said Pertamina accelerated the increase in national oil production to 1 million BPD.

"Pertamina gets about 70% of the portion of 1 million barrels," She said.

Rokan Block Production

Regarding the Rokan Block, Nicke admitted that he was worried that production levels would decline during the transition period.

"We have made efforts to make the transition period since last year, namely by offering Joint Drilling where drilling activities are carried out together, but with Pertamina funding. But that is not acceptable because as a concession holder it does not want anyone to enter. Legally the concession can be switched to Pertamina in August 2021, "explained Nicke.

In fact, according to Nicke, by regulation, there is a Minister of Energy and Mineral Resources Regulation No. 24 of 2018 which was previously Ministerial Regulation of 26 of 2017 which states that operators, contractors are required to invest in their working areas, and maintain production levels until the end of the contract period.

"So there is actually a contractor's obligation to invest. There is no reason to worry that this will not be replaced because the Ministerial Regulation states that all costs incurred will be replaced because of cost recovery, "said Nicke.

Blogger Agus Purnomo in SKK Migas

The Rokan Block is one of Pertamina's mainstays for increasing production. But in fact, oil production in this block is known to have dropped to 20,000 barrels per day (BPD). The Special Task Force for Upstream Oil and Gas Activities (SKK Migas) has monitored the operational transition process in the Rokan Block. However, SKK Migas stated that the transition process of the Rokan Block was very difficult and had caused a decline in oil production in this block.

PT Chevron Pacific Indonesia (CPI)

According to the Head of SKK Migas Dwi Soetjipto, the lack of drilling investment in the Rokan Block is the main cause of the decline in oil production. The contract period of the PT Chevron Pacific Indonesia (CPI) oil and gas Cooperation Contract (KKKS) in the Rokan Block will end in April 2021.

The Ministry of Energy and Mineral Resources (ESDM) has decided to hand over the management of the Rokan Block after the Chevron contract expires in 2021 to PT Pertamina's State-Owned Oil and Gas Holding Company, and to end the company's partnership with the Indonesian Government which has lasted for more than 90 years.

Meanwhile, Constitutional Economist Defiyan Cori believes, before ending all the provisions contained in the laws and other regulations that apply in Indonesia, especially related to investment drilling must still be carried out by KKKS, namely Chevron.

Chevron

The handover of the management of the Rokan Block to PT Pertamina has also gone through a transparent and professional bidding competition process and Pertamina has issued a signature bonus to the government in the amount of US $ 780 million or Rp10.92 trillion (dollar exchange rate of Rp. 14,000).

Defiyan said that the lack of drilling investment in the Rokan Block by Chevron caused a decrease in oil production of up to 20,000 BPD which meant a reduction in oil supply for domestic needs and would harm Pertamina's position because of the growing oil and gas deficit that President Joko Widodo had complained about if the supply shortages were met through imports.

"With the K3S contract period not yet over, investment in oil drilling until 2021 in the Rokan block must be undertaken by Chevron so that the absence of investment in 2020 does not result in a greater reduction in lifting production to more than 20,000 barrels per day. Chevron can be declared as having committed a default that is detrimental to Pertamina's finances and further disrupts the energy supply for the needs of the Indonesian people, "he stressed.

Therefore, the Rokan Block transition process must be completed by the Ministry of Energy and Mineral Resources and SKK Migas well through the facilitation of both parties (Chevron and Pertamina). Because, if the decline process gets bigger, it will become a problem for the fulfillment of production of Indonesia's oil consumption, in the future.

In fact, in this year's SKK Migas plan, oil production can only reach 705,000 BPD, while in the 2020 APBN, oil production is set at 755,000 BPD.

"It is very irrelevant and makes sense that Pertamina is the party blamed for the decline in Rokan Block production, while the KKKS portion is still at Chevron," he said.

The same thing was stated by an energy observer who is also Director of the Center for Public Policy Studies (Puskepi) Sofyano Zakaria. According to him, the government, in this case, the Ministry of Energy and Mineral Resources and SKK Migas must act decisively to Chevron as the operator of the Rokan Oil and Gas Block.

the Rokan Oil and Gas Block Chevron

"This decline should have been a concern of the government for a long time not just now. The government, in this case, the Ministry of Energy and Mineral Resources and SKK Migas, should understand this problem and must firmly behave towards Chevron which is still responsible for the Rokan block until 2021 "he said.

According to him, according to the regulation namely ESDM Minister Regulation Number 24 of 2018 which is a change from ESDM Ministerial Regulation Number 26 of 2017, it is stated that the contractor is obliged to invest in its working area and maintain the fairness of its production level until the end of the work contract period.

"In addition, it was stated that all investment costs will be replaced by the government (cost recovery). So, actually, there is no reason for Chevron not to invest in drilling because their work contracts are still ongoing until August 8, 2021, "continued Sofyano who is also the Chairperson of the Indonesian Energy Observer Association.

Noted, the production of the Rokan Block has dropped dramatically. In 2012, Rokan Block production was still 338 thousand BPD, and further in 2019, there were only 190 thousand BPD remaining. This is allegedly due to the Well drilling investment by the contractor, Chevron has declined dramatically. If in 2012 drilling was carried out in 615 wells but in 2015 it fell and only drilled 200 wells.

Whereas in 2016 there were 110 wells, and in 2019 there was no drilling for new wells at all. If this year does not invest in drilling wells, the production of the Rokan Block is expected to drop to 160 thousand BPD, and production in 2021, when handed over to Pertamina, is expected to decrease again to 140 thousand BPD.

Upgrading and Building Refineries

Meanwhile, in the downstream sector, Pertamina carried out refinery upgrading and upgrading projects and built new refineries. Refinery upgrading is carried out at the Balongan refinery in West Java, Balikpapan in East Kalimantan, Dumai Refinery in Riau, and Plaju in Palembang, South Sumatra.

While two new refinery projects in Bontang, East Kalimantan and Tuban, East Java refineries with a capacity of 300 thousand BPD each. All of the company's refinery projects are targeted to be completed no later than 2027.

Pertamina Megaprojects Processing and Petrochemical Director Ignatius Tallulembang said, upgrading the new refineries and refineries made the total capacity be 2 million BPD or double the current capacity. The refinery will eventually be able to produce petrochemicals of 12 million tons/year.

"We are the top players in the region. "Our refinery capacity is the largest in the region," he said.

Ignatius revealed, the modernization of refineries made processing capabilities more flexible, meaning that they were able to absorb various types of crude oil. He asserted that in 2025 Pertamina will be able to meet all the needs of fuel oil (BBM) in the country, including producing fuel with the best quality which refers to the Euro 5 standard.

"Fuel production is now around 650 thousand-700 thousand BPD. While consumption of 1.3 million BPD. So we import about 500 thousand-600 thousand BPD. There is no other choice we have to build refineries, "he said.

Meanwhile, based on data from the Central Statistics Agency (BPS), the oil and gas balance deficit in 2019 is US $ 9.34 billion. This deficit is better than in 2018 which reached the US $ 12.69 billion.

Biodiesel Program

In the downstream sector, Pertamina also supports the government's mandatory program related to the mixing of fuel oil (BBM) with FAME (Fatty Acid Methyl Ester) or vegetable oil from palm oil. This program is able to reduce oil imports. This mixing is called biodiesel because it mixes vegetable oil with diesel fuel.

At present 30% Biodiesel (B30) is already underway, which is Solar mixed with 30% FAME. Since 2017 has been mixing with 20% Fame (B20). Nicke Widyawati said the mixing or bioenergy program was dependent on the supply of raw materials for crude palm oil / CPO. The availability of CPO is currently able to support mixing of up to 50% or B50.

"The bioenergy program must look at the current CPO supply count of only B50. It needs additional plantation area (to get to B100), "he said.

He revealed, his party supports efforts to reduce imports of fuel with the biodiesel program 30% (B30) to B-100. Next year the Cilacap Refinery with a capacity of 6,000 barrels per day (BPD) will be able to produce B-100, also known as green diesel products.

"This proves that the Indonesian refinery is capable of B-100 and is the first in the world," he said.

Based on Pertamina's data, in the last five years (2015-2019), the compound annual growth rate (CAGR) of crude oil imports dropped by 9%, while product imports (gasoline, gas oil, aviation fuel) fell 4%. As for LPG imports, increased by 8% to meet the increase in national demand.

Nicke further proposed that the government impose an allocation obligation for the domestic market or Domestic Market Obligation (DMO) for palm oil (CPO) and price limits, such as the DMO imposed by the government on coal for steam power plants. With the DMO scheme, there is a long-term supply guarantee for volume and price.

"The price of output is still regulated using the rupiah and is locked. If it is not regulated (DMO) then there will be subsidies, "he said.

Investor Daily, Page-9, Monday, March 9, 2020

SKK Migas Appreciates Pertamina EP Production Increase

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) appreciates the operation and production performance of PT Pertamina EP as a Cooperation Contract Contractor (KKKS). In the last three years, Pertamina EP (PEP) has succeeded in increasing production at a time when global oil prices are likely to fall.

SKK Migas

"That's right for PEP in 2017, 2018,2019 we challenge and fully support them, they dare to raise production targets from what was planned. And the results are indeed production inclined from the previous year, "said SKK Migas Deputy for Operations Julius Wiratno in Jakarta.

Based on data, Pertamina EP oil production throughout 2017-2019 or under the leadership of President Director Nanang Abdul Manaf continued to increase. In 2017 oil production reached 77,154 barrels per day (BOPD), rising again to 79,445 BOPD in 2018, and last year to 82,213 BOPD. 

   Whereas gas production was recorded at 1,018 BOPD in 2017, an increase compared to 2016 which recorded 989 million standard cubic feet per day (MMSCFD), then 1,017 MMSCFD in 2019, and 959 MMSCFD in 2019 because buyers did not buy gas produced by Pertamina EP.

Julius Wiratno

Julius encouraged PEP to try to reduce the natural decline rate that was natural by identifying additional resources during development and drilling on time and paying attention to work safety. SKK Migas also plays a role in approving work plans and budgets (WP and B).

"When I coordinated the WP and B discussion to carry out the main tasks and functions as the head of the work program division, I was directly involved in the technical and economic discussions of each work program and encouraged more aggressively. With PEP KKKS we help and encourage identification of development wells candidates to be drilled and increase production directly, "he said.

Julius encouraged PEP and other KKKS to be more aggressive and facilitate facilitation in approving budgets and accelerating the implementation of work programs, especially development wells. In 2017, total PEP development wells reached 58 wells, increasing again in 2018 to 92 wells and in 2019 to 106 wells. 

     While work over wells was recorded in 194 in 2017, 175 in 2018, and 215 in 2019. He assessed the constraints of PEP operations because the scattered assets and working areas from West to East of Indonesia became very complex. Not to mention the added production facilities that are old so that they need maintenance efforts that require costs as well.

"Therefore, PEP management must be more daring to implement advanced technology to increase production and conduct debottlenecking businesses and to conduct good preventive and predictive maintenance," he said.

According to Julius, in the future PEP is more willing to take risks with the implementation of technology that is already available in the market, dare to be more persistent for innovation, and operational improvisation to be more efficient. Of course, you also have to be brave enough to take risks to make massive explorations. For some old fields that still exist, it might be possible to collaborate with technology provider contractors.

"Hopefully PEP is more advanced and victorious because I see a high commitment from the PEP leadership team," he said.

Djoko Siswanto

Secretary-General of the National Energy Council (DEN) Djoko Siswanto, assesses that Pertamina must continue to work to increase oil production in its own way. It would be nice if all the suggestions and input from all stakeholders to increase oil production were also considered to be implemented.

"In the last three years, PEP production has increased from year to year. In terms of cost, I see that there is actually something that can be saved so that profits can be greater, "he said.

Investor Daily, Page-9, Monday, March 9, 2020