Thursday, October 27, 2016
Amendment to Mahakam Block Contract Approved
Pertamina Oil Production Increases 15.9%
PT Pertamina (Persero) recorded an increase in oil production of 16.9% in the third quarter of 2016 to 322,000 barrels per day (BPD) from the same period last year of 276,000 BPD. This achievement exceeds the target set in the company's budget plan this year of 308,000 BPD. Next year Pertamina targets oil production to reach 438,000 BPD.
The increase in Pertamina's oil production is dominated by domestic production by 70-80%, the rest is oil and gas production abroad," said Pertamina's Vice President of Corporate Communication Wianda Pusponegoro.
Wianda Pusponegoro |
According to her, in addition to oil production, in the same period, Pertamina also succeeded in increasing gas production to 2 million standard cubics per day, from the same period last year of 1.73 million standard cubics per day. Regarding the development of the Balikpapan refinery, Pertamina will produce Euro 4 quality fuel oil with an estimated investment of USD 4.6 billion.
The first phase in June 2019 will produce Euro 2 quality fuel with an investment of USD 2.6 billion with a capacity of 135,000 kiloliters (KL). In addition to producing fuel, the Balikpapan refinery will also produce LPG, avtur, and diesel.
Previously, the House of Representatives Commission VII asked Pertamina to add 5.5 kg of non-subsidized LPG product Bright Gas. This is to anticipate the implementation of closed distribution for 3 kg packaged LPG which is expected to trigger consumer migration to other LPG products.
Member of Commission VII People's Representative Council Inas Nasrullah Zubir said the potential increase in 5.5 kg LPG users came from 38.97 million households who were deemed not entitled to receive LPG subsidies through closed distribution.
Currently, there are 54.9 million households receiving subsidized LPG prime tubes. However, based on provisional data from the National Team for the Acceleration of Poverty Reduction (TNP2K), only 15.96 million households received the 3 kg LPG subsidy through a closed distribution mechanism.
Koran Sindo, Page-19, Wednesday, Oct 26, 2016
Pertamina's Investment in Mahakam Approved
The Ministry of Energy and Mineral Resources finally approved the amendment to the Mahakam Block contract. With this amendment, PT Pertamina can enter the Mahakam Block before the expiration of the old operator contract. Currently, the Mahakam Block is managed by PT Total E&P Indonesie and will expire next year.
PT Total E&P Indonesie |
The Minister of Energy and Mineral Resources, Ignasius Jonan, said that he approved the amendment to the production sharing contract for the Mahakam work area. The amendment to the cooperation contract was signed by SKK Migas and PT Pertamina Hulu Mahakam, as new investors for the Mahakam Block, Tuesday (25/10) at the Ministry of Energy and Mineral Resources office.
Blogger Agus Purnomo in SKK Migas |
Jonan said that currently, the Mahakam Block gas production reaches 1,747 mmscfd and oil-condensate 69,186 bpd. With this amendment, it is hoped that the Mahakam Block production in 2018 can be maintained. Understandably, with this contract amendment, Pertamina can start investing in the Mahakam block starting in 2017.
All costs incurred by Pertamina in the transfer of management will be included in cost recovery in 2018. Deputy Minister of Energy and Mineral Resources Arcandra Tahar said, with the approval of the Mahakam Block contract amendment, Pertamina could participate in the discussion of the work program and project budgeting or work program and budget (WP&B) in 2017.
The discussion will be held on 24-25 November 2016. The WP&B will agree on the activities that will be proposed by Total E&P Indonesie, as the operator and Pertamina as the investor. Arcandra said that so far PT Total E&P Indonesie plans to invest in drilling in six wells and Pertamina in 19 wells. Pertamina Director Dwi Soetjipto said that to drill 19 wells, Pertamina would invest US$ 180 million.
Because this is indeed a block where there is a decline in production, if nothing is done, the decline will be very drastic. We invest early so that the decline is not too drastic. The supervision is from SKK Migas," said Dwi.
President Director of Total E&P Indonesie Hardy Pramono said that with this drilling activity, his party would maintain production as well as possible. Hardy said the gas production target in 2017 was 1.4 to 1.45 BCF and condensate oil was around 50,000 BPD.
Kontan, Halaman : 15, Rabu, 26 Okt 2016
Price Has Been Cut
State-owned enterprises in the gas transmission and distribution business have tried to reduce gas prices, including gas for the industry. The decline in gas prices is highly dependent on the location and condition of drilling wells as well as gas transmission and distribution lines.
According to the Deputy for Energy, Regional Logistics, and Tourism at the Ministry of SOEs, Edwin Hidayat Abdullah, downstream gas prices have been cut a lot. He gave an example, the price of gas in North Sumatra has fallen from an average of 12 US dollars per million British thermal units (MMBTU) to below 10 US dollars per MMBTU.
State-owned companies engaged in the supply chain, namely gas transmission, and distribution, have cut their profit margins. In Lampung, PGN also lowered the selling price from 9.8 US dollars to 8 US dollars per MMBTU. The price of gas said Edwin, really depends on the location of the gas source or gas well and the length of the transmission and distribution pipeline. The upstream price component also needs to be looked at.
There are still several components that determine gas prices, such as taxes and toll fees set by BPH Migas. Vice President Corporate Communications PT. Pertamina Wianda Pusponegoro said that there are several gas price structures that reach consumers. In the upstream sector, the price of gas, including the price of liquefied natural gas, is set by the government with reference to international prices.
The cost of regasification is influenced by the amount of investment, operating and maintenance costs, and profit margins. In the downstream sector, transportation costs via transmission pipelines are also influenced by the 3 percent BPH Migas contribution, taxes, investment costs, and operational and maintenance costs. Gas distribution through the pipelines to end-users is also determined by profit margins, taxes, and operating and maintenance costs. To reduce gas prices, regulations are needed to regulate profit margins.
Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, I Gusti Nyoman Wiratmaja, said that efforts to streamline supply chains require gas traders or traders to build infrastructure. They are given the opportunity until 2018 which is called the transition period.
In one distribution network, the gas pipeline network may consist of several layers of traders. Because every trader makes a profit, the price of gas to the final consumer is high. The government is trying to regulate it by revising the Regulation of the Minister of Energy and Mineral Resources Number 6 of 2016 concerning Provisions and Procedures for Allocation and Utilization, as well as Natural Gas Prices.
PT PGN Batam Area Sales Head Amin Hidayat said the method of delivery and the number of parties involved were important factors in determining gas prices. Pipeline delivery from source to the user is the cheapest method to date. According to Amin, Batam is a lucky area.
The city can get gas supplies through pipes from the source to the end-user. Batam's gas pipeline network has reached all strategic points. Deputy Chairperson of the Upstream and Petrochemical Industry Committee at the Indonesian Chamber of Commerce and Industry (Kadin) Achmad Widjaja argued gas user industries as buyers did not question how many traders were involved in the gas supply chain. For industry, the most important thing was that gas prices were still economically acceptable. industry.
The government, in this case, the Minister of Finance, should decide whether it still wants state revenues in the upstream oil and gas sector or not? If you want to reduce it so that gas prices can go down, you have to make sure how much the reduction will be. That way, the decision to reduce prices will not be protracted.
Chairman of the Association of North Sumatran Gas User Companies, Johan Brien, assessed that the gas trading chain is too long, causing the gas price to be very high to consumers. From the start, the policy of developing gas infrastructure in North Sumatra was criticized because it was deemed not pro-industrial. There are at least five companies that manage gas, starting from the Tangguh Block in West Papua, to Medan in North Sumatra.
Kompas, Page-20, Wednesday, Oct 26, 2016
Produksi Minyak Pertamina Meningkat
Produksi minyak PT Pertamina (Persero) pada triwulan III-2016 mencapai 322.840 barrel per hari. Jumlah itu meningkat 16,6 persen dibandingkan dengan produksi minyak pada triwulan III-2015 yang sebesar 276.770 barrel per hari. Produksi minyak itu melampaui target produksi minyak per hari pada 2016, yaitu 308.000 barrel per hari. Menurut Vice President Corporate Communication Pertamina Wianda Pusponegoro, di Jakarta, Selasa (25/10), peningkatan produksi itu antara lain karena optimalisasi produksi sumur-sumur minyak yang dikelola Pertamina. Sebagian besar produksi minyak berasal dari produksi di dalam negeri dan sebagian lagi berasal dari produksi sumur Pertamina di luar negeri.
Kompas, Hal : 18, Rabu, 26 Okt 2016
Oil and Gas Production is Hard to Maintain
Kompas, Page-17, Wednesday, Oct 27, 2016
Pertamina Invests in Mahakam
The process of transferring the management of the Mahakam Block oil and gas field from Total E&P Indonesie to PT Pertamina has been completed. The Minister of Energy and Mineral Resources, Ignasius Jonan, gave his approval for the amendment to the Product Sharing Contract (PSC) for the Mahakam block in East Kalimantan. Starting next year, Pertamina will be able to enter for investment.
The PSC amendment for the 2018-2038 period was signed by Pertamina Hulu Mahakam, a subsidiary of Pertamina, and SKK Migas. This change has become the entry point for Pertamina to carry out the transition process since 2017.
"The process of managing the Mahakam Block has been completed. The agreement has been signed and can be implemented immediately.
Jonan explained that currently, the production of oil and condensate from the Mahakam field has reached 69 thousand BPD. Meanwhile, gas production reached 1,747 mmscfd. He stated that Pertamina would immediately invest in it so that when it became an operator in January 2018, production would not decline.
Deputy Minister Arcandra added that before the signing was done, the two companies had repeatedly held workshops. Starting from the matter of technology transfer, licensing issues, to the Mahakam Block workers. On the 24th and 25th of November, he said, the Mahakam work program & budget (WP&B) has been finalized.
He said Total has been carrying out activities in the black goldfield since 1966 or for 50 years at the Iranian refinery. Pertamina, who proved its capacity to manage the Mahakam Block, Head of SKK Migas Amien Sunaryadi explained, the amendment to the Mahakam Block PSC was also supported by the revision of the Minister of Energy and Mineral Resources Regulation number 15 of 2020 concerning 15 oil and gas working areas whose contract terms would expire. This change became the basis and legal protection that Pertamina could incur operating costs in 2017.
This expenditure will be recognized as cost recovery in 2018. At that time the PSC (Pertamina) came into effect. Because it is still an investment, the 19 wells drilled by Pertamina are not for production. However, these wells were closed and opened in 2018 to maintain performance. Meanwhile, Total's six wells are still producing as usual. Pertamina president director Dwi Soetjipto explained that the investment for the 19 wells was prepared at USD 180 million or around Rp 2.3 trillion.
When asked about what guarantees were given so that there would be no decline in production, Dwi stated that there was actually a natural decline. His team already knew that and started preparing. If nothing is done, production will decrease.
In accordance with the projection, if you can enter early, the decline will not be too significant. After this, Pertamina Hulu Mahakam and Total will finalize the transfer of operatorship agreement (TOA) and bridging agreement. Both are expected to be completed by the end of November.
President Director of Total Hardy Pramono said next year's production might drop. Gas, for example, becomes 1.45 mmscfd. For oil, it also fell to 50 thousand BPD. Regarding the offer for Total to re-enter Mahakam with a share of 30 percent, there has been no decision.
The reason is that at this time the most important thing is the process of transfer of management so that production does not decrease. He stated that there would be further discussion before Total took up the offer to cooperate. Especially the discussion about terms and conditions.
Jawa Pos, Page-6, Wednesday, Oct 26, 2016
Transfer to Manage Mahakam Block, Pertamina Prepares IDR 2.3 T
PT Pertamina has prepared an investment fund of USD 180 million or equivalent to Rp. 2.33 trillion to drill 19 wells as part of the transition period for the takeover of the Mahakam Block in 2017.
Investments were made to maintain the block's production level after the Mahakam Block Production Sharing Contract amendment was made. On Tuesday (Oct 25), the Minister of Energy and Mineral Resources, Ignasius Jonan, gave his approval for the Amendment to the Production Sharing Contract for the Mahakam block.
This step was taken to maintain the continuity of oil and gas production during the transfer of management of the Mahakam Working Area. This profit-sharing contract amendment is part of the process of transferring the management of the Mahakam Block from Total E&P Indonesie to PT Pertamina (Persero).
As is known, Total's contract in Mahakam expires on December 31, 2017. Starting January 1, 2018, Pertamina becomes the new operator of the block which produces 1,740 MMSCFD of gas and 69,186 bpd of oil. Pertamina President Director Dwi Soetjipto said that the Mahakam Block amendment for the 2018-2038 period had to be carried out.
This step is also a way for Pertamina to make a good transition from 2017. This profit-sharing contract amendment, said Dwi, allows Pertamina to start the transition step in managing the Mahakam Block earlier. Namely as of January 1, 2017, with the aim of maintaining the production level of this largest gas-producing working area.
Next, we will have detailed talks with Total E&P Indonesie as the current operator to ensure the transition goes well. Dwi explained that Pertamina Hulu Mahakam had finalized the preparation of the 2017 Mahakam Block Work Program and Budget (WP&B).
Based on the WP&B, assisted by Total E&P Indonesie as the executor, Pertamina Hulu Mahakam has prepared drilling activities in 2017 with a target of 19 wells with an investment value of around USD180 million. So it is expected that natural gas production from the Mahakam Block can be maintained at around 1.2 BSCFD and condensate around 20,000 BCPD in 2018-2019.
Blogger Agus Purnomo in SKK Migas |
SKK Migas is preparing technical instructions for the implementation of Pertamina Hulu Mahakam WP&B with the principle of activities carried out by Total E&P Indonesie on a no-cost no-profit basis. With all costs and activities risks borne by Pertamina Hulu Mahakam.
The drilling well is targeted to start production on January 1, 2018. Pertamina Hulu Mahakam together with Total E&P Indonesie and Inpex Corporation is finalizing a management transfer agreement which includes a Transfer of Operatorship Agreement (TOA) and a Bridging Agreement (BA). The TOA which was signed by the parties on July 29, 2016, will be aligned with the amendments to the Mahakam Block PSC.
Meanwhile, a Bridging Agreement is required related to the assistance for the implementation of Pertamina Hulu-Mahakam activities by Total Indonesie in the 2017 period. We are targeting the completion of the Bridging Agreement and amendment of the Transfer of Operatorship Agreement by the end of November 2016.
Deputy Minister of Energy and Mineral Resources Arcandra Tahar said, in addition to the 19 wells drilled by Pertamina Hulu Mahakam (PHM/a subsidiary of Pertamina that will manage Mahakam) in 2017, Total also drilled 6 wells. Hopefully, it can take place according to the previously agreed plan.
The Mahakam Production Sharing Contract was signed between SKK Migas and PT Pertamina Hulu Mahakam on 29 December 2015 and will become effective on 1 January 2018. With this amendment, Pertamina will invest in drilling wells in the block on 1 January 2017.
Duta Masyarakat, Page-1, Wednesday, Oct 26, 2016
Pertamina Ready to Drill in Mahakam
PT Pertamina is preparing an investment of US$ 180 million in the transition period for the Mahakam Block management after obtaining certainty through an amendment to the production sharing contract for the working area.
Blogger Agus Purnomo in SKK Migas |
The amendment was signed by Pertamina's subsidiary, PT Pertamina Hulu Mahakam (PHM), SKK Migas, Tuesday (Oct 25). Pertamina President Director Dwi Soetjipto said the amendment was a way for the company to enter the Mahakam Block starting next year. The previous Production Sharing Contract/PSC was signed on 29 December 2015 and will become effective on 1 January 2018.
This PSC amendment allows Pertamina to begin the transition to the Mahakam Block management earlier, namely as of January 1, 2018, with the aim of maintaining the production level of this largest gas-producing working area.
Total Oil |
Dwi revealed that PHM had compiled the 2017 Mahakam Block Work Program and Budget/WP&B and was being finalized. Based on the WP&B, assisted by Total E&P Indonesie (TEPI) as the executor, Pertamina Hulu Mahakam is preparing for drilling activities next year with a target of 19 wells with an investment value of around US$ 180 million.
Inpex Corporation |
PHM together with TEPI and Inpex Corporation is finalizing a management transfer agreement which includes a transfer of operatorship agreement (TOA) and a bridging agreement (BA). The TOA which was signed by the parties on 29 July 2016 will be aligned with the Mahakam Block PSC amendment, while the BA is required in relation to Total assistance in the implementation of PHM activities in the 2017 period.
The Minister of Energy and Mineral Resources, Ignasius Jonan, explained that the amendment must indeed be carried out to provide legal certainty in the transition period of Mahakam Block management.
This amendment can also maintain the continuity of oil and gas production as well as provide legal certainty in the implementation of activities during the transfer of operation of the Mahakam block working area from the existing contractor Total Indonesie to Pertamina.
Head of SKK Migas Amien Sunaryadi said the amendment would allow PHM to spend on operational costs. The expenditure will be recognized as part of the 2018 cost recovery.
President & General Manager of TEPI Hardy Pramono added that the transfer of management is the most important thing at this time. The goal is to prevent a drastic decline in oil and gas production. The point is how to keep decline to a minimum. Six wells were drilled for 2017 and 19 wells were drilled for Pertamina.
Bisnis Indonesia, Page-15, Wednesday, Oct 26, 2016
Pertamina's Production Reached Target
Pertamina's Vice President of Corporate Communication Wianda Pusponegoro explained, during the January-September 2016 period, the company's oil production of 322,840 BPD rose 16.6 percent compared to the same period last year of 276,770 BPD.
Wianda Pusponegoro |
Gas production in January-September 2016 was 2,000 MMscfd, an increase of 15.8% compared to the same period last year of 1,730 MMscfd. Wianda explained that the increase in production was mostly obtained from domestic oil and gas blocks managed by state-owned companies operating in the oil and gas sector. This increase reaches around 72% -80% by domestic oil and gas fields. The rest are from abroad.
The contribution of oil and gas production from domestic blocks reached 550,000 boepd, while blocks located abroad contributed 120,000 boepd. Wianda explained that the results of oil and gas production up to the third quarter of 2016 had exceeded this year's target.
Pertamina's oil and gas production realization until the third quarter of 2016 has exceeded the target of 1.36%. Oil production is currently 4.81% higher than the target by the end of this year of 308,000 BPD. The company's gas production until the third quarter of 2016 was 2.51% above this year's target of 1,951 MMscfd.
the Banyu Urip Field, Cepu Block |
According to her, the Banyu Urip Field, Cepu Block and West Madura Offshore (WMO) Block managed by Pertamina Hulu Energi are still supporting Pertamina's oil and gas production.
PHE-WMO |
Wianda emphasized that the company will ensure that oil and gas production will not decline even though oil prices are still low. Pertamina continues to spur oil and gas production through organic and inorganic growth or the acquisition of other oil and gas blocks. The company will also reduce production operating costs upstream by working on projects that are fast in production.
With these efforts, the oil and gas State-Owned Enterprise (BUMN) has set a very high oil and gas production target next year, namely 863,000 boepd. The target details 688,000 boepd from existing blocks and the remaining 175,000 boepd and acquisitions of new blocks and takeovers of blocks whose contracts have expired.
The oil and gas production target in 2017 consists of oil which is expected to increase by 36 percent to 438,000 BPD, with details of 335,000 BPD coming from existing blocks, and 103,000 BPD from new blocks. Next year's gas production is targeted to increase 13 percent to 2,278 MMscfd consisting of 1,858 MMscfd existing blocks and 450 MMscfd new blocks.
Wianda explained that the increase in the oil and gas production target next year will be supported by the company's plan to acquire several new oil and gas blocks abroad.
Bisnis Indonesia, Page-15, Wednesday, Oct 26, 2016