Upstream Oil and Gas Preparing to Go

Upstream oil and gas industry players are gearing up to spur operational performance when the new normal order is implemented. 

Dwi Soetjipto

    The Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said that with world oil prices that have passed the level of US $ 40 per barrel became a positive sentiment for investment in upstream oil and gas activities in the country.

"With the improving oil price, investment in upstream oil and gas will also improve," he said.

Dwi added, his party would review upstream oil and gas activities to be more optimal.

"Next, we will wait for how to optimize activities in Hulu Migas in the new-normal era," he said.

Meanwhile, SKK Migas Deputy for Operations Julius Wiratno said that with the implementation of the new normal period it is expected that upstream oil and gas operational activities would be more productive.

"Because the mobilization of people and goods is not disrupted," he said.

SKK Migas has sent a circular to the Cooperation Contract Contractor (KKKS) related to the preparation and implementation of new normal operations. He revealed the preparation and implementation of new normal operations while adhering to existing health protocols and applicable in the area of ​​oil and gas operations. 

     There are no specific directives, which are important according to the existing protocol. "We're trying if we can quarantine before crew change for one week instead of 2 weeks," he explained.

Sonitha Poernomo

Chevron Pacific lndonesia Corporate Communication Manager Sonitha Poernomo said that the company continues to monitor the current Covid-19 pandemic situation. She said it had used guidelines from international and domestic health authorities.

"Our main concern is employee health and safety and we take precautions to reduce the risk of exposure by ensuring safeguards are available and functioning properly," She said.

Similarly, PT Medco Energi International Tbk. ensuring the sustainability of the company's operations during the Covid-19 pandemic. 

Hilmi Panigoro

     President Director of Medco Energi Hilmi Panigoro said that the company is committed to safeguarding the safety of workers in the work area and maintaining business continuity by complying with the Covid-19 health and safety protocols regulated by the government.

He said that his party was facing a period full of challenges. The rapid decline in energy demand in the face of increasing oil production is a challenge for the industry.

"However, Medco Energi is optimistic that it will succeed in facing challenges caused by the Covid-19 pandemic," he said.

Previously, Medco targeted the company's oil and gas production this year to reach 110,000 barrels of oil equivalent per day. In another development, PT Pertamina Hulu Energi said it would recalculate the economic value of the project in line with the upward trend in oil price movements.

Director of Pertamina Hulu Energi (PHE) Meidawati said that all projects undertaken would recalculate their economic value. The calculation was carried out on several exploration and development drilling projects that can maintain and increase the company's oil and gas reserves and production.

Bisnis Indonesia, Page-4, Thursday, June 11, 2020.

Pertamina EP Cepu Optimistic that JTB Project Operates on Time

PT Pertamina EP Cepu (PEPC) is optimistic that the Jambaran-Tiung Biru unitization project can be completed on time and operational in mid-2021. Although the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) sees no indication of delays in the execution of this project.

Jamsaton Nababan

PEPC Managing Director Jamsaton said, his party understood SKK Migas' concerns regarding the potential pullback of the JTB Project. The reason is SKK Migas could have estimated the assumption of the worst scenario considering the impact of the Covid-19 pandemic on the work of national oil and gas projects.

PT Pertamina EP Cepu (PEPC)

He admitted, there were several obstacles in the work of the JTB Project which indeed had the potential to cause delays. But it is trying to innovate to minimize the potential for these delays.

the Jambaran-Tiung Biru unitization project

"Namely by adjusting construction schedules and materials on site but by maintaining the onstream target in July 2021," Jamsaton said.

Jamsaton explained the obstacle faced was the limited workforce of experts who were willing to work in the field due to fears of contracting the Covid-19 Virus. Then, there are limitations to the mobilization of workers due to the enactment of Large-Scale Social Restrictions (PSBB) as prevention of the spread of the virus. The quarantine period imposed by the Bojonegoro Regency Government also reduced the effective working days.

"These three things cause the workforce needs in the field are not optimal so they cannot do construction speed-ups," he said.

Not only that, the process of manufacturing goods in several countries stalled due to lockdowns imposed in those countries. In a country that does not run a lockdown, the manufacturing process is slow due to restrictions on working hours and transportation of materials including manufacturing in Indonesia.

Investor Daily, Page-9, Wednesday, June 10, 2020.

Refinery Projects will remain in demand

The government is still optimistic that the oil and gas refinery project will still be attractive to foreign investors, even though a number of partners who have previously joined chose to resign due to the fluctuating pressure on the black gold price.

Overseas Oil and Gas LLC

One of the partners who have resigned is Overseas Oil and Gas LLC based in Oman, from the Bontang Refinery project in East Kalimantan Province, so that the project is currently suspended. In addition, Saudi Aramco has also recently withdrawn from the Cilacap Refinery project in Central Java Province.

Saudi Aramco

Deputy for Maritime Sovereignty and Energy Coordinating Ministry of Maritime and Investment Coordinating Ministry Yudhi Sadewa said he would investigate the withdrawal of Pertamina's partners in the Bontang Refinery project.

He acknowledged that low oil prices would make several countries withhold investment in advance. However, that does not mean that no one is interested in investing in a national refinery project. As an illustration, over the past year, the price of Indonesian crude oil (ICP) reached its lowest point in April 2020 at the US $ 20.66 per barrel and in May 2020 at the level of US $ 25.67 per barrel. Last year, the average ICP was the US $ 62.37 per barrel.

Purbaya revealed that Chinese investors were also interested in the refinery project in Batam, Riau Islands (Riau Islands).

"China will invest the US $ 5 billion to the US $ 6 billion in Batam. The Riau Islands ask for our support to support the investment, "he said.

However, he was unable to provide details on the capacity of China's investment plans in Batam.

"They say they can also go to the international market, therefore the choice is in the Riau Islands near the international shipping lane," he explained.

Purbaya is still optimistic that refinery investment will continue if it is properly guarded. He added that Abu Dhabi was also interested in building refineries in Balongan, West Java Province, and Dumai, Riau Province.

"Refinery investment has very large prospects," Purbaya said.

Previously, PT Pertamina (Persero) 's Megaprocessing and Petrochemical Processing Director Ignatius Tallulembang said that all Refinery Development Master Plan (RDMP) and Grass Root Refinery (GRR / new refinery) projects were still in the status of National Strategic Projects (PSN).

He added until now the entire refinery project construction process is still in accordance with the target. The breakdown includes, among others, Balongan Refinery which works in three phases, in phase 1 it has now entered the procurement auction process and is targeted to be onstream in 2022.

While for phase 2 studies are being carried out to increase its capacity which will be completed in September or October 2020 which will be followed by engineering studies.

CPC Corporation, Taiwan

For phase 3, Ignatius said, it was just agreed to cooperate with CPC partners from Taiwan related to petrochemical processing which would later integrate with existing refineries. Phase 3 is targeted for completion in 2026. Furthermore, at the Cilacap Refinery in Central Java, Pertamina is looking for new partners after Saudi Aramco decided to withdraw from cooperation in developing the refinery.

Double Impact

Ignatius asserted, although it requires a large investment, the refinery development can have multiple impacts on the economy. With a total investment of around US $ 48 billion if the project is completed, the refinery, which currently has a capacity of 1 million barrels per day, will increase to 2 million barrels per day so that fuel oil needs can be fulfilled without the need for imports.

Fahmy Radhi

     Gadjah Mada University's School of Energy Economics Fahmy Radhi believes the refinery business has a sustainable market certainty even though it requires a large investment fund with a long-term return on investment with a small return.

"I predict in early 2021, foreign investors will flock to Indonesia to invest in oil refineries," he said.

Fahmy believes that Pertamina must have a commitment that oil refineries are needed right now, so it needs a meeting to benefit both parties in the negotiation process. In addition, the government must provide a number of fiscal incentives and facilities in the process of land acquisition needed for refinery development.

Bisnis Indonesia, Page-14, Wednesday, June 10, 2020.

The Pertamina Refinery Complete Project Targeting Solar Export Opportunities

PT Pertamina (Persero) states that there is an opportunity to export diesel fuel to the Asia Pacific market, including Australia and New Zealand, once all refinery projects are completed in 2026-2027. Therefore, it is still important to proceed with the refinery project.

Pertamina Megaprojects Processing and Petrochemical Director Ignatius Tallulembang said, after all, refinery projects had been completed, Indonesia would be able to meet all national fuel needs, aka no more imports. In fact, for diesel fuel, his side projects an excess of production that can be exported.

"Solar will exceed their needs. But if you look at supply-demand in the region, such as Australia and New Zealand, they are in deficit and this is our opportunity to export diesel after the refinery project is completed, "he said at an online press conference last weekend.

He explained, although the Asia Pacific region, in general, would have an excess supply of diesel up to 1.06 Million Barrels Per Day (BPD), not all countries are able to meet their own needs. Based on the data used by the company, there are five countries that are projected to have a shortage of diesel in 2030, namely Vietnam, the Philippines, Papua New Guinea, Australia, and New Zealand.

According to these data, Australia will have a solar deficit of up to 427 thousand BPD, followed by the Philippines 152,000 BPD, Vietnam 104 thousand BPD, New Zealand 40,000 BPD, and Papua New Guinea 23,000 BPD. On the other hand, in 2030 after the refinery upgrading and upgrading project construction has just been completed, Pertamina's diesel production is estimated to be around 600 thousand BPD with domestic needs below 500 thousand BPD.

"So, excess diesel is not a problem, because it can be exported to countries that need it," Tallulembang said.

The refinery project also needs to be continued to improve the competitiveness of refineries because the technology of refineries in Indonesia is out of date. National refineries have lower complexity compared to refineries in other more modern countries. As a result, the yield or conversion rate to refinery value products in Indonesia is only around 75% compared to modern refineries which have reached 95%.

"The economics of our refineries are lower. This is because the technology used by the old technology is unable to compete, "he said.

Though referring to the same data, in the Asia Pacific there are countries that also have a very large excess of solar production. Some of these countries are China with a volume reaching 639 thousand BPD, South Korea 491 thousand BPD, Singapore 220 thousand BPD, and Japan 110 thousand BPD.

After the refinery upgrading project, Pertamina targets the national refinery product yield to increase to 95%. Not only that, but the fuel produced will also have a quality equivalent to EURO V.

Stop importing petrochemicals

Not only targeting foreign markets, Tallulembang said, excess diesel can also be used to produce petrochemical products. Moreover, Indonesia is still very dependent on imports to meet the needs of domestic petrochemical products, namely polyethylene, propylene, and paraxylene and benzene.

This is because the company's refinery project is integrated with petrochemical facilities. Two new 300 thousand BPD refineries built by Pertamina in Tuban, East Java Province, and Bontang, East Kalimantan Province, will be equipped with petrochemical processing. In addition, the company is also building a crude oil processing complex into petrochemical products in Balongan, West Java Province with China Petroleum Corporation (CPC).

China Petroleum Corporation (CPC), Taiwan

"From the material balance of the refinery project, we can meet the needs of [petrokima] in the country and eliminate imports altogether," Tallulembang said.

From the company side, the petrochemical business is still very promising in the future. From the results of Pertamina's study and evaluation, the plan to build a refinery will provide added value or profitability for both the company and the country.

Referring to Pertamina's data, the petrochemical production capacity in 2018 is far from needed. Specifically, polyethylene production was recorded at 806-kilo tons per year (kilo tons per annum / KTPA) from the needs of 1,791 KTPA, then propylene production of 903 KTPA from the demand of 1,745 KTPA, and paraxylene and benzene 560 KTPA from the needs of 1,324 KTPA.

While in 2030, the production of polyethylene increased to 3,868 KTPA, propylene 4,378 KTPA, and paraxylene and benzene 1,918 KTPA. On the other hand, the needs of these three types of petrochemical are projected below production capacity, namely 3,459 KTPA for polyethylene, 3,240 KTPA for propylene, and 1,810 KTPA for paraxylene and benzene.

Investor Daily, Page-10, Tuesday, June 9, 2020.

Pertamina and Taiwan's CPC work on the Petrochemical Industry in Balongan

Pertamina and CPC Taiwan agreed to follow up the cooperation in the development of the Integrated Petrochemical Industrial Complex in Balongan, West Java Province, with an investment of US $ 8 billion.

CPC COrporation,Taiwan

This was marked by the signing of the head of agreement (HOA) by Pertamina Urama Director Nicke Widyawati and the President & CEO of CPC Corporation Taiwan who were symbolically represented by Mr. Ming-Huei Chen, CPC Corporation's Vice President, last week. 

     

Nicke Widyawati

      Previously, discussions on this project had been initiated by Pertamina and CPC Taiwan since the end of 2018. And was followed by the signing of a framework agreement and joint Feasibility Study since mid-2019.

Mr. Ming-Huei Chen

"This collaboration was formed because of a long and deep negotiation process. Therefore, we appreciate the efforts of Pertamina and CPC. Project this is the government's priority. We will fully support. We gave the tax holiday confirmation yesterday, "said BKPM Head Bahlil Lahadalia.

Nicke Widyawati

Pertamina President Director Nicke Widyawati asserted that as a national oil and gas company, Pertamina is committed to realizing a strong petrochemical industry in Indonesia. Therefore, it can meet domestic needs and help reduce imports of petrochemical products.

"This project is an important history to strengthen the petrochemical business portfolio so that within the next 10 years, Pertamina can become a major player in the petrochemical business in the Asia Pacific region, "Nicke said.

It is hoped that CPC's experience and expertise in the petrochemical field can help Pertamina to accelerate the development of an integrated petrochemical business with RDMP and GRR megaprojects.

"Going forward, Pertamina together with the government and Taiwan's CPC will continue to strengthen cooperation to complete the project targeted to operate in 2026," concluded Nicke.

Media Indonesia, Page-10, Monday, June 8, 2020.

Pertamina-Aramco Officially Split

Pertamina is more focused on the construction or development of existing refineries. PT Pertamina (Persero) officially parted ways with Saudi Aramco in developing the Cilacap Refinery Development Master Plan (RDMP) mega-project. This decision was taken after Aramco sent a letter of resignation from the project.

Saudi Aramco

Pertamina Megaprocessing and Petrochemicals Director Ignatius Tallulembang said Saudi Aramco had resigned from the project after an agreement to review the cooperation ended in April 2020.

Nicke Widyawati

Ignatius conveyed, Aramco through his leadership sent a Letter to Pertamina's Managing Director Nicke Widyawati who informed Pertamina to proceed with the project without the oil company from Saudi Arabia. This is because Aramco is still focused on other things.

"They asked Pertamina to continue, meaning Aramco could not join the Cilacap Refinery construction. So, for the Cilacap Refinery no longer plans to work with Aramco," Ignatius said in a virtual conference.

Ignatius explained, Pertamina also continued to develop the Cilacap Refinery development project as well as looking for new partners to develop the project.

"Pertamina is in the process of finding a new partner, the land has been dealt while looking for opportunities that exist," Ignatius said.

Pertamina-Aramco Split alias Ambyar

In addition, after the withdrawal of Saudi Aramco there were plans to accelerate building a bio refinery or green refinery in the Cilacap Refinery. Ignatius said, the possibility for a bio refinery could be built faster and could operate in 2022 for a small scale.

Through the Cilacap Refinery development project, the original refinery capacity of 348 thousand barrels will increase to 370 thousand barrels per day (BPD). In addition, there will also be an increase in gasoline (gasoline) production from 59 thousand BPD to 138 thousand BPD and diesel production from 82 thousand BPD to 137 thousand BPD. Officially parting with Aramco, Ignatius said, Pertamina is now looking for new partners while developing the Cilacap Refinery independently.

"Pertamina is currently in the process of finding a new partner while looking for opportunities that we can build first. Then, prepare a business scheme by learning from the case of the Saudi Aramco partnership or other further cooperation," he said.

Overseas Oil and Gas LLC (OOG)

Pertamina had also previously been left by a partner in building a refinery. The State-Owned Enterprises (BUMN) in the oil and gas sector were left by Overseas Oil and Gas LLC (OOG), an oil and gas company originating from the state of Oman in the construction of the Bontang Refinery. 

    Without OOG, Pertamina has been forced to delay the construction of the Bontang Refinery. Ignatius explained, Pertamina would focus more on the construction or development of existing refineries as well as work on projects that had already prepared physical activities.

The previous Bontang refinery was part of Pertamina's six megaprojects consisting of four existing refinery developments, namely RDMP and two new refineries, Tuban and Bontang Grass Root Refinery (GRR). Ignatius emphasized that, despite being expensive, the construction of Pertamina's refineries had a multiplier effect on employment and national economic development.

RDMP and GRR also provide opportunities to improve the quality of fuel products (BBM) that are more environmentally friendly in accordance with international regulations and standards so that in the future a healthier Indonesian ecosystem will be realized.

Of the six refinery projects that were previously expected to be completed by Pertamina in 2022, only two refinery projects will be completed. First, Balongan Refinery in Indramayu, West Java, the first and second phases. Second, the Bio-Refinery in the Cilacap refinery in Central Java. He explained, the two projects to date have shown enormous progress.

Nicke Widyawati

Pertamina's President Director Nicke Widyawati said the schedule for the Cilacap Refinery development project which is a national strategic program or PSN will be reviewed and reviewed by Pertamina. 

Erick Tohir

   Previously, SOE Minister Erick Tohir warned that Aramco's negotiations with Pertamina regarding the valuation of the Cilacap Refinery should not be detrimental to the state. He said, bargaining is a natural thing, but don't let the Aramco and Pertamina negotiations harm the country.

Republika, Page-4, Saturay, June 6, 2020

National Strategic Projects Account Accord Targeting

At the time of the outbreak of the Covid-19 pandemic in Indonesia, PT Rekayasa Industri (Rekind) successfully completed a number of national strategic projects in accordance with the specified work targets. 

PT Pertamina EP Cepu (PEPC)

    One of the national strategic projects currently able to achieve the specified target is the Gas Processing Facility (GPF) Project for the Gas Unitization Field - Jambaran Tiung Biru (JTB), Bojonegoro, East Java, owned by PT Pertamina EP Cepu (PEPC) - a subsidiary PT Pertamina (Persero).

PT Rekayasa Industri (Rekind)

Rekind who joined the JGC-IND consortium recently succeeded in achieving an important milestone in the project, namely the appointment of Selexol Heavy Equipment and Regenerator for the Gas Processing Facility (GPF) Gas Unitization Unit - Jambung Tiung Biru (JTB) with a total weight of 760 tons.

 Jambung Tiung Biru (JTB)

    The implementation of the GPF EPC project work continues even in the face of the Covid-19 pandemic situation so that the progress of the JTB project work in May 2020 has reached 64.20% with a completion target of July 2021.

"It is an honor for Rekind to play a big role in delivering the country's national strategic projects to achieve the specified targets. I am very grateful for this achievement, even though the project team had to struggle during the challenges of the Covid-19 outbreak, "said Rekind President Director Yanuar Budinorman.

Rekind's high commitment to implementing a number of projects mandated by the state was also reflected in the implementation of the Lombok CFSPP FTP-2 PLTU project (2x50MW) in Sambelia, East Lombok, West Nusa Tenggara Province.

Rafako S.A - Poland

The involvement of Rekind with Rafako S.A (a Boiler manufacturer from Poland) is believed to support the national electricity program of 35,000 MW and specifically to accelerate the increase in electrification ratios on the island of Lombok, West Nusa Tenggara (NTB).

At the end of 2019 Rekind also completed the Muara Laboh Geothermal Power Plant (PLTP) located in Solok Selatan Regency, West Sumatra, with 85 MW capacity owned by PT Supreme Energy Muara Laboh (SEML).

At present Rekind is also implementing the Rantau Dedap PLTP Project with a capacity of 98.4 MW (2 units), which until April 2020 the project progress has reached 81.6%. The project, owned by PT Supreme Energy Rantau Dedap (SERD), will later supply electricity to the electricity system in the South Sumatra region. 

    The achievements made by Rekind did not stop there. The subsidiary of PT Pupuk Indonesia (Persero) also has an achievement in the construction of other national strategic projects, such as the Balikpapan Refinery Development Master Plan (RDMP) project.

Hyundai Engineering Co., Ltd.

In carrying out the project owned by PT Pertamina (Persero), Rekind was incorporated through Joint Operation (JO) together with three EPC companies from home and abroad, namely PT Pembangunan Perumahan (PP), Hyundai Engineering Co., Ltd. (HEC) and SK Engineering & Construction Co., Ltd. (SKEC).

SK Engineering & Construction Co., Ltd. (SKEC)

 Investor Daily, Page-9, Saturday, June 6, 2020

11 Agreement on Changes in Gas Prices Signed

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated 11 letters of agreement (LoA) to adjust industrial gas prices and electricity to the US $ 6 per million British thermal units / MMBTU re-signed.

SKK Migas recorded total gas volume according to the LoA of 231.18 billion British thermal units per day / BBTUD. Thus, the total volume of gas sold at US $ 6 per MMBTU according to government policy has now reached 564.63 BBTUD or 47.53% of the total volume of 1,188 BBTUD in the Minister of Energy and Mineral Resources Decree No. 89K / 2020 concerning Procedures for User Determination and Natural Gas Prices Certain in the Field of Industry.

The LoA was signed by six national gas producers, namely PT Pertamina EP, Kangean Energy Indonesia Ltd., PT Pertamina Hulu Energi (PHE) Jambi Merang, PT PHE Ogan Komering, PT PHE North Sumatra Offshore (NSO), and PT PHE West Madura Offshore (WMO) and partners.

Blogger Agus Purnomo in PHE-WMO

While buyers who signed this agreement were PT Pertamina Gas (Pertagas), PT Sumber Petrindo Perksana, PT Petrokimia Gresik, PT Bayu Buana Gemilang, PT Inti Alasindo Dwiguna, and PT PGN Tbk, PT Pertagas Niaga. Not only LoA, nine oil and gas producers have also signed a Side Letter of Production Sharing Contract (PSC). 

   These nine companies are PT Pertamina EP, PT PHE NSO, PT PHE Ogan Komering, PT PHE Jambi Merang, PT PHE Offshore South East Sumatra (OSES), EMP Bentu Limited, Kangean Energy Indonesia Ltd., PT Pertamina Hulu Mahakam, and Minarak Brantas Gas Inc.

"This signing was carried out in order to provide legal certainty and investment related to the adjustment of gas prices after the issuance of a number of regulations from the Ministry of Energy and Mineral Resources," Head of SKK Migas Dwi Soetjipto.

The Side Letter of PSC explains the profit-sharing adjustment between SKK Migas and oil and gas producers by using a provisional entitlement to the application of natural gas prices determined by the Minister of Energy and Mineral Resources. This calculation is carried out through a mechanism to reduce the share of the country on a monthly basis to maintain the revenue share of oil and gas companies.

Whereas the LoA is a continuation of a previously signed agreement between the seller and buyer of natural gas. The essence of the agreement stipulated in the LoA includes volume, initial gas price, gas price adjustment, and implementation period.

"By signing this side letter of PSC and LoA, we hope that oil and gas producers can continue to increase their investment in Indonesia and maintain the national gas production target," Dwi said.

Chalid Said Salim

PT Pertamina EP President Director Chalid Said Salim appreciated SKK Migas for providing investment certainty in the upstream oil and gas sector through the signing of the Side Letter of PSC and LoA.

"We certainly appreciate this step because it will encourage increased investment in upstream oil and gas in the future. In the short term, Pertamina EP and SKK Migas will optimize the program this year so that it is efficient as the capital stepped up in the following year, "Chalid said.  

 Investor Daily, Page-10, Friday, June 5, 2020

SKK Migas Speeds Up Operation Schedule of the Upstream Oil and Gas Project

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) accelerates the operational schedule of the upstream oil and gas project which is estimated to be completed this year. 

   For example, the Meliwis project managed by Ophir Indonesia (Madura Offshore). The project, which will produce 20 mmscfd of gas production, is targeted to be completed in July this year.

Then the construction of the Bambu Besar project by PT Pertamina EP and reactivation of the PHE-12 Platform by PHE-WMO and the construction of the Sembakung gas compressor facility by Pertamina EP.

Blogger Agus Purnomo in PHE-WMO

The implementation of these projects was originally targeted to be completed in 2021, but this project is claimed to be able to be completed this year. The Bambu Besar project will produce 3 mmscfd of gas (non-asso) now in the EPC process and will be streamed in the third quarter of 2020.

While Reactivation Platform-12 is an activity to improve the platform which had tilted in 2017, to produce oil production of 3,000 barrels per day (BOPD). It is expected that the project can be realized by the end of 2020. Likewise, the Sembakung compressor project will be completed by the end of 2020, and produce 2 mmscfd of gas.

SKK Migas and KKIG continue to conduct intensive coordination to ensure that the upstream oil and gas project can run well according to the schedule, said the Head of SKK Migas, Dwi Soetjipto.

According to him, the acceleration of a number of projects is a form of SKK Migas 'commitment to upstream activities and the success of SKK Migas' transformation. But certainly, the completion of a number of oil and gas projects will have an impact on increasing national oil and gas production and lifting.

Kontan, Page-12, Thursday, June 4, 2020

PGN Group Signs LoA Phase Two

PT Perusahaan Gas Negara Tbk (PGN) signed the second phase of the Letter of Agreement (LoA) held by SKK Migas on Wednesday (3/6). This was done as a form of implementation of the Decree of the Minister of Energy and Mineral Resources number 89 of 2020 concerning Users and Prices of Natural Gas in the Industrial Field and the Decree of the Minister of Energy and Mineral Resources 91.K / 2020 concerning the Price of Natural Gas in Power Plants (Plant Gate). In this agenda also witnessed ESDM Minister Arifin Tasrif, SKK Migas Head, KKKS representative, and Buyer's representative.

The PGN Group includes Pertamina Gas (Pertagas) and Pertagas Niaga (PTGN) which are affiliates of the gas holding sub-sector as one of the buyers signing an LoA with PT Pertamina Hulu Energi (PHE) which acts as a seller on 4 contracts.

The contract includes LOA from the Ogan Komering Work Area in South Sumatra with the volume in accordance with Ministerial Decree number 89.K of 1.43 - 1.44 MMSCFD for utilization in the South Sumatra industry. The price of upstream adjustment from the initial price of US $ 8.27 / MMBTU to US $ 4.62 / MMBTU. 

    LoA from the Jambi Merang Region, with a volume in accordance with Minister of Energy and Mineral Resources Decree number 91.K / 2020 of 35 BBTUD for utilization in the electricity sector of western Java and Batam. The price of gas adjustments upstream is US $ 4.00-4.06 / MMBTU.

LoA from the North Sumatra Offshore Working Area for Industry and electricity in Aceh and North Sumatra. The volume distributed according to the Decree of the Minister of Energy and Mineral Resources number 89.K / 2020 is 8.5 BBTUD. The price of upstream adjustment from the initial price of USD 6.25 / MMBTU to USD 4-4.5 / MMBTU.

Blogger Agus Purnomo in PHE-WMO

Furthermore LoA from the West Madura Offshore Working Area (PHE-WMO) with volume according to Ministerial Decree number 89.K / 20 of 19 BBTUD for utilization in the industrial sector in East Java. During the period up to December 2021, the upstream gas adjustment price was USD 5.33 per MMBTU. Furthermore, until 31 December 2022, the upstream gas price adjustment was USD 4.5 per MMBTU.

In addition to the signing of the LoA with PT PHE, the PGN Group through PT Pertagas also carried out the signing of the LoA with PT Pertamina EP from the Pondok Tengah, Tambun and Pondok Makmur fields with a volume of 0.9 BBTUD with an upstream gas price of USD 4.5 / MMBTU. US $ 7.17 / MMBTU.

The price of natural gas is valid until the end of the time of the price adjustment of Natural Gas in the Decree of the Minister of Energy and Mineral Resources number 89K / 2020. The period for adjusting natural gas prices can be extended, if there is a further decision from the Minister of Energy and Mineral Resources.

"As a midstream businessman who distributes gas from upstream oil and gas to the gas user industry, the signing of the LOA agreement is a sign that we have bought at a lower gas price as stipulated in the Minister of Energy and Mineral Resources Regulation so that the price of gas in the industry is at the US $ 6 per MMBTU.

We believe that selling prices to industrial gas users lower than before will have a positive impact on increasing competitiveness for the national industry, "said PGN President Director Suko Hartono as the buyer's representative.

Furthermore, Suko explained that PGN projects that gas demand will increase so that it will encourage PGN to increase the capacity and reach of gas infrastructure. In addition, it will also have multiple impacts on industrial growth, growth of new economic points, downstream gas industry, and other positive impacts on the national economy. PGN has also prepared various technical provisions for the implementation of the Minister of Gas Price Decree which will be agreed with the customer.

Investor Daily, Page-10, Thursday, June 4, 2020