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Monday, July 20, 2020

STIMULUS FOR TARGET CHASE




The Special Task Force for Implementing Oil and Gas Business Activities finally
provided the stimulus to the Cooperation Contract Contractors (KKKS) to increase
investment in the upstream oil and gas sector.



With the stimulus in the form of a delay in depositing the Abandon and Site Restoration Fund (ASR) 2020, it is hoped that KKKS production activities will remain optimal amidst the pressure of world oil prices and the influence of the Covid-19 pandemic.

Dwi Soetjipto

The Head of SKK Migas, Dwi Soetjipto said that the provision of incentives was a policy that was pursued to overcome the financial and operational problems of KKKS.

"I hope that KKKS can take advantage of this policy, then immediately carry out activities to increase production. "This is our joint effort to oversee the target for this year and the years to come," he said.

For contractors who need relaxation, a special ASR deposit fund for 2020 can be given to SKK Migas no later than July 31, 2020. Furthermore, the value of the ASR request that has been postponed will be billed immediately in the semester I / 2021, added with time.

ASR funds are funds prepared by KKKS at the time of post-operation, for permanent Well closure, temporary stopping, and production facility assistance, to be able to restore or demolish permanently and restore the environment in the Work Area (WK).

Director of Engineering and Environment of the Directorate General of Oil and Gas at the Ministry of Energy and Mineral Resources Adhi Wibowo said the stimulus provided was valid for all WK oil and gas, not just the Rokan Block.

the Rokan Block

"It was taken from a scenario determined by the government, what about providing stimulus, it is hoped that the business/oil and gas sector in the Covid-19 period will continue," he said.

Meanwhile, the target of lifting oil this year is cut to 705,000 barrels per day (BPD), from the previous target of 725,000 BPD, and which was originally in the state budget is 755,000 BPD. Oil and gas companies appreciate the government support for KKKS by providing flexibility in relation to the preparation of ASR funds because it will have a good impact on the company's cash flow.

"The impact on development and operations is being studied in more detail," said Pertamina Hulu Energi President Director Budiman Pahursip.

The Executive Director of the Indonesian Petroleum Association (IPA) Marjolijn Wajong assesses that the ASR funds can ease the burden on upstream oil and gas industry businesses.

"This policy can help the oil and gas industry to maintain the current condition of the world oil price is low and prevent the economic crisis after the Covid-19 crisis," She said.

This was justified by the Teaching Stal of Trisakti University Pri Agung Rakhmanto.

"Some significant and effective are certainly not the same for each KKKS. However, when oil prices are indeed still low like this, improving cash flow will be very helpful for KKKS to be able to maintain normal management of increasing production reserves or lifting, "he said.

Observers in the upstream oil and gas sector, Tumbur Parlindungan assessed that with the stimulus, KKKS can divert their budgets for operational production activities.

"Activities such as good service or maintenance or well development drilling."

Rokan Block

Meanwhile, PT Pertamina Hulu Energi as the upstream sub-holding of Pertamina will immediately drill a well in the Rokan Block when the transition period is complete, in accordance with the decline in value and increase production and the oil block. Director of Pertamina Hulu Energi Budiman Pahursip is optimistic that his party can increase production above 170,000 barrels of oil per day (bopd).

"We can succeed by drilling many wells so that we can reach 190,000 bopd-200,000 bopd in the latter days. We need to use technology applications such as 3D seismic, steam, steam, and look to ask for EOR [Enhanced Oil Recovery], and with other technologies that we can apply, "he said.

Satya Widya Yudha

On the other hand, Supporting SKK Migas Expert Satya Widya Yudha believes PT Chevron Pacific Indonesia is able to increase the production of the Rokan Block WK to 5,000 barrels per day in July 2020 production to 170,000 bopd.




"Even though it is still over in 2021, we are still asking for drilling," he said.

CPI will continue until the transition process in August 2021. Furthermore, in January 2021-July 2021, CPI will drill 96 wells and 11 conversion wells. Meanwhile, CPI will spend an investment of US $ 11 million this year and the US $ 143 million for drilling in 2021. Meanwhile, Pertamina will also open up opportunities for local partners in the Rokan Block after the transition process is completed, as an effort to increase the level of the domestic component (TKDN) in the Rokan Block working area.

"TKDN must be increased, it must be Pertamina's commitment which will be continued by Hulu Rokan that the increase in TKDN must be truly improved
the participation of local companies must be optimized, "said Budiman.

Deputy Governor of Riau, Edy Natar Nasution said that his party would optimize Riau's Regional Business Entity (BUMD) which would get a 10% participation right in the Rokan Block. He hopes that the people in the Rokan Block will provide equal opportunities both to carry out the project and workforce with the KKKS. In addition, the Rokan Block contributes around 65% -80% to Riau's APBD because it still relies on funds for oil and gas proceeds.

"Our hope is that in 2022 the Riau Provincial Government and the City Government can receive BUMD dividends from the PI 10%," he said.

Meanwhile, the Riau Community Leaders Communication Forum asked for a return from President Joko Widodo's campaign pledge to give priority and special rights to Riau Residents in the Rokan Block.

Bisnis Indonesia, Page-4, Friday, July 17, 2020

Monday, July 13, 2020

Shell Ensures Downstream Business Continues



Shell Indonesia guarantees that its oil and gas downstream business in Indonesia will remain expansive amid news of the release of the 35% participating interest (PI) of the Shell Group in the Masela Block.

Rhea Sianipar

Shell Indonesia's External Relations Vice President Rhea Sianipar said investment activities in the downstream sector were still being carried out. Even Shell's downstream oil and gas business is very expanding. One example is the development of a Shell lubricant factory in Marunda, North Jakarta.



In this project, Shell is working on increasing the capacity of the lubricant plant. On the other hand, Shell ensures that the gas station business line also continues to be the focus of their business in Indonesia.

"Our retail business has grown to 116 Public Fuel Filling Stations (SPBU), not only reaching big cities, but also small cities in Indonesia," Rhea said.

But She was reluctant to comment on the news of the release of the 35% interest of the Shell Group Interest Participation in the Masela Block.

the Masela Block

"We cannot comment further on Shell's portfolio activities," Rhea said.

While the Inpex Masela Corporate Communication Manager, Moch N. Kumiawan said, currently it is focused on the planned development of the Abadi LNG project, Masela.



"We are confident that this project will continue and we are actively working to implement a development plan (POD) approved by the Indonesian government," he said.

Kontan, Page-10, Monday, July 13, 2020

Government finances Chevron investment



The government has decided to bear the investment of PT Chevron Pacific Indonesia (CPI) in the Rokan Block. This was done as an effort by the government to hold back production cuts before PT Pertamina (Persero) officially managed the block.



Deputy for Maritime Sovereignty and Energy Coordinating Ministry of Maritime Affairs and Investment Purbaya Yudhi Sadewa said that efforts to maintain the capacity of national oil and gas producers in the Rokan Block were very important.

the Rokan Block

Therefore, investment in drilling there must continue. On this basis, the government decided to bear the investment costs under the Rokan Block Production Sharing Contract (PSC) scheme. In this case, the party executing the drilling investment is the Cooperation Contract Contractor (KKKS). namely Chevron.

However, the investment value will be calculated in the cost recovery scheme. Therefore, the government will return the investment costs made by KKKS so our intention in that investment is that the government continues to contribute according to the PSC scheme, "Purbaya said.

As for now, Chevron and the Special Task Force for Pelalsana Upstream Oil and Gas Business Activities (SKK Migas) have conducted very intensive communication. The two parties will sign an agreement and adjustment document for the PSC, for which the current investment scheme in the transition to management of the Rokan Block will be included.

Fajriyah Usman

Pertamina Corporate Communication VP Fajriyah Usman said that the company targets to drill 44 wells in 2021 when the transfer of management of the Rokan Block occurs in August 2021. 

    Currently, Pertamina is conducting preparations for the drilling program, including the procurement of logistics, rigs, and crew to ensure that PT Pertamina Hulu Rokan (PHR) can immediately conduct drilling, as soon as the transfer transition process is completed in August 2021.

Kontan, Page-10, Saturday, July 11, 2020

Wait PLN, Field Kepodang Ready to Stream Gas



PT Perusahaan Gas Negara Tbk (PGN) stated that gas production from Kepodang Field, Muriah Block will flow after the gas sale and purchase agreement (PJBG) with PT PLN (Persero) is signed. PGN is also optimistic that it will win an arbitration suit against Petronas Carigali Muriah Ltd (PCML) following the cessation of Kepodang Field gas production in September 2019.



PGN President Director Suko Hartono said that 80% of participating interest / PI ownership in Muriah Block which was initially held by PCML had been transferred to his party through Saka Energi Muriah Ltd (SEML). Thus, his party can produce Kepodang Field.

"So at least there is a gas flow of 10-20 MMSCFD (million standard cubic feet per day)," he said.

Kepodang Field, Blok Muriah started producing gas for the first time at 56 MMSCFD at the end of August 2015. The gas supply was channeled with the Kalimantan-Java (Kalija) I pipeline managed by PT Kalimantan Jawa Gas (KJG) to the Steam Gas Power Plant (PLTGU) Tambak PLN's Lorok in Semarang, Central Java.

Bloggger Agus Purnomo in Petronas Carigali Ketapang

However, in July 2017, Petronas stated that Kepodang Field was in force majeure because the reserves did not match the predictions. This field gas production was then stopped on 23 September 2019.



Suko added, his party had received permission from the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) to restart gas production at Kepodang Field. But he was not sure when the gas would start flowing because it was still waiting for the gas purchase agreement by PLN.

"This is what we are trying to do so that gas production can be in 2020-2021. We are waiting for the PJBG, "he said.



Previously, Saka Energi had sent an official letter to PLN regarding gas supply from Kepodang Field. Another commercial aspect that needs to be prepared is the Gas Transportation Agreement (GTA), where Saka will negotiate with KJG as a transporter.

PGN has been involved in the management of Kepodang Field, Blok Muriah from the beginning through SEML with 20% PI ownership. However, PCML and SEML have signed legal documents on the transfer of a participating interest or the Deed of Assignment (DoA) of Petronas participation shares at the end of January.

So, now SEML holds 100% interest participation in the Muriah Block. Even though the production has stopped since September 2019, the function testing activities for important equipment in the Kepodang Field are still carried out routinely. Over the past five months, Saka and Petronas have also made operational transitions, including conducting joint operations trials to keep operating facilities functioning properly. This is so that Saka can directly produce gas as soon as management switches.

Arbitration Lawsuit

At the same time, PGN Finance Director Arie Nobielta Kaban revealed, the lawsuit against Petronas Carigali related to the cessation of Kepodang Field gas production in the Arbitration International Chambers of Commerce (ICC) is still rolling. He is optimistic he can win this lawsuit.

"There is potential [to win], according to our lawyer, the gap is very large, around 70%, we won," he said.

The arbitration award is likely to come out in 2021. The lawsuit was filed because PGN also holds an 80% stake in KJG, in addition to the PI in the Muriah Block. Kaban explained the cessation of the Kepodang Field gas supply had an impact on the value of the KJG Kalija I pipeline.

"So, this pipe needs to be impaired in accounting because the book value is higher, which is the US $ 98 million," he said.

Previously, according to a letter from the Board of Directors of PGN on the Indonesia Stock Exchange (IDX) securities information disclosure in September 2019, the lawsuit was related to ship or pay obligations as stipulated in the gas transportation agreement between PCML, KJG, and PLN.

Because PCML ended the GTA with KJG and PLN earlier than the agreement following the end of the PJBG with PLN. PGN had revealed that based on the initial plan, the gas flowed through Kalija I Pipe reached 116 million MMSCFD. However, to guarantee the company's investment in the pipeline, a ship or pay scheme was established with a minimum limit of gas flowing at 104 MMSCFD.

The realization, since the Kepodang Field began production in 2015, the gas flowed through Kalija I Pipe has always been below the minimum limit. In 2015, the gas flowing was only 86.06 MMSCFD. Furthermore, Kepodang Field only releases gas of 90.37 MMSCFD in 2016 and 75.64 MMSCFD in 2017.

Investor Daily, Page-17, Friday, July 10, 2020

Inpex Committed to the Masala LNG Project



Inpex and Shell are still discussing the transfer of 30% of Shel's participating interest


Inpex Corporation's management is committed and believes that the Masela Block project continues, despite news of the departure of Royal Dutch Shell (Shell) as the owner of 35% participating interest in the block.

Act Corporate Communication Manager of Inpex Masela Moch N Kurniawan said, at this time his side focused on preparing the development of the Abadi LNG project, Masela.

the Abadi LNG Gas Field

"As operators of the Abadi LNG Project and supported by the Government of Indonesia, we believe this project will continue. We are actively working on implementing the plan of development (POD) approved by the Government of Indonesia," said Kurniawan.

However, he did not want to detail the continuation of discussions between Shell and Inpex. Currently, Inpex as the largest shareholder in the block is looking for a replacement for Shell. 

    In the Masela Block, Shell has a participating interest (PI) of 35%. while Inpex Corporation controls 65% PI. Later, the local government will receive a 10% allotment of participation rights, which will be taken from ownership of Shell and Inpex.

The reason for Shell's withdrawal from the Masela Block development project was due to the condition of their cash flow which was affected by the corona pandemic (Covid-19). Shell decided to focus on other projects they were working on in Indonesia.

Previously, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) said that the plan to transfer participation rights by Shell still had to obtain the approval of the Minister of Energy and Mineral Resources (ESDM).

SKK Migas Deputy for Operations Julius Wiratno said the government did not interfere in discussions between Inpex and Shell. However, SKK Migas is still guarding to ensure that the discussion does not hamper the implementation of the Masela Block project.

"All the PI transfer processes must be based on the approval of the Minister of Energy and Mineral Resources. Regarding valuation and all business discussions between investors, we are not involved at all," said Julius

He added, Shell did not reveal another reason for the decision to release the participation rights in the Masela Block. Shell only stated that the distressed cash flow condition was the main reason for the decision. The Masela Block Abadi Project this year has entered the approval stage of an analysis of environmental impacts (Amdal).

Until April 2020, the process had reached 45.33396 from the target of 47.96% for the month. The Masela Block Project has also obtained a Decree (SK) for the Determination of Land Procurement Locations for the Abadi LNG auction port on June 1, 2020. The refinery is planned to be built in the Tanimbar Islands, Maluku. 

    Inpex has begun the front end engineering design (FEED) process for onshore LNG projects, floating production and offloading (FPSO), export gas pipelines, and subsea umbilical risers; and flowline (SURF). The project is targeted to operate in the second quarter of 2027, a year later than the initial target.

Kontan, Page-13, Thursday, July 9, 2020

SKK Migas Ensures that the Masela Project Still Runs Even Without the Shell



Shell Corporation, which is a participating interest holder (PI) in the Masela Block, is reported to be planning to leave the oil and gas block. However, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) ensures that the Abadi LNG Project, the Masela Block will continue.

Dwi Soetjipto

SKK Migas Head Dwi Soetjipto admitted that his party had not yet received notification that Shell was releasing its 35% participating stake (farm out) in the Masela Block. The issue of Shell leaving the Masela Block will not stop the Abadi LNG Project. Inpex will continue the project.

the Masela Block

"KKKS (cooperation contract contractor) is committed to continuing the project," he said.

Meanwhile, SKK Migas Deputy for Operations Control Julius Wiratno added, so far, the farm out plan is still limited to discussions between Shell and Inpex as partners.



"There will be an approval from the Minister of Energy and Mineral Resources (ESDM) if it is certain [to release participating shares] right," he said.

The issue of Shell will sell its participation in the Masela Block is not the first time it appears. In May last year, this issue also surfaced following Shell's plan to release a number of assets that had generated the US $ 30 billion in funds. 

    From the sale of PIs in the Masela Block, at that time Shell was eyeing for funds in the amount of US $ 1 billion. However, the issue was denied by SKK Migas at that time.

Meanwhile related to the issue of Shell's withdrawal, Inpex Masela Ltd's Acting Corporate Communication Manager Moch N Kurniawan revealed, his party was not in a position to answer the commercial activities of the oil and gas company. He said he was still focused on developing the Abadi LNG Project, the Masela Block.

"As operators of the Abadi LNG Project and with the support of the Government of Indonesia, we are confident that this project will continue and we are actively working to implement a PoD (the plan of development) approved by the Government of Indonesia," said Kurniawan.

The Abadi Project is targeted to start operating in the second quarter of 2027. The project, valued at the US $ 19.8 billion, which is worked on by Inpex Masela Ltd, is projected to produce 150 MMSCFD of the pipeline through LNG and in the form of LNG 9.5 million tons per year.

Covid-19 affected

Meanwhile related to the progress of the Abadi LNG Project, Julius said, currently, the geological and geophysical survey activities were hampered due to the Covid-19 pandemic. At the end of March, Inpex was supposed to start mobilizing survey equipment but was eventually postponed due to Covid-19. 

    Until now, there is no certainty when the mobilization of tools and labor will continue. However, it is not certain that the delay in survey activities will make the target operation of the Abadi LNG Project backward. The reason is, this project has not been fully ongoing

"And [the process] is still long, because the target [operation] is 7-8 years. However, there will definitely be recovery efforts, "said Julius.

All parties are aware that the Covid-19 pandemic is hitting the oil and gas business, not only in Indonesia but also globally. Therefore, all companies also recalculated their business. The impact of the Covid-19 pandemic on the Abadi LNG Project was also disclosed by Dwi. 

    This impact is not only on project work, but also on gas marketing which is difficult because buyers still see the situation. However, he will try to prevent the project from backing down.

"We are still discussing with Inpex so that onstream does not retreat from 2027," he said.
In terms of gas marketing, so far, Inpex has only received a commitment to purchase gas by PT PLN (Persero) 2-3 million tons per year and PT Pupuk Indonesia (Persero) 150 million standard cubic feet per day / MMSCFD. At least, around 80% of the 9.5 million tons per year gas production must have a purchase commitment so that a final investment decision / FID can be achieved.

Based on SKK Migas data, as of last March, the work on the approval of the Abadi Project environmental impact analysis (Amdal) still reached 43.41% of the target of 47.27%. In addition, the auction process for front end engineering design / FEED of onshore liquefied natural gas / LNG refinery facilities, floating production, storage and offloading (FPSO) facilities, gas pipelines, and umbilical subsea facilities, risers, and flowline (SURF) is still ongoing.

Investor Daily, Page-10, Thursday, July 9, 2020

lnpex Focus on Masela



lnpex Masela Ltd. said it was still focused on developing Abadi Field, the Masela Block in the Arafuru Sea, Maluku. Act Corporate Communication Manager of lnpex Masela Moch N. Kurniawan said lnpex remained committed to continuing the Masela Block development project. With government support, lnpex believes the project to develop the offshore oil and gas block will continue.

Inpex Corporation

"We are actively working to implement the Plan of Development / PoD which was approved by the Indonesian government," he said.



Regarding the news of Shell's withdrawal plan in the Masela Block project, Kurniawan was reluctant to respond to this. He said it had no interest in explaining the news considering it had entered Shell's commercial activities.

"We suggest to immediately ask this to Shell," he said.

When confirmed separately, Shell Indonesia still chose not to comment related to its current position in the Abadi Field project in the Masela Block. 

Rhea Sianipar

    Rhea Sianipar, VP of External Relations of Shell Indonesia, previously said that it was reluctant to comment on the news of Shell's withdrawal from its partnership with lnpex. Meanwhile, Shell originally held 35 shares of participation in the project. The rest is held by Intex and regionally owned enterprises (BUMD) by 10%.

SKK Migas Deputy for Operations Julius Wiratno previously said that Shell had decided to withdraw from the project due to cash flow problems due to projects in other countries that were hampered.

"Inpex doesn't back down, which Shell resigns as a partner. "Everything is going to be taken over by lnpex or is looking for potential partners," he said.

However, later the statement was corrected.

"Until today Shell hasn't left yet, it's a B-to-b discussion / negotiation with lnpex and others. If the Inpex continues, "he said.

Bisnis Indonesia, Page-4, Thursday, July 9, 2020

Friday, July 10, 2020

Tuban GRR refinery processes imported oil



All crude oil raw materials that will be processed at Tuban Refinery Grass Root Refinery (GRR) will be supplied from abroad. That is because the domestic oil content containing sulfur is very high although not as high as in the Middle East region.

"100 percent of the processed oil will be imported later, one of them from Venezuela because the oil that is managed is more acidic. In Indonesia, sweet oil is known," he said. 

Tuban GRR Project Coordinator from Pertamina, Kadek Ambara Jaya. The largest expected refinery in Southeast Asia will have a maximum capacity of 300 thousand barrels per day. To supply crude oil raw material needs, 60 percent is charged to Pertamina's partners, namely PT. Rosneft Oil Company and Russia.



"For that, the requirement to become a partner, partners must have oil fields and refineries," added Kadek.

The man born in Bali said the Tuban refinery will use advanced technology because it processes heavy oil. While the products produced are equivalent to Euro 5 quality.

"The Euro 5 spec has no odor, and its sulfur content is very low," he said.

Until now, the process of land acquisition for oil refinery construction is still ongoing and has reached around 95 percent. The remaining 30 hectares are estimated to be completed by the end of this month.

Harian Bangsa, Page-9, Thursday, July 9, 2020

Tuban GRR Refinery Explores EIA Study



The Pertamina Grassroot Refinery [GRR) Tuban oil refinery has presented the second Environmental Impact Analysis (EIA) study to the Tuban District Government. This EIA study is one of the stages in the construction of an oil refinery involving Pertamina and Rosneft, a company from Russia.



Tuban Regency Regional Secretary of East Java Province, Budi Wiyana said that public consultation played a very large role, as well as being a vehicle for stakeholders to submit suggestions and input related to oil refinery development.

Compilation of EIA documents to identify cross-sectoral impacts from refinery development, from product development stages to post-project completion.

"Amdal is certainly important, the document as a reference for the drafting, management, and monitoring of a number of impacts has been identified," said Budi.

The former Head of Bappeda explained that the development of oil refineries needs support and synergy from all parties, the regional government, Pertamina, and the community. The operation of the refinery will bring significant economic growth in Tuban Regency primarily to residents around the refinery.

The development of oil refineries is also able to create multiplayer effects, the start, and the emergence of new industries, entrepreneurship, and the need for a local workforce. The oil refinery is targeted to operate in 2026 with a production capacity of 300 thousand Barrels Per Day (BPD).

Surya, Page-7, Wednesday, July 8, 2020

Tuesday, July 7, 2020

Efforts to Find a Substitute for Shell in the Masela Block



Royal Dutch Shell Plc (Shell) has indeed not officially come out of the Masela Block Abadi Gas Project, Maluku Province. But that intention has been illustrated by Shell's request to open a data room block that was designed to have an LNG capacity of 9.5 million tons.



Deputy for Operations for the Special Unit for Upstream Oil and Gas Business Activities (SKk Migas), Julius Wiratno said that negotiations between Shell and Inpex Corporation as the holders of 65% participation in the Masela Block were still ongoing.

the Masela Block in Maluku Indonesia

Do not rule out the possibility, the negotiation process will lead to a recalculation of the investment value in the block. This is also supported by situations and conditions that occur where project work has not yet fully taken place.

"Until today Shell has not resigned, there is still a B to B discussion with Inpex. "However, Inpex will continue, the project must start even if it is stumbling, let alone the Covid-19 pandemic," Julius said.

Shell's plan to step down was seen when the company asked permission to open a data room. This step allows potential investors to see the potential of the Masela Block.



SKK Migas has also sent a letter to complete the request for opening the data room. Shell is said to be looking for partners to transfer 35% of its participating shares. However, Shell Indonesia's External Relations Vice President Rhea Sianipar was reluctant to comment on this.

"For the question above, I have no comment," Rhea said.

Until last night, Melia Relations Inpex Corporation Specialist Moch N Kurniawan had not answered Kontan's questions.

Kontan, Page-12, Tuesday, July 7, 2020