Chevron sells IDD blocks

 

PT Chevron Pacific Indonesia's plan to exit the second phase of the development of the second phase of the Indonesia Deepwater Development (| DD) Block is very serious. Chevron has even offered the deep-sea gas block to its partner, Eni, an Italian oil and gas company.

the Indonesia Deepwater Development (| DD) Block

Acting Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources Ego Syahrial confirmed the news that Chevron was offering to develop the block to Eni.

"Chevron has already proclaimed it, now it is being offered to Eni, we'll just wait. Chevron is the one making the bid to Eni," he explained.

However, Ego was reluctant to reveal what the block release scheme would be like and the bid value. Currently, in the Deep Sea project, Chevron acts as the operator and the majority shareholder, which is 63%.

Chevron is working on this oil and gas project in Iaut with other partners, namely Eni, Tip Top, PT Pertamina Hulu Energi, and partners in Muara Bakau. IDD is a deep-sea gas project carried out by Chevron Indonesia Company (Cico) in the Kutai Basin, East Kalimantan through four production sharing contracts, namely PSC Ganal, Rapak, Makassar Strait and Muara Bakau.

The second phase development in the IDD Block includes the development of the Gendalo field and the Gehem field. There are plans to develop two separate hubs where Gendalo and Gehem will have a Floating Production Unit (FPU) for each field (see table). 

    Ego assessed that Chevron's plan to leave the IDD Block was inseparable from Chevron's not being extended to other oil and gas blocks in Indonesia, namely the Rokan Block. Later, in the year 2021. PT Pertamina (Persero) will continue the block located in Riau. "so one package," he said.

Dwi Soetjipto

Meanwhile, Dwi Soetjipto, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), said that his party had asked Chevron's assurance for the continued management of the IDD Block. However, until now the letter sent by SKK Migas to Chevron has not been immediately responded to.

"Not yet replied, we are still discussing it," he said.

SKK Migas needs to be certain about the current condition of the IDD Block. This is because there are already oil and gas companies that are interested in continuing the project. Chevron also has not yet sent the IDD Block management work plan or plan of development (PoD), which has been requested since January 2020. 

Sonitha Poernomo

    Manager of Corporate Communications of PT Chevron Pacific Indonesia, Sonitha Poernomo said that his party had opened a data room to facilitate discussions on identifying potential partners for IDD Block earlier this year.

"At this time, there is no final decision regarding the discussion," She said.

Regarding the plan to leave the IDD Phase 2 project, Sonitha explained that his party could not compete for capital in the global Chevron Group portfolio. Therefore, he believes this project will have value for other operators.

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

Kontan, Page-12, Friday, August 7, 2020

32 Companies Interested in Shell Shares in Masela Block

The Ministry of Energy and Mineral Resources (ESDM) stated that there are 32 oil and gas companies that have been allowed to open data (open data) of the Masela Block. The data will be opened after Shell has released its participating interest (PI) in the Masela Block.

Acting Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Ego Syahrial, confirmed that Shell would indeed release PI ownership in the Abadi LNG Project, the Masela Block. The opening of data for oil and gas companies interested in taking Shell's PI has also been approved.

the Masela Block

"There are 32 oil and gas company candidates who are in the process of opening this data. The government is certainly looking for the best competence, "he said.

According to him, 32 oil and gas companies that are currently disclosing this data are large oil and gas companies. Not only that, but foreign companies interested in taking Shell shares have also been given permission to view the data.

"That means if there are companies from within the country, maybe just a few companies. Who is the biggest company in the country, most importantly Pertamina, Medco, ”said Ego.

Despite the change in shareholders in the Masela Block, Ego emphasized that the Abadi LNG Project must continue.

"Of course, the government's goal is how the Eternal LNG Project will continue and in 2027 the gas can [operate]. That's all, "said Ego.

Dwi Soetjipto

Previously, the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto revealed that the process of transferring ownership of PI is likely to be completed next year if Shell has obtained a potential buyer.

"I think it will last up to 1-1.5 years. If the divestment will continue, no later than 2021 it must be completed, ”he said.

The Abadi project is targeted to start operating in the second quarter of 2027. The US $ 19.8 billion projects undertaken by Inpex Masela Ltd is projected to produce 150 mmscfd of piped gas and 9.5 million tons of LNG per year.

Currently, Shell holds 35% PI in the Masela Block, while the rest is owned by Inpex. Based on data from SKK Migas, until last March, the work on the Abadi Project's environmental impact analysis (Amdal) approval was still 43.41% of the target of 47.27%.

In addition, the auction process for front end engineering design / FEED onshore liquefied natural gas / LNG refinery facilities, production and floating production facilities, storage and offloading / FPSO, gas pipelines, as well as subsea umbilical, riser, and flowline (SURF) facilities are still taking place.

Oil and Gas Investment

Meanwhile, the Ministry of Energy and Mineral Resources noted the realization of national oil and gas investment in the first half of 2020 amounting to the US $ 5.6 billion or only 38.6% of the target of US $ 14.5 billion. However, with the starting to increase in oil prices, oil and gas investment in the future will improve. 

    Acting Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Ego Syahrial, said that his party continues to strive for optimal oil and gas investment climate.

However, the Covid-19 pandemic, which depressed global crude oil prices, he admitted had an impact on national oil and gas investment. This is because the drop in oil prices was followed by cuts in investment budgets by major world oil and gas companies.

"We had targeted oil and gas investment at the US $ 14.5 billion, but the realization still reached the US $ 5.6 billion. So it is still far away, still a third, "he said.

Of the US $ 5.6 billion investment, the US $ 4.85 billion came from the upstream oil and gas sector and the US $ 712.26 million from the downstream oil and gas sector. When compared with the Performance Report (Lakin) of the Directorate General (Ditjen) of Oil and Gas 2019, the realization of downstream oil and gas investment in the first semester of 2020 is quite good.

This is because, in the one year period in 2019, the realization of downstream oil and gas investment was the only US $ 1.06 billion. In detail, the realization of downstream oil and gas investment until last June, namely investment in processing infrastructure of the US $ 299.17 million, transportation of US $ 346.44 million, storage of US $ 21.67 million, and trade of US $ 44.98 million.

ESDM Ministry's Oil and Gas Program Development Director Soerjaningsih revealed that the downstream oil and gas project investment includes a refinery project undertaken by PT Pertamina (Persero).

"The downstream investment comes from the Balikpapan and Tuban refinery projects, as well as the BBM (fuel oil) and BBG (gas fuel) transportation projects," he said.

For the performance of the upstream oil and gas sector, Ego said that the realization of oil lifting as of last June had approached the change target of 705 thousand barrels per day (BPD). Even if compared to the initial target of 755 thousand bpd it is indeed very far away.

“Like it or not, the upstream oil and gas performance is affected by low investment. This is the impact of all major oil and gas companies in the world to cut investment, "he said.

Oil and Gas Block Auction

To increase oil and gas investment in the future, Ego added that the government will auction off 10 conventional oil and gas blocks this year. Along with the preparation for the oil and gas block auction, his party has communicated with potential investors regarding the schedule for opening this oil and gas block auction. Several investors asked for the auction to be postponed for the rest of the year in the hope that oil prices would improve.

"The announcement option in the near future will be decided whether it is the end of the third quarter or the beginning of the fourth quarter of this year," he said.

The oil and gas block auction is also planned not to be held simultaneously. Ego explained that currently the final evaluation of the 10 oil and gas block candidates is being carried out. This evaluation is more attractive terms and conditions and the implementation of production sharing contract / PSC gross split or cost recovery.

"We evaluate it for maximum results by considering input from stakeholders which we do pro-actively," he said.

Based on ESDM Ministry data, the total potential oil resources of the 10 oil and gas blocks are 3.44 billion barrels and 5 trillion cubic feet of gas. The five oil and gas blocks that are regularly auctioned are Merangin III Block in South Sumatra & Jambi (Onshore), Sekayu in South Sumatra (Onshore), North Kangean in East Java (Offshore), Cendrawasih VII in Papua (Offshore), and Mamberamo in Papua ( Onshore and Offshore).

Meanwhile, the five oil and gas blocks being auctioned with a direct bid mechanism are the West Palmerah Block in South Sumatra and Jambi (Onshore), Rangkas in West Java and Banten (Onshore), Liman in East Java (Onshore), Bose in East Nusa Tenggara (Onshore and Offshore). ), as well as Maratua II in Kaltara (Onshore and Offshore).

Investor Daily, Page-12, Thursday, August 6, 2020

PHE Jambi Merang Complete 2D Survey Without Accident

PT Pertamina Hulu Energi (PHE) Jambi Merang, a subsidiary of PHE, made a new history by completing the implementation of a two-dimensional (2D) Seismic Survey of a Firm Work Commitment (FWP) for the 31,140 km Jambi Merang Working Area on Monday (3 August) at 15.45 WIB. The success of completing this seismic exceeded the target of 30,000 km or 103.8% with no work accidents or zero incidents.

"Thank God, we are grateful PHE Jambi Merang was able to complete the 2D survey in less than a year during the Covid-19 pandemic," said Pertamina Hulu Energi Exploration Director Medy Kurniawan.

PT Elnusa Tbk (ELSA) Ship

A 2D seismic survey of the Jambi Merang KKP is the first implementation in an open area that began on November 20, 2019. It is hoped that Pertamina can continue to support the increase in national oil and gas production and reserves, especially to get a giant discovery.

According to Medy, the 2D PHE Jambi Merang survey was not only carried out in the Jambi Merang block area. Because it is open, the survey was also conducted outside the Jambi Merang area. 

    In this activity PHE Jambi Merang appointed PT Elnusa Tbk (ELSA), an affiliated company of PT Pertamina (Persero), to conduct a 2D survey starting from western waters to eastern Indonesia.

This 2D offshore seismic survey is the largest exploration activity over the past decade because it passes through Bangka waters to Seram Island in Maluku. In addition, this 2D seismic uses 2D seismic marine broadband technology and is carried out by a single operator, Elnusa's Elsa Regent Ship.

Elnusa's Elsa Regent Ship

Apart from the offshore 2D Seismic survey, a 3D seismic survey was also carried out in the Jambi Merang working area covering an area of ​​237 km2 covering two provinces, namely South Sumatra and Jambi, as well as three districts namely Musi Banyuasin, Banyuasin, and Muaro Jambi.

For information, this 2D seismic survey is part of the Jambi Merang Firm Work Commitment (FWP) until 2024 with an investment value of US $ 239.3 million. Specifically for exploration activities, in the Firm Work Commitment (FWP) US $ 196.5 million has been allocated to increase the discovery of reserves so that other exploration activities will be carried out in the future. 

    Medy said PHE will process and evaluate the 2D survey results. It is hoped that the results of the evaluation can be completed in December 2020.

"We are grateful to the government for giving the confidence to carry out the mandate of this work. Even though it was full of challenges, finally the 2D survey work was completed even earlier than the target. This is of course due to the support of all parties, the Ministry of Energy and Mineral Resources, SKK Migas, and other stakeholders, "he said.

Investor Daily, Page-12, Thursday, August 6, 2020

Government Reviewing Masela Block Profit Sharing

The government is considering changing the production share of gas or split in the management of the Masela Block. It seems that the plan is to attract investors to replace Royal Dutch Shell (Shell), which plans to sell the 35% participating interest in the Abadi Gas Field. 

Royal Dutch Shell (Shell)

    Referring to the agreement in the head of agreement (HoA) in 2019, the government and lnpex Corporation as the controlling shareholders of the Masela Block agreed to split the gas distribution by 50% (government) and 50% (lnpex and consortium).

Dwi Soetjipto

Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Dwi Soetjipto, assessed that at the time of the continuation of the Shell divestment, his party also saw potential or room for split changes. "We also found points or potentials for this economic project to be in a reasonable government split. We will continue to discuss it," Dwi said.

INPEX CORPORATION

However, he is still reluctant to detail the objectives of the split change and the details of the changes being considered, so it is not yet known whether this profit sharing will increase the government's portion or even increase the INPEX portion. Dwi only said that Masela's liquefied natural gas (LNG) product enthusiasts had reached 50%.

"PLN has expressed an interest of at least 2 to 3 million tons per year (MTPA). From abroad, there are Japan, China, and Taiwan," said Dwi.

With regard to Shell's plan to leave, the Ministry of Energy and Mineral Resources (ESDM) noted that 32 companies are interested in replacing Shell.

Investor interest

Acting Director-General of Oil and Gas, Ego Syahrial confirmed that Shell had conducted open data to see the potential development of the Masela Block.

"It's true that Shell is in the process of opening this data. There are 32 candidates who are currently in the process of opening this data," said Ego Syahrial.

the Masela Block

Even the Ministry of Energy and Mineral Resources has approved foreign companies to see the block data. However, the government does not want to disclose the names of 32 companies interested in investing in the Masela Block. One thing is for sure, if Shell does leave, the government insists the Masela Block project will continue.

Besides investors, the Masela project is still hampered by land problems. Maluku Governor Murad Ismail promised to be ready to facilitate the land acquisition. Together with the Tanimbar Islands Regency Government and Southwest Maluku, the land acquisition of the Masela Block will be completed through adat and deliberation processes.

"We will solve the land problem as well as possible since it has been discussed that many people have controlled the land," he said.

Therefore, the Maluku Provincial Government is also waiting for the decision and the readiness of lnpex to acquire some land for LNG development.

"We'll just wait. It is impossible to solve the land problem if there is no encouragement from lnpex," he said.

Dwi Soetjipto added land acquisition will begin if the Environmental Impact Assessment (EIA) has been completed.

Kontan, Page-12, Thursday, August 6, 2020

SKK Migas Claims Certainty to Chevron

PT Chevron Pacific Indonesia's commitment is not clear in the development of the Phase II IDD Block project in the Gendalo-Gehem Field. In response to this, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) sent an official letter to Chevron Pacific.

PT Chevron Pacific Indonesia's

SKK Migas questioned Chevron's commitment to continue the development of the Indonesia Deepwater Development (IDD) Block. Previously, Chevron sent a signal not to continue the development of Phase II of the IDD Block. This is the result of the development of phase II of the IDD Block which is not included in the global portfolio of the US oil and gas company.

the Indonesia Deepwater Development (IDD) Block

The Acting Head of the SKK Migas Program and Communication Division, Susana Kurniasih, claimed that up to now Chevron had never formally submitted the plan to leave the Phase II project IDD Block to SKK Migas.

SKK Migas has actually tried to urge Chevron to provide certainty related to the development of the IDD Block. Last week SKK Migas had written a letter to Chevron asking about the continuation of operations, Susana said.

Indeed SKK Migas still hopes that the IDD Block Phase II development activities will be realized soon, despite the challenges in the upstream oil and gas industry sector lately. PT Chevron Pacific Indonesia's Corporate Communication Manager Sonitha Poernomo was reluctant to comment much regarding the certainty of Chevron's planned exit from the IDD Block II development project.

Sonitha Poernomo

"We are still continuing to coordinate with the government and potential partners to develop IDD development solutions, said Sonitha.

Eni

In the IDD project, Chevron acts as the operator and holds a 63% stake or Chevron's participating interest working on the oil and gas project in the deep sea with several partners such as Eni, Tip Top, PT Pertamina Hulu Energi, and Muara Bakau partners. Phase II development of the IDD Block includes the development of the Gendalo Gehem Field with an investment of US $ 12 billion.

Kontan, Page-12, Wednesday, August 5, 2020

EIA Completion of the Abadi Abadi LNG Project begins

After being stopped due to the approval of the Covid-19 pandemic, the process of discussing the Impact of the Environmental Impact (EIA) of the Abadi LNG Project, the Masela Block will start again in the second semester. Not only that, some foreign gas buyers who are interested in taking liquefied natural gas (LNG) produced by this project.

Dwi Soetjipto

SKK Migas Head Dwi Soetjipto said that Inpex Corporation and Shell continue to work on the Abadi LNG Project. At present, EIA approval for this project has been approved. Needed, Inpex as an operator will continue to be completed by Amdal so other processes can be carried out, including land acquisition.

"Inpex can conduct a survey in the second semester, especially for rainy season data. Then [the process] gives an EIA, then other things can be processed. This is a condition for the investor in the execution of the land, which is the EIA, okay, "he said.

The Abadi LNG project

Related to land acquisition, the Governor of Maluku. Murad Ismail is committed to facilitating it. The Abadi LNG project is a large project that submitted its development plan which was witnessed directly by President Joko Widodo so that the local government will support this project. In addition, this project is also intended for the people of Maluku.

"Since all land permits above 5 hectares are ours, I will help and discuss with the regents of Tanimbar and Southwest Maluku," he said.

He decided, his party would strive so that there were no challenges in the acquisition of this land. For example, it has previously provided 27 hectares of land on Nustual Island as the port side of the Abadi LNG Project. 

    The decision was stipulated in the Maluku Governor's Decree No. 96 of 2020 on the 14th of February 2020. Therefore, Murad asked the contractor not to doubt the tolerance of the local government regarding the Abadi LNG Project. Even if there is compensation for land acquisition, it will facilitate so that the amount is not excessive.

"We support that everywhere, we choose adat and deliberation. We will be picky about this land, "he said.

However, to complete the execution of land acquisition depends on Inpex.

"Procurement of land depends on Inpex wanting to be finished anytime. We just wait. It is impossible to finish if there is no support from Inpex, "he added.

Based on SKK Migas data, as of last March, the work on the Environmental Analysis (Amdal) of the Abadi Project has only reached 43.41% of the target of 47.27%. In addition, the auction process for the work of Front End Engineering Design / FEED onshore liquefied natural gas / LNG refinery facilities, floating production and loading and unloading facilities (floating production, storage, and unloading / FPSO), gas pipelines, and umbilical underwater facilities, risers, and flowline (SURF) is still ongoing.

Aside from land, Dwi admitted, the Covid-19 pandemic also considered the sale of LNG from the Abadi LNG Project. Because, for the project to reach a Final Investment Decree / FID, amounting to 80% of the total LNG production target of 9.5 million tons per year, there must be a buyer. So far, PT PLN (Persero) has approved the purchase of LNG of 2-3 million tons per year and PT Pupuk Indonesia (Persero) 150 million standard cubic feet per day / MMscfd.

"From abroad, there are Japanese, Chinese, and Taiwanese companies that are interested in buying, we immediately receive support," Dwi said.

It was revealed, his side was still hoping that the Abadi LNG Project FID could be accepted in 2022. Before that, along with LNG marketing, the project design work had to be completed.

"From 2022 to 2027, EPC (engineering, procurement, and construction) can continue," he said.

The Abadi Project launches in the second quarter of 2027. The US $ 19.8 billion replacement project undertaken by Inpex Masela Ltd is projected to produce 150 mmscfd of gas piped and in the form of LNG 9.5 million tons per year.

Investor Daily, Page-10, Wednesday, August 5, 2020

Global Oil and Gas Company Tighten the Belt

Concerning a compact global oil and gas company increasing efficiency, matching the weakening world oil prices, oversupply, and weak commodity demand in the world due to the Covid-19 pandemic. Based on the official report of ExxonMobil Corporation, the company in the second quarter of 2020 cut capital expenditure to the US $ 5.3 billion, lower the US $ 2 billion for capital expenditure in the first quarter / 2020.

This year ExxonMobil cut investment costs from the US $ 33 billion to the US $ 23 billion in accordance with increased efficiency, lower commodity prices, and faster project rates. Not only that, but savings were also made for the company's operational costs which could be increased by 15% because it was approved by the activities and volume reduction.

"The Covid-19 pandemic has an impact on the company's finances and operations which has led to an increase in the cost of capital and operating cash than agreed," as released by the management.

Not much different, Chevron Corporation also decided to be more efficient in overcoming the condition of the upstream oil and gas industry which has not improved. Chevron Corporation CEO Michael K. Wirth said that in response to the severe upstream oil and gas conditions, his side reduced the capital expenditure budget and cut operational costs this year.

Michael K. Wirth

In the second quarter / 2020, Chevron only realized capital expenditure of the US $ 3 billion or 40% below its quarterly budget. For this year, Chevron revised its capital expenditure to purchase the US $ 14 billion. Meanwhile, operating costs in the II / 2020 quarter were realized at a value of US $ 7.1 billion, an increase of 13% compared to the II / 2020 quarter.

"While there are no signs of improvement in demand and commodity prices at pre-pandemic levels, financial results may continue to be depressed until the first quarter of 2020," he explained.

Related to the efficiency efforts, Teaching Staff of Trisakti University Pri Agung Rakhmanto rate, the efficiency assessment conducted by global oil and gas companies will be increased in upstream oil and gas projects in the country. According to him, the economic level of the project is an important factor for investors to continue the upstream oil and gas project in Indonesia.

Are projects in Indonesia included in the priority rankings of their global portfolio or not? But it should indeed be changed. Because generally, it has been quite a long time, our upstream oil and gas are not very attractive, "he said.

He added, oil and gas companies at the mayor level such as Shell and Chevron will issue investments based on the rankings of global investment portfolio companies in accordance with their competitive level. In addition, the projects approved by the projects undertaken are not included in the company's economic standards or portfolio ratings, so there is a great chance of being accepted.

If our upstream oil and gas projects are less competitive or economically disadvantaged with their projects in other countries, then of course they will eventually withdraw from their projects in Indonesia, "Pri said.

Cameron Van Ast

To note, Shell and Chevron are also known to change their investment portfolios in the oil and gas sector in the world, including for projects in Indonesia. Chevron Asia Pacific External Affairs Advisor Cameron Van Ast said it was giving a signal to release its participation in the IDD project. 

the IDD project Chevron

He revealed the plan had been reviewed since early 2020 and was not related to the acquisition of Noble Energy shares on July 20, 2020.

Dwi Soetjipto

SKK Migas Head Dwi Soetjipto previously revealed that the upstream oil and gas investment trend in the world this year is projected to fall by around 30% to the US $ 228 billion from the initial target in 2020, valued at the US $ 325 billion.

Bisnis Indonesia, Page-4, Wednesday, August 5, 2020

There is Still Hope in Upstream Oil and Gas

Upstream oil and gas investment in Indonesia is believed to be still prospective, despite a number of challenges due to fluctuations in world oil prices and the Covid-19 pandemic. Moreover, the government has also given the flexibility to investors to choose the form and production sharing contract in oil and gas activities.

The policy is believed to provide legal certainty and increase oil and gas investment in Indonesia. But of course, it must be punctuated by the right strategy and oil and gas investors to survive and get out of the crisis.

Arcandra Tahar

Former Minister of Energy and Mineral Resources (ESDM) for the 2014-2019 period Arcandra Tahar said investment in upstream oil and gas was not merely a matter of the political situation in a country. According to him, the majority of investors will enter the oil and gas project which is considered to provide good profits for the company.

"Investment does not recognize citizenship. That is, where there is a profitable investment, investors will enter, "he said.

 

the Masela block

Referring to the news of Shell's departure from the Masela and Chevron Block projects on the Indonesia Deepwater Development (IDD) project, Arcandra said many factors could trigger the decision. Comprehensively the decision could be influenced by the shifting focus of the company relating to economic value. But the withdrawal of two global oil and gas companies from the project in Indonesia cannot be used as a reference that investment conditions in Indonesia are not good.

"Can you see that their assets (Investors) are sold abroad? I think so. What does it mean, if we only look at it from one side, the investment climate might not be okay. "

He considered the mix of business portfolios in oil and gas companies could be one strategy to get out of the crisis. According to him, the weakening of world oil prices and falling demand that occurred some time ago along with the Covid-19 pandemic was one of the extraordinary events.

However, basically the oil and gas industry is a business whose principles always fluctuate, so there should be mitigation to go through difficult times. Was this not prepared in advance by the oil and gas company? I think it's been prepared, "Arcandra said.

Shell

For this reason, the business portfolio mixes between upstream and downstream needs to be balanced considering that there are still oil and gas companies that can get profit, in a state where oil prices are skyrocketing or weakening. According to him, this was also done by large-scale global oil and gas companies such as Shell and Chevron. In addition, the oil and gas companies have begun to apply the trend to anticipate difficult times.

"So a strong company, a balance between upstream and downstream. Even if a medium company has a good strategy, besides having a business in the upstream, they also anticipate it in the downstream, "he explained.

Dwi Soetjipto

SKK Migas Head Dwi Soetjipto projects that oil and gas investment this year will only reach US $ 11.6 billion, down 16% from the target of US $ 13.8 billion. According to him, global upstream oil and gas investment trends this year are also projected to fall by around 30% to the US $ 228 billion from the initial 2020 target of US $ 325 billion.

"So in Indonesia the decline is far better than the global upstream oil and gas trends," he said.

PORTFOLIO CHANGE

Both Shell and Chevron are known to change their investment portfolios in the upstream oil and gas sector in the world, including for projects in Indonesia. Chevron Asia Pacific External Affairs Advisor Cameron Van Ast said it was giving a signal to release its participation in the IDD project. 

He revealed that the plan had been reviewed since the beginning of this year and he dismissed that the decision was related to the acquisition of Chevron in Noble Energy shares on July 20, 2020.

PT. Chevron Pacific Indonesia's

Chevron Pacific Indonesia's Corporate Communication Manager Sonitha Poernomo added that the Phase 2 IDD project could not compete for capital in Chevron's global portfolio. Meanwhile, Shell was quoted from the official website of Shell Global, dividing the oil and gas company's business into the upstream business, integrated gas, renewable energy, and downstream business.

Sonitha Poernomo

In line with Arcandra, Secretary-General of the National Energy Board Djoko Siswanto is optimistic that Indonesia's upstream oil and gas sector is still in good condition and attractive to investors. 

Hilmi Panigoro

    On the other hand, President Director of Medco Energi Hilmi Panigoro revealed that Indonesia's biggest challenge to bringing in investment in the upstream oil and gas sector is legal certainty which is more attractive to investors.

According to Hilmi Panigoro, there are many investors who prefer other countries than Indonesia even though the tax conditions and political conditions are not better. Hilmi said this could happen because the investors considered that they did not have more risks given the clear legal certainty.

"For example, now the government is changing its paradigm, energy is not a source of revenue, then gas prices are lowered, but the contractor's rights must be maintained so that investors believe. So whatever the form of the regime, what is important right now is how this new law can be a guarantee, so the signed agreement must be maintained, "he explained.

Regarding oil and gas production sharing contracts, ESDM Minister Arifin Tasrif issued Minister of Energy and Mineral Resources Regulation No. 12 of 2020 concerning the Third Amendment to the Minister of Energy and Mineral Resources Regulation No. 8 of 2017 concerning Gross Split Production Sharing Contracts.

In Article 2 paragraph (2) of the Ministerial Regulation, it is explained the form and cooperation contract can use Gross Split, Cost Recovery, or other cooperation contracts. Arifin also abolished the provisions regarding the management of the Work Area that ended the contract period and was not extended, the government imposed a Gross Split for the next period. In addition, in the case of Work Areas that will expire in the contract period, the government can stipulate all cooperation contracts or Gross Split.

Bisnis Indonesia, Page-10, Monday, August 3, 2020