Petronas Finds New Oil Reserves in Madura

 

    Petronas' subsidiary, PC North Madura II Ltd., managed to find oil reserves through the Hidayah-1 Exploration well in the North Madura II Working Area, which is located off the coast of East Java, Indonesia. 

Blogger Agus Purnomo in Petronas PC Ketapang II

    PC North Madura II Ltd. is the sole operator with a participating interest of 100 percent in the North Madura II Working Area. The drilling of the Hidayah-1 exploration well began on January 7, 2021, and has reached a depth of 2,739 meters.

    The Hidayah-1 well succeeded in finding a reservoir layer containing oil with good reservoir quality in the Ngimbang carbonate formation and having a flow test result of 2,100 barrels of oil per day (BOPD) with good oil quality.

"The results of the Hidayah-1 exploration well drilling will be further evaluated to determine the potential size of these reserves," said Emeliana Rice-Oxley, Petronas Vice President of Exploration, Upstream.

Emeliana Rice-Oxley

    She emphasized that the discovery of the Hidayah-1 Exploration well is a major proof of success for the North Madura II Work Area, which is proven by the potential for a reservoir layer containing oil in the area.

"This also encourages the development of promising exploration potential in Indonesia. We will always collaborate with the Indonesian government to realize clean and sustainable energy for Indonesia," She said.

                                Blogger Agus Purnomo in SKK Migas

"We are grateful for the great support provided by SKK Migas and the Sampang district government in the successful drilling of the Hidayah-1 exploration well. This discovery is evidence of Petronas' commitment to continuing the development of the upstream oil and gas business in Indonesia," added the President of PC North Madura II Ltd. Mohd Nazlee Rasol.

    Petronas is also the operator of the Bukit Tua Iapangan off the coast of East Java and is a partner of six other Cooperation Contractors located on the mainland and off the coast of Sumatra, Natuna, East Java, and Kalimantan.

Harian Bangsa, Page-4, Friday, Feb 26, 2021

Chevron Drills 12 Wells in the Rokan Block

 

    PT Chevron Pacific Indonesia has only drilled 12 wells in the Rokan Block, even though the transfer of management to PT Pertamina (Persero) only has 6 months left. Julius Wiratno, Deputy for Operations of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), said that the number of wells drilled was an activity undertaken by Chevron since last year. He revealed that the drilling of the Rokan Block well had several problems.

the Rokan Block

“The condition of the field after the rain is very challenging and we haven't drilled in the Rokan block for several years. "Procurement of goods and materials for the time being that is running out is also a challenge in itself," he said.

Blogger Agus Purnomo in SKK Migas

    Meanwhile, SKK Migas has prepared steps so that drilling activities in the Rokan Block to hold down the rate of decline in production during the transition period can continue. Julius said that his party will soon be aggressive in looking for materials for drilling the well. According to Julius, his party will try to drill the Rokan Block as much as possible with the target of still being able to drill more than 100 wells by August 2021.

"In the process, well the hard looks are a bit difficult to find," he said.

    The drilling of the Rokan Block well is a commitment in the Head Of Agreement (HoA) on September 28, 2020, for investment during the transition period in the Rokan Block. Chevron will invest the US $ 154 million for drilling activities. 

    In 2021, Chevron will drill 101 wells with an estimated investment of US $ 143 million to increase production by 5,000 barrels of oil per day. If Chevron is unable to complete the Well drilling according to the target, then the work will be continued by Pertamina with an investment from Chevron.

    The teaching staff of Trisaksi University, Pro Agung Rakhmanto, is of the opinion that the realization of drilling 12 wells can be said to be very good progress during the transition period. This is because, based on experience with transitions in other oil and gas blocks, the transition process often does not take place smoothly. 

    As a result, activities, and efforts to maintain production only started when the transfer of management was actually in a new contract position. According to him, SKK Migas, Chevron, and Pertamina just need to continue the transition process, which is already progressing well.

"Do not have too many expectations that are not well-founded, because after all there is a consequence of slowing down operating activities and then a decline in production from a decision to transfer the management of an already operating oil and gas block to a new operator," he said.

    Meanwhile, the investment required to achieve and maintain production of 1 million barrels of oil per day and 12,000 MMscfd of gas is estimated to reach the US $ 2S0 billion in the next 10 years. Head of the SKK Migas Goods and Services Procurement Management Division Erwin Suryadi said this year, the list of procurement of goods and services that had been set was 1,482 packages with a total project value of US $ 6.05 billion.

"Based on this investment, it requires a system of procurement of goods and services that is effective, efficient, and capable of being a strong leverage to move the upstream oil and gas industry," he said.

    He said SKK Migas is working with the Indonesian Petroleum Association (IPA) to accelerate the completion of the tender process and strengthen synergy and collaboration with all stakeholders.

"The IPA Supply Chain Management Committee is expected to be able to bridge operational activities and fulfillment of the Domestic Component Level (DCL/TKDN)," he explained.

Bisnis Indonesia, Page-20, Friday, Feb 26, 2021

PGN Builds Gas Infrastructure in Kendal

 

    PT Perusahaan Gas Negara (Persero) Tbk is the sub-holding gas of PT Pertamina (Persero) supports the provision of infrastructure and natural gas distribution services in an effort to grow economic activity through new industries in the Central Java region. 

    One of the areas served by PGN is the Kendal Industrial Estate (KIK). KIK is a new industrial area that is the readiest in Indonesia with all the facilities. However, KIK is still having problems with certainty about the availability of natural gas which has made investors delay investing in this area.

    PGN's Director of Infrastructure and Technology, Redy Ferryanto, said that PGN has conducted a study on KIK, especially regarding gas demand since 2016. The latest developments show that gas demand in the region is very large. PGN continues to coordinate intensively with KIK regarding the potential total gas demand to be used.

"KIK will send an official letter to PGN regarding the complete total demand," said Redy.

    Redy said, PGN will strive to serve the natural gas trade through PGN's pipeline distribution network infrastructure in the Sales & Operation Region III (SOR III), which includes Central Java, East Java, and East Indonesia. Meanwhile, natural gas trading other than pipelines (CNG and LNG) will be managed by PGN's subsidiaries, namely PT Pertamina Gas Niaga (Pertagas Niaga) and PT Gagas Energi Indonesia (Gagas).

    In line with the completion of the construction of the Gresik-Semarang gas transmission pipeline by PT Pertamina Gas (Pertagas), Redy continued, PGN is targeting to be able to realize the certainty of distribution of natural gas supply in Central Java. 

    The 267 kilometers (km) long transmission pipeline network has a maximum gas flow capacity of around 400 million standard cubic feet per day (MMSCFD). The potential source of supply that will be supplied by the Gresik-Semarang Pipe comes from Jambaran Tiung Biru (JTB) owned by PT Pertamina EP Cepu (PEPC).

Jambaran Tiung Biru (JTB)

"Optimizing natural gas distribution infrastructure to meet energy needs for the industry is expected to have a positive impact on the growth of KIK and the surrounding community for the progress of the Central Java economy," said Redy.

    KIK has been designated as a special economic zone (KEK) as a result of a joint venture scheme collaboration between PT Jababeka Tbk and Sembawang Corporation. KIK was inaugurated by President Joko Widodo and Singaporean Prime Minister Lee Hsien Loong. To date, there are 64 companies from eight countries that have joined KIK, namely Taiwan, China, South Korea, Hong Kong, Singapore, Japan, Malaysia, and Indonesia in this ABTB product.

    The development of the industrial center in KIK is expected to be able to generate micro, small and medium enterprises (MSMEs) as well as open new jobs for the surrounding community. 

    According to Redy, the development of natural gas distribution infrastructure in Central Java is very challenging for PGN. Therefore, cooperation and support from the local government and various stakeholders are also very important for the development of natural gas infrastructure in Central Java.

Republika, Page-9, Thusday, Feb 25, 2021

Pertamina EP Ready to Exploration Kasuari Emas Well

 

    Pertamina EP Asset 4, a subsidiary of PT Pertamina (Persero), strives to meet national energy needs by continuing to carry out exploration activities to maintain energy availability for the next decades.

Pertamina EP Asset 4

"We at Pertamina EP remain optimistic about Indonesia's energy availability, and we are committed to continuing to explore, one of which is currently being prepared is the Kasuari Emas Exploration Well in the Bojonegoro Regency area," said Deddy Syam, General Manager of PT Pertamina EP Asset 4.

    Deddy also added that this exploration activity resulted in the discovery of large reserves so that it could extend the life of fossil energy in Indonesia.

"With exploration activities, we hope Pertamina will sustain and continue to operate to meet Indonesia's energy needs," said Deddy.

Blogger Agus Purnomo in SKK Migas

    Supporting Pertamina EP's activities, Nanang Abdul Manaf, SKK Migas Supervisory Commission expert explained that exploration is important because every barrel of oil production starts from one new Held Wildcat Well.

"Without exploration, don't expect new oil and gas reserves," said Abdul Manaf.

    He said further that the exploration could stimulate investors to come. Because Indonesia's oil and gas potential is still very large.

"Indonesia has 128 oil and gas potential basins. A total of 20 basins are already in production, 27 basins have been drilled with exploration discoveries, then 13 basins have been drilled without discoveries and the remaining 68 basins have not been explored", said Nanang Abdul Manaf.

    It's just that it's not easy to bring in investors because the upstream oil and gas industry is faced with challenges because the Easy Oil Era has run out. Meanwhile, 70 percent of oil and gas reserves are in the territorial waters. To carry out exploration requires very large costs, reaching 80-100 million US dollars [equivalent to Rp. 11.2 trillion to Rp. 14 trillion], and the rate of return or IRR is low and the exploration period is short.

    The Ministry of Energy and Mineral Resources has prepared a strategy to increase the investment attractiveness of oil and gas exploration, among others, increasing the prospect of oil and gas exploration, improving the investment climate through a fiscal approach, regulatory certainty, and political stability and security.

"With this strategy, it is hoped that Indonesia can get out of a critical situation to increase investment to meet the gap in Indonesia's energy needs in the middle of the energy transition phase towards the green energy era," he said.

Surya, Page-7, Wednesday, Feb 24, 2021

January, Upstream Oil and Gas Investment Reaches The US $ 8732 Million

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) noted that the realization of upstream oil and gas investment in January 2021 reached US $ 873.2 million or 7.05 percent of this year's target of US $ 12.38 billion. This realization is better than the condition in January 2020 which was the only US $ 767.5 million.

Blogger Agus Purnomo in SKK Migas

    Acting Head of Program and Communication Division of SKK Migas Susana Kurniasih said the investment achievement was after the successful completion of the accelerated completion of supporting documents for program implementation at the end of last year.

"So that the realization of investment in January 2021 is higher in number and percentage compared to the same period last year," said Susana.

    Susana explained that the investment realization in January was to support exploration and development activities. These exploration activities were carried out by PT Pertamina EP, PT Pertamina Hulu Mahakam (PHM), ENI East Sepinggan, PT Pertamina Hulu East Kalimantan (PHKT), and PT Pertamina Hulu Energi Offshore South East Sumatra (PHE OSES).

ENI

    Meanwhile, development activities in the form of Well drilling were carried out by PHM, ENI East Sepinggan, Pertamina EP, PT Pertamina Hulu Sanga-Sanga (PHSS), PT Pertamina Hulu Energi Offshore North West Java (PHE ONWJ), Petronas Carigali Ketapang II, Exxon Mobile Cepu Limited EMCL, and BP Tangguh.

 Blogger Agus Purnomo in Petronas Carigali Ketapang II

    From the procurement aspect, the 2021 procurement list, which was completed at the end of last year, was able to accelerate the process of procuring goods and services this year.

"In addition, the highest number of procurement packages is in January 2021, so that KKKS (cooperation contract contractors) will have a longer time to carry out operations for upstream oil and gas management," said Susana.

    His party will continue to oversee upstream oil and gas investment this year, including related to licensing and procurement of goods and services. He hopes that the minimum procurement constraints can encourage optimal investment absorption. 

    In addition, his party will coordinate with the Investment Coordinating Board (BKPM) so that this year's upstream oil and gas activity plan can be carried out as planned. He is also optimistic that upstream oil and gas investment this year will be better than last year.

"As world oil prices improve, business players' optimism towards Covid-19 prevention and massive vaccination in various countries including Indonesia, the upstream oil and gas business climate this year will be much better than 2020," said Susana.

    The investment realization also has an impact on the smooth running of upstream oil and gas projects. Of the target of 12 upstream oil and gas projects this year, two projects have started operating in January, namely the KLD ONWJ Project with an investment of US $ 34 million and the gas supply project to the Balikpapan Refinery of US $ 27 million. This month, the US $ 46 million West Pangkah Project is scheduled to start operating.

Investor Daily, Page-10, Wednesday, Feb 24, 2021

Upstream Oil and Gas Investment is US $ 873.2 Million

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) said the realization of upstream oil and gas investment in January 2021 was positive. Investment realization last month was recorded at the US $ 873.2 million or 7.05 percent of the investment target of US $ 12.38 billion this year. 

    Acting Head of Program and Communication Division of SKK Migas Susana Kurniasih revealed that the realization of this investment was higher than the investment achievement in the same period in 2020 which amounted to the US $ 767.5 million or 5.55% of the annual target.

ENI

    Meanwhile, investment realization throughout January 2021 was used to support exploration activities, including by Pertamina EP, Pertamina Hulu Mahakam, ENI East Sepinggan, Pertamina Hulu East Kalimantan, and PHE OSES. In addition, this investment is also used to finance development activities. 

Exxon Mobile Cepu Ltd (EMCL)

    Primarily, the drilling of development wells, such as carried out by Pertamina Hulu Mahakam, Pertamina Hulu Sanga-Sanga, PHE ONWJ, ENI East Sepinggan, Pertamina EP, Petronas Carigali Ketapang II, Exxon Mobile Cepu Ltd (EMCL) and, BP Tanguh.

Blogger Agus Purnomo in Petronas Carigali Ketapang II

BP Tanguh

    Since discussing work, program, and budget (WP&B), SKK Migas claims to continue to coordinate with Cooperation Contract Contractors (KKKS), by conducting supervision and assistance with work program plans that have been approved in WP&B 2021. SKK Migas sees, accelerating the implementation of work programs in KKKS by endeavoring to complete the supporting documents for this year's program implementation has shown good results.

                                Blogger Agus Purnomo in SKK Migas

"So, the investment realization in January 2021 is higher in number and percentage compared to the same period last year, said Susana.

    SKK Migas and KKKS have also completed the 2021 procurement list at the end of 2020 and are also considered to have a positive impact on efforts to accelerate the process of procuring goods and services this year. 

    In addition, the highest number of procurement packages was in January 2021. As a result, KKKS will have a longer time to carry out operations for upstream oil and gas management. Susana explained, efforts to oversee upstream oil and gas investment were continuously carried out from various aspects, including licensing and procurement of goods and services. SKK Migas hopes that the absence of obstacles in the procurement process will contribute to optimal investment absorption.

    Indeed, investment requires support from various related agencies. On that basis, SKK Migas continues to carry out intensive coordination including with the Investment Coordinating Board (BKPM) so that the 2021 work program can be carried out according to the target. 

    SKK Migas is also optimistic that investment realization in 2021 will be better than in 2020. This is in line with the continuing improvement in world oil prices and optimism among business players towards the prevention of Covid-19.

"As well as the implementation of massive vaccinations in various countries including Indonesia, the upstream oil and gas business climate this year will be much better than in 2020," said Susana.

    The improved investment realization also had an impact on the smooth running of upstream oil and gas projects. Of the 12 onstream upstream oil and gas project targets, in January 2021 there were two onstream projects, namely the KLD ONWJ project with an investment value of US $ 34 million and the gas supply project to Pertamina Refinery Unit 5 Balikpapan with an investment value of US $ 27 million.

"In February 2021, the West Pangkah project is planned to be onstream with an investment of US $ 46 million," concluded Susana.

Kontan, Page-13, Tuesday, Feb 23, 2021

Pertamina is still selecting partners in the Rokan Block

 

    PT Pertamina ensures that the process of finding a strategic partner for the Rokan Block is still ongoing. Senior Vice President of Corporate Communications & Investor Relations of Pertamina. Agus Suprianto revealed that Pertamina is currently still conducting studies.

the Rokan Block Chevron

"The selection of a Strategic Partner for the Rokan block is currently still in the review and preparation stage," said Agus Suprianto.

    Agus still did not specify which oil and gas companies had submitted bids to become partners. On the other hand, for domestic electricity supply, Agus ensures that at this time it will still be carried out in accordance with the memorandum of understanding (MoU) signed with PT Perusahaan Listrik Negara (PLN). 

PT Perusahaan Listrik Negara (PLN)

    In addition to a number of preparations, Agus revealed that Pertamina also carried out contract mirroring for a number of supporting activities after the transfer of management in August 2021.

    President Director of PT Pertamina Hulu Rokan (PHR), RP Yudantoro, explained that the provision of these contracts was contracted previously used by PT Chevron Pacific Indonesia (CPI).

PT Chevron Pacific Indonesia (CPI)

"The majority of other contracts are provided by mirroring the current CPI contracts," said Yudantoro.

    Yudantoro continued to prepare for the drilling of 44 wells in the period August to December 2021 after the transfer of management, Pertamina will prepare around 6 rigs.

"The procurement of 6 rigs is ongoing," said Yudantoro.

Kontan, Page-13, Tuesday, Feb 23, 2021

Negotiations to be completed in March 2021

 

    The negotiation process between PT Chevron Pacific Indonesia and Eni for the transfer of management of the Indonesia Deepwater Development project is targeted to be completed by March 2021. 

PT Chevron Pacific Indonesia

    Deputy for Operations of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Julius Wiratno said that his party hopes the Indonesia Deepwater Development project (IDD) will immediately get new partners so that project implementation can be carried out quickly.

Blogger Agus Purnomo in SKK Migas

"It is hoped that the IDD will be completed by the end of March. Hopefully, the B to B will run smoothly, "he said.

    Chevron Pacific Indonesia Corporate Communication Manager Sonitha Poernomo said that his party is still working with SKK Migas and potential partners to continue realizing the potential of the IDD project.

Sonitha Poernomo

"However, according to policy we cannot provide detailed information on commercial negotiations," said Sonitha Poernomo.

    Head of SKK Migas Dwi Soetjipto said that Chevron had applied for a data opening permit to find new investors since July 2019 and was submitted again in February 2020. Dwi revealed that ENI was one of the most potential partners for the project.

"New operators can start proposing an extension of the Work Area and at the same time finalizing the discussion on the proposed revision of the IDD POD-I," he said.

    In other developments, SKK Migas noted that the realization of oil and gas investment as of January 2021 had reached the US $ 873.2 million. Acting Head of Program and Communication Division of SKK Migas Susana Kurniasih explained that the realization was 7.05 percent of this year's investment target of US $ 2.38 billion. This achievement is even better than the realization of investment in the same period last year which was valued at the US $ 767.5 million or 5.55% of the target.

Susana Kurniasih

    Susana explained investment realization during January 2021 was used to support exploration activities, including those carried out by Pertamina EP, Pertamina Hulu Mahakam (PHM), ENI East Sepinggan, Pertamina Hulu East Kalimantan, and PHE OSES. Investments are also used to finance development activities, particularly to finance development well drilling activities.

Bisnis Indonesia, Page-4, Tuesday, Feb 23, 2021

The Jumbo Oil and Gas Project Is Still Ongoing

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) ensures that several upstream oil and gas projects are still continuing. This is to support the achievement of oil production targets of 1 million barrels per day and natural gas 12 billion standard cubic feet per day by 2030.

the Merakes project 

    Deputy for Operations of SKK Migas, Julius Wiratno, said that major projects in the upstream oil and gas sector are still in the construction stage, some of which are expected to be completed by the end of 2021. One of them is the Merakes project which is being worked on by Eni East Sepinggan.

Eni

"We hope this project can be on stream in April with gas production of 380-400 mmscfd," he said.

the Jambaran Tiung Biru (JTB)

    There is also the Jambaran Tiung Biru (JTB) project that is being supported by SKK Migas and the government so that it can be on stream in November this year. In the future, the project managed by PT Pertamina EP Cepu (PEPC) will produce 350 mmscfd of gas.

    SKK Migas is also working on the Tangguh Train-3 project that BP Berau Ltd is working on to be on stream immediately at the end of this year or early next year.

Blogger Agus Purnomo in SKK Migas

    The project is indeed constrained from an operational perspective due to restrictions on social activities in the context of tackling the Covid-19 pandemic.

the Masela Block

"Other major projects such as Indonesia Deepwater Development (IDD) and the Masela Block are in the process of business-to-business discussions between contractors and their partners," said Julius.

Indonesia Deepwater Development (IDD) Chevron

    The IDD project is facing obstacles because its main investor, Chevron Pacific Indonesia, is reportedly leaving, even though this project should be targeted to be on stream in 2025.

Kontan, Page-10, Saturday, Feb 20, 2021

The Merakes Project will be Operated in the Second Quarter of 2021

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) is optimistic that the Merakes Field development project, the East Sepinggan Block, will start operating in the second quarter of this year. This project will generate additional gas production of up to 368 million standard cubic feet per day / MMScfd.

Blogger Agus Purnomo in SKK Migas

    Deputy for Operations of SKK Migas Julius Wiratno said that the work on the Merakes Project which was undertaken by ENI East Sepinggan had been delayed due to the Covid-19 pandemic. The main obstacles faced were restrictions on the movement of goods and Human Resources (HR) required by the project. However, ENI and his party are trying to catch up with the delay in this project.

ENI

"Currently, the activities have been carried out smoothly, so that the project progress has reached 88.5% or only 1.5% slower than the target. We are trying to get the first gas project at the end of April 2021, "said Julius.

the Merakes Field

    This year, gas production from the Merakes Field is targeted to reach 345 MMScfd. This gas production will continue to be boosted so that it can reach peak production of up to 368 MMscfd in 2022.

"Gas from this field will be flowed to the Bontang LNG Refinery in East Kalimantan to fulfill existing market commitments," he added.

    The construction of the Merakes Project began in 2019 with an investment fund of US $ 1.3 billion. In the plan of development / POD for the Merakes Project, ENI plans to drill six underwater wells and build a submarine pipeline system that will be connected to the floating production unit / FPU of Jangkrik Field in the Muara Bakau Block. 

Jangkrik Field

    Later, the Merakes Field gas will be sent via the existing pipe from the Jangkrik Field FPU to the Bontang LNG Refinery operated by PT Badak NGL. Similar to the Jangkrik Field, the Merakes Field will also extend the operating life of the Bontang LNG Plant.

    ENI stated that Merakes Field is estimated to have gas reserves of 2 trillion cubic feet in its official statement. This oil and gas potential was discovered after ENI drilled the Merakes-1 well in 2014. Furthermore, in 2017, ENI drilled the Merakes-2 appraisal well. In January, two Projects Completed SKK Migas succeeded in completing two of the 12 oil and gas projects targeted to operate in 2021.

    The two projects are the KLD Project by PT Pertamina Hulu Energi Offshore North West Java (PHE ONWJ) with a capacity of 16 MMscfd and the project to divert gas supply from the South Mahakam Field to the Balikpapan Refinery by PT Pertamina Hulu Mahakam (PHM) 50 Mmscfd. According to Julius, these two projects were successfully completed on time, despite the Covid-19 pandemic.

"The timely implementation of these two projects gives confidence that the implementation of other projects that will be carried out in 2021 can be realized on time," said Julius.

    Together with the cooperation contract contractor (KKKS), they are trying to maximize the implementation of activities in the field. One of them is by accelerating the realization of projects that are supposed to be implemented next year to this year.

"I do not promise, but we are trying to accelerate the achievement of activities like last year. This acceleration requires a very large effort, "said Julius.

    Last year, SKK Migas succeeded in realizing the operation of 15 projects out of the targeted 12 projects, even though one project encountered obstacles.

    Julius hopes that acceleration efforts can be carried out considering that current oil prices are improving faster than world predictions so that they can also increase the economic calculation of upstream oil and gas business activities. After the average world oil price in January reached around the US $ 55 per barrel, the oil price reached US $ 63 per barrel this February. 

    Meanwhile, the oil price assumption in the APBN is the US $ 45 per barrel. The total investment for the 12 upstream oil and gas projects which are scheduled to operate this year reaches the US $ 1.7 billion. The 12 projects will provide additional oil production of 28,508 barrels per day (bpd) and gas of 484.2 MMScfd.

Investor Daily, Page-9, Saturday, Feb 20, 2021

Land Acquisition Completed, Pertamina Continues the Tuban Refinery

 

    PT Pertamina (Persero) through Subholding Refining and Petrochemical, PT Kilang Pertamina Internasional (KPI), is continuing to prepare land for the Tuban Refinery Project, East Java. This step follows the completion of land acquisition belonging to residents who are sure to comply with applicable regulations. KPI Corporate Secretary Ifki Sukarya said the land acquisition for the Tuban Refinery Project has been completed. Currently, his party is continuing to work on the Tuban Refinery Project which is now in the early work stage.

"The clearing of the land is still around 328 hectares and the restoration of abrasion (restoration) covering an area of ​​20 hectares has been completed," said Ifki.

    Ifki explained the majority of affected residents had received reimbursement of funds from Pertamina for land acquisition for the Tuban Refinery Project. The land that has been acquired has been reached 99% of the target area of ​​377 hectares of residents' land. This procurement has gone through all the mechanisms stipulated by Law Number 2 of 2012 concerning Land Acquisition for Development for Public Interest.

    The law has regulated the procedures for land acquisition for refinery construction, namely planning, preparing, implementing, then releasing agency land. In the preparation stage, based on the results of the inventory and identification of land tenure, Pertamina has followed the procedures for assessing compensation in accordance with the provisions by appointing a Public Appraisal Service Office (KJPP) which is then determined through the local National Land Agency.

"KJPP is the one that assesses the land to be taken over," said Ifki.

    Ifki added, Pertamina could not intervene in the land appraisal process carried out by KJPP and other parties. Pertamina also has the principle that this land acquisition process does not harm the residents whose land is affected. In fact, Pertamina also provides education to residents so that they can manage the money from land replacement as well as possible.

"On average, residents own a large area of ​​land. The bigger the land area, the bigger the replacement money will be automatically received, ”he explained.

    Pertamina had stated that the land requirement for the refinery project and petrochemical facilities in Tuban reached around 800 hectares, where part of the land belongs to the community and partly under the Ministry of Environment and Forestry (KLHK). In May last year, the company completed the land acquisition belonging to the Ministry of Environment and Forestry. The Tuban Refinery Project is one of the National Strategic Projects mandated by the Government to Pertamina.

    With the existence of a refinery in Tuban, future fuel needs can be met from domestic refineries, thereby reducing imports. This project is expected to increase the oil processing capacity by 300 thousand barrels per day (BPD) and will produce Euro V standard fuel in the form of gasoline (gasoline) 80 thousand bpd, diesel oil  100 thousand BPD, and Avtur 30 thousand BPD. The Tuban refinery is integrated with a petrochemical refinery with a production capacity of 3,750 kilotons per year.

Rosneft 

    The Tuban Refinery project was carried out by PT Pertamina Rosneft Processing and Petrochemicals (PRPP) which is a joint venture formed by Pertamina and Rosneft Oil Company since October 2016. This joint venture company will work on and manage the Tubang Refinery with 55% share ownership of Pertamina and Rosneft 45 %. The construction of the refinery will also absorb 35% of the domestic component level (TKDN), 20 thousand workers during construction, and 2,500 workers during operation. In addition, in the early stages of development, Pertamina absorbed 271 local Tuban workers.

Investor Daily, Page-10, Thursday, Feb 19, 2021

Without Incentives, Mahakam Block Production has the Potential to Drop

 

    Additional incentives from the government are considered crucial to boost oil and gas production from the Mahakam and Sanga-Sanga blocks. The reason is, without incentives that are able to open new potential, the production of the two oil and gas blocks in East Kalimantan has the potential to drop drastically in the next three years.

Sanga-Sanga blocks

    Head of the Exploration Planning Division of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Shinta Damayanti said that providing additional incentives is very important to boost existing oil and gas production and encourage exploration activities. So far, incentives have been provided for two subsidiaries of PT Pertamina Hulu Energi (PHE), namely PT Pertamina Hulu Sanga-Sanga (PHSS) and PT Pertamina Hulu Mahakam (PHM).

Blogger Agus Purnomo in SKK Migas

"If they are not given incentives, their oil and gas production will decline significantly in 2024," said Shinta Damayanti.

    Deputy for Operations of SKK Migas Julius Wiratno revealed that the government through the Ministry of Energy and Mineral Resources has approved a number of incentives for the Mahakam Block.

"There has been a letter from the Minister of Energy and Mineral Resources dated January 6, 2021, regarding the change of FTP from 20% to 5% and incentives for upstream oil and gas in the form of accelerated depreciation at the cost of capital," he said.

    Apart from this upstream incentive, SKK Migas has also proposed a number of fiscal incentives for the Mahakam Block. These fiscal incentives include exemption from a number of taxes, LMAN tariff fees, and utilization of state-owned goods from the termination block, as well as domestic market obligation (DMO) holidays. This tax exemption includes Value Added Tax (VAT/PPN) and Land and Building Tax (PBB) for the exploitation stage, Income Tax (PPh), and VAT for joint facility operating costs, Income Tax (PPH) and, VAT for the allocation of indirect head office costs, as well as PDRI and import duties.

"Regarding fiscal incentives, SKK Migas was asked to send another letter to be forwarded to the Minister of Finance," explained Julius.

Dwi Soetjipto

    In fact, the Head of SKK Migas Dwi Soetjipto previously stated that all upstream and fiscal incentive instruments were needed to provide a reasonable economy for the Mahakam Block. This is based on the economic study of his party and the Cooperation Contract Contractor (KKKS). SKK Migas has recorded a number of field development plans, including work plans to keep Mahakam Block production from falling.

    For existing production, there is already a plan of development / POD with gas reserves of around 1 trillion cubic feet and 36 million barrels of oil. Later, there are 8 projects that will produce 64.4 billion cubic feet of gas and 6.4 million barrels of oil. For development, there is OPLL 2A which includes the development of South Mahakam, Sisinubi, Handil, and Bekapai which can produce additional gas reserves of 8.6 trillion cubic feet and oil of 5.1 million barrels.

    Next is OPLL 2B in the same fields with projections of additional gas reserves of 38.6 trillion cubic feet and oil of 3.3 million barrels. Then, OPLL 2C includes the construction of a new platform on Sisi Nubi and other activities that are expected to produce 215 billion cubic feet of gas and 0.6 million barrels of oil with 176 wells.

Investor Daily, Page-10, Wednesday, Feb 18, 2021