Indonesia Ministry of Energy and Mineral Resources Extend The management contract to ConocoPhillips

The management contract extension has been determined by the Indonesia Ministry of Energy and Mineral Resources to ConocoPhillips as the existing operator on July 22, 2019 at the ESDM Ministry office, Jl. M.H Thamrin, Jakarta. 

The initial Corridor Block contract was signed on December 21, 1983 with three cooperation contract contractors (KKKS), namely ConocoPhillips (54%), Talisman (36%) and Pertamina (10%). The oil and gas block contract will expire on December 19, 2023. With the extension of the contract, the Ministry of Energy and Mineral Resources stipulates that the composition of share ownership will change to ConocoPhilips 46%, Pertamina 30% and Repsol 24%. 

The Corridor Block is the third largest gas block in Indonesia after the Tangguh and Mahakam Blocks. As of the end of June 2019, the realization of gas lifting from the Corridor Block was recorded at 827 million cubic feet per day (million standard cubic feet per day / mmscfd). 

In a press conference in Jakarta on Monday (7/22/2019) the Minister of Energy and Mineral Resources stated that the extension of the Corridor Block management for 20 years until 2043 was based on, among other things, a signature bonus (US $ 250 million and a definite work commitment (US $ 250 million). 

Corridor is said to be using a gross split scheme.The profit sharing contract will implement a gross split scheme in which the KKKS receives a 48.5% share for oil and 53.5% for gas.

(See another article : "Pertamina Was Alarmed Rokan Block Production Continues to Decline Like the Mahakam Block")

The decision of the Ministry of Energy and Mineral Resources above is based on Minister of Energy and Mineral Resources Regulation No.23/208 which is constitutional. Previously, ESDM Minister Sudirman Said had issued Minister of Energy and Mineral Resources Regulation No.15 / 2015 which prioritized the management of contracted oil and gas blocks to Pertamina. However, after Ignasius Jonan became Minister of ESDM, Minister of Energy and Mineral Resources Regulation No. 15/2015 was amended by Permen No.23 / 2018. This Regulation No.23 / 2018 is deliberately prepared to provide opportunities for foreigners to continue to dominate the control of national oil and gas management even though it has been managing for decades. 

Based on the Constitutional Court Decision No.36 / PUU-X / 2012, the oil and gas working area (WK) should only be managed by BUMN as a form of state control. This is in accordance with the mandate of Article 33 of the UDD 1945 in which the state through the Government and Parliament, has the power to make policies, manage, regulate, manage and supervise the state's natural resources. Particularly for management, government control is carried out by the government through BUMN. If the government complies with the constitution, then there is no other alternative except to hand over the management of oil and gas WK whose KKS ends to BUMN. 

Minister of Energy and Mineral Resources Regulation No.23 also contradicts the Energy Law No. 30/2007. Article 2 of the Energy Law states that energy is managed based on the principles of benefit, fairness, sustainability, community welfare, preservation of environmental functions, national security and integration by prioritizing national capabilities. Article 4 of the Energy Law states that in order to support sustainable national development and improve national energy security, fossil energy, geothermal, large-scale hydro resources and nuclear energy resources are controlled by the state and utilized for the greatest prosperity of the people. 

Minister of Energy and Mineral Resources Regulation No.23 / 2018 keeps the mystery of the possibility of corruption and rent seeking through direct appointment of existing KKS contractors to continue the management of an oil and gas WK. SKK Migas Head Dwi Soetjipto said oil and gas production in the Corridor Block would be stable if additional reserves were found. At present, proven gas reserves in this block are recorded at 4 trillion cubic feet (TCF). "Maybe until 2043, there were only a few TCFs. If it is calculated until 2026, there are probably 2 TCFs, "Dwi said.

If it is assumed that the remaining Corridor Block reserves are around 3 TCF and the average gas price is US $ 8-10 / mmbtu, the Corridor Block's gross income potential (before the exploitation fee is deducted) is around US 24 - 30 billion or around Rp 336 - 420 trillion , at an exchange rate of Rp. 14,000 per US $. The cost of acquiring proven reserves of an oil and gas block ranges from 10% to 15% of the reserve value. Therefore, the cost of acquiring 100% of the Corridor Block reserves is (10% - 15%) x US (24-30) billion = US $ 2.4 billion - US $ 4.5 billion!

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8:12:00 AM | 0 comments

Gas Bubble On the YYA block in Offshore North West Java Block (ONWJ).

PT Pertamina Hulu Energi (PHE) stated that there had been a gas bubble on the YYA block in Blok Offshore North West Java (ONWJ). The oil and gas block is located in the waters of the North Coast of Java Island.

Vice President Relations of Pertamina Hulu Energi Ifki Sukarya said, on July 12 the drilling of the YYA-1 well had caused a bubble to appear around the YAA offshore platform operated by PHE ONWJ. The well is about 2 kilometers (km) from the North Coast of Java, Karawang, West Java. "That the YY A1 well is a well that was previously explored and we are preparing for production. It makes holes for production activities. When it pits holes, flow arises, gas bubbles emerge," Ifki said, in Jakarta, Wednesday (07-17/2019 )

Pertamina Hulu Energi ONWJ has activated the Incident Management Team (IMT) to overcome this gas bubble incident.

To avoid undesirable things, Pertamina Hulu Energi ONWJ has closed the YYA1 well drilling activity, while also moving workers on offshore platforms and drilling towers.

"So we immediately at the time of closing, we are IMT activists who are tasked with monitoring the situation on the ground," he said.

Anticipation

At the moment the gas bubble is still happening, Pertamina Hulu Energi ONWJ has also prepared a device to anticipate an oil leak. In addition, people in three villages near the project have been asked to stand by.

"So we will prepare an oil spill response team to prepare a strategy at sea and on land, do not get to land. We already have 3 teams built. Oil boom (a tool for dealing with oil leaks) 3 km in length. There are three villages in expect it to be exposed, "he said.(PE)

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9:03:00 AM | 0 comments

North Stream 2 New Export Gas Pipeline From Russia to Europe Will be In Operation Soon

(Gazprom) North Stream 2 is a new export gas pipeline running from Russia to Europe across the Baltic Sea.The decision to build Nord Steam 2 was based on the successful experience in building and operating the Nord Stream gas pipeline.

The new pipeline, similar to the one in operation, will establish a direct link between Gazprom and the European consumers. It will also ensure a highly reliable supply of Russian gas to Europe. This is particularly important now when Europe sees a decline in domestic gas production and an increasing demand for imported gas.

The Nord Stream 2 project is implemented by the Nord Stream 2 AG project company. The entry point of the Nord Stream 2 gas pipeline into the Baltic Sea will be the Ust-Luga area of the Leningrad Region. Then the pipeline will stretch across the Baltic Sea. Its exit point in Germany will be in the Greifswald area close to the exit point of Nord Stream.

The route covers over 1,200 kilometers.

The total capacity of two strings of Nord Stream 2 is 55 billion cubic meters of gas per year. The aggregated design capacity of Nord Stream and Nord Stream 2 is therefore 110 billion cubic meters of gas per year. Nord Stream 2 will be put into operation before late 2019.(PE)

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4:41:00 AM | 0 comments

PoD Revision of the Masela Block Oil and Gas Project Development Plan was Signed

Saumlaki - Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan has signed a revision of the Masela Block Oil and Gas Project Development Plan for the Tanimbar Islands, Maluku. This was stated by the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto through a press release received today.


The signing was carried out after Minister Jonan cooperated with the Corruption Eradication Commission (KPK) to prevent potential corruption in the development of the block which has a large investment and the use of the cost recovery profit sharing contract (PSC). "Yesterday we had to clarify with the KPK. There were a number of things that were the concern of the KPK, there were some that had been clarified, there were some that had to be monitored, for example procurement. With the KPK completed, (PoD) was signed by the Minister," said Dwi, Saturday, July 13, 2019.


The PoD revision that has been approved by the Minister of ESDM, according to Dwi, is in accordance with the recommendations of SKK Migas. "Because this is a big investment, then the Minister will report to the President. In detail, the Minister will deliver," he said.


Furthermore, Jonan said the government did not delay long after SKK Migas and Inpex signed a Head of Agreement (HoA) on June 16. Now the PoD made based on the HoA is ready to be executed and the next step in developing this Masela Block is FID (Final Investment Decision). "Their FID will process, according to the schedule for another year (complete)," Dwi said.


Previously, INPEX Corporation's Senior Media Specialist Mochamad Nunung Kurniawan explained that INPEX formulated a revised Plan of Development (POD) based on the results of the Pre-FEED work and ongoing discussions with the government so that the project has feasibility from the economic side of the project.


The contractor winning the Pre-FEED Onshore LNG auction is PT KBR Indonesia, while the Pre-FEED Floating Production Storage and Offloading (FPSO) Contractor is a PT Technip Engineering Indonesia Consortium and PT Technip Indonesia. Under the scheme of land LNG development with an annual LNG production capacity of 9.5 million tons.

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7:56:00 PM | 0 comments

Rokan Transfer Management Team Will be Formed in The Near Future

Pekanbaru (PE) - The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) said that the Rokan Block transfer management team in the near future will be formed to ensure the smooth transition of oilfield management in Riau Province. "The government will have a meeting point very soon. For the form of the team, it takes time, needs agreements, meetings between the parties, "Head of North Sumatra SKK Migas, Avicenna Darwis, told in Pekanbaru, Riau, Thursday. 

 Avicenna said that this responded to the decline in the production of the Rokan Block which was still managed by PT Chevron Pacific Indonesia at the end of the company's contract period, which expired in 2021. The Indonesian government had decided to submit further management to PT Pertamina (Persero). He acknowledged that the condition at the end of the existing operator contract period would certainly have an impact on the decline in oil production. This was because Chevron certainly reduced its investment in the oilfield.

( Another article : Pertamina Was Alarmed Rokan Block Production Continues to Decline Like the Mahakam Block )

To anticipate these conditions, Avicenna continued, the government formed the Rokan block management transfer team. 

The team essentially said that Chevron and Pertamina were looking for an agreement in the transition process, including issues such as environmental issues, human resources, and data. "The challenge is concerning data, because building data is not built in a year, two years," he said. The issue of the transition of operators in a large work area is admittedly not easy to determine the scheme and investment model. Avicenna said the process was almost complete, which was expected before the end of the 2021 working area contract, Pertamina could enter for investment. 

 "Now it is at the end of the process, because it is very complex, especially the transition of production area (oil) is almost 200,000 or around 190,000 (barrels per day)," he said. Previously, SKK Migas targeted Block Rokan oil lifting this year at only 190,000 barrels of oil per day (BOPD), down 9.2 percent compared to the realization in 2018 which reached 209,478 BOPD.

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5:47:00 AM | 0 comments