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INDONESIAN OIL, GAS & POWER CLEAN ENERGY GAINING MOMENTUM VOLUME 59 | FEBRUARY 29 - MARCH 29, 2016
PETROMINDO FEBRUARY 29 – MARCH 29, 2016
1
CONTENTS
10 INTERNATIONAL
A new green energy superpower
India building 100,000 MW solar power
38 FOcus
Clean energy gaining momentum 32
42 Center of Excellence for
Clean Energy built in Bali
54 COMPANIES
Pertamina’s upstream profit
drops to $800m
56 pOWER
N. Sulawesi, Gorontalo have
enough power now
64 INTERNATIONAL
63 OIL & GAS
ovt offers investors
G
WEC: Unconventional gas
is changing global markets
81 SHIPPING POWER
Wintermar acquires new vessel
despite tough times irebon groundbreaking
C
82 OIL & GAS
scheduled for May 2016
Pelindo signs contract with JSK PT Cirebon Energi Prasarana (CEPR), the
for LNG Terminal in Bali sister company of PT Cirebon Electric Power
(CEP), expects to break ground on its 1000
84 Bontang in decline MW power plant project in May 2016.
86
T
PUBLISHER here’s concern that the sharp drop in oil, gas and coal prices will
Alexander Ginting dampen the interest of many countries in clean energy. That’s not
NEWS DIRECTOR the case with Indonesia. Indonesia under President Joko Widodo
Reiner Simanjuntak
CHIEF EDITOR
has underlined its commitment to developing clean energy remains strong
Johannes Simbolon despite the collapse of oil and gas prices. An encouraging fact, indeed.
EDITORS The commitment was well displayed during the recent Bali Clean Energy
Godang Sitompul Forum (BCEF) held in Nusa Dua, Bali province on Feb. 11-12.
Bernard Lubis
Co-organized by the Indonesian government and the Paris-based
Benget Besalicto ST
Febry Silaban International Energy Agency (IEA), where Indonesia has been a member
Cepi Setiadi since last November, the event was considered the largest energy event ever
Rikordias Dominius held in Indonesia in recent history. Dozens of energy ministers and experts
ART DIRECTOR
from various countries came to the event. The willingness of people to
Ipunk AF.
PHOTOGRAPHERS participate was beyond expectation. Around 2,000 people, mostly investors,
Khalsa Leatemia either local or international, participated in the event, while the organizer
Abdul Rahim initially only expected 500 people to come. At the end of the conference,
Mudasir ministers from 17 countries signed a declaration, underlining their
Lucky Ginting (Research)
GRAPHIC DESIGNER
commitment to the development of clean energy.
Ach. Sakti W. One of the main agenda of the conference was the launching by the
M. Yunus (Info Graphic) Indonesian government of the so-called Center of Excellence (CoE) for
ADVERTISING MANAGER Clean Energy. The CoE is an integrated research and development center for
Ronald Siahaan
Nizma Sari Nurulita
clean energy. Thanks to the existence of the CoE, which will be built in Bali,
ADVERTISING SUPPORT Indonesia expects to be able to accelerate the development of clean energy.
Santi Marpaung In a nutshell, through the international conference, Indonesia wanted to
Irma Stephanie tell the world that it is still committed to the development of clean energy
FINANCE DIRECTOR
despite the low prices of fossil fuels. This is the topic of the main story of
Anton Leonard J.
EDITORIAL SECRETARY this edition.
Firmansyah Sembiring Aside from our reports on the Bali conference, we also have many
PROOF READER articles on power, oil and gas industries in this edition. Among them is our
Tyasno Hery
interview with Suriyanto B.com MTM, President Director of PT EnviroMate
DISTRIBUTION MANAGER
Tria Purnama Sari
Technology International (PT ETI), a leading provider of energy-related
CIRCULATION services. As a business player, he offered a valuable perspective on what is
Riyanci Dina happening now in the energy industries, including his opinion regarding
the government’s 35,000 MW program. The article based on interview with
PETROMINDO is part of Suryanto is presented as cover story of this edition.
Besides, we have two opinion articles by our contributors on power
industry, including one regarding geothermal, which is one type of
Editorial
Jl. Gajah Mada No.149C 2nd Floor, renewable energy available in abundance in Indonesia, and the other
Jakarta Barat - Indonesia regarding the governmental regulations issued for the 35,000 MW mega
Phone: +62-21- 687 0020 (Hunting) projects.
Fax: +62-21-6385 8655
Advertising & Circulation
Jl. Melawai Raya No. 21C
Jakarta Selatan 12130 - Indonesia
Phone: +62-21-722 6564 (Hunting) Johannes Simbolon
Fax: +62-21-722 6567 Editor in Chief
Advertising inquires contact
advertising@petromindo.com Send your letters or comments on this magazine or articles inside, as well as your
Subscription inquires contact opinion articles to ogeasia@petromindo.com. Opinion articles, either in Indone-
circulation@petromindo.com sian or English, are between 1,500 and 2,000 words in length.
Courtesy of Wikipedia
T
he global power industry coal exporting countries. India is power, last November during the
is now setting close eyes the largest importer of coal from Paris COP21 climate summit, India’s
on India as the country is Indonesia. Prime Minister Narendra Modi
busy developing numerous Facts on the ground however together with France’s President
power plants as part of its ambitious indicate that the country still has a Francois Hollande announced a new
renewable energy program which, if long way to go to achieve the target. alliance of 120 countries and industry
realized, will turn the country into a Obstacles are plentiful and not easy to players on large-scale expansion of
green energy superpower. remove. That’s why a report recently solar energy use in tropical countries
The Indian government has released by Stanford University says and beyond.
launched a program to build 175,000 that target is “perhaps at this point Modi told a press conference that
MW power plants using renewable only aspirational”. Meeting the target as fossil fuels put the planet in peril,
energies as fuel, including 100,000 will require some potentially difficult hopes for future prosperity in the
MW solar power plants. The global reforms by both federal and state developing world now rest on bold
community in particular set eyes on governments, according to the report. initiatives.
the National Solar Mission, which is Regardless, the Indian “Solar technology is evolving,
the biggest of its kind ever launched government is pushing forward to costs are coming down and grid
by any country. The goal is that solar realize the project. connectivity is improving,” he said.
power plants will generate total of Piyush Goyal, India’s Union “The dream of universal access to
100,000 MW power in India by 2022, Minister of Coal, Power and clean energy is becoming more real.
according to reports. Renewable Energy said the country’s This will be the foundation of the
A very ambitious program, indeed. solar energy capacity is expected new economy of the new century,”
It’s also more than all of Europe’s increase four-fold to 20,000 MW Modi said, while describing the solar
solar capacity, and more than half the during the next fiscal year, ending alliance as “the sunrise of new hope,
world’s, as of the end of last year. March 2017. not just for clean energy but for
In comparison, Indonesia, who is At present, the country’s solar villages and homes still in darkness,
also very keen to develop renewable capacity stands at around 5,000 MW. for mornings and evening filled with a
energies, including solar power, has The target for the capacity addition clear view of the glory of the sun”.
thus far planned to build only 5,000 during this fiscal year is about 2,000 The Indian government is
MW solar power. No timeframe MW, whereas for the next fiscal year investing an initial US$30 million in
has been given by the Indonesian it is 12,000 MW. Over 4 GW of solar setting up the alliance’s headquarters
government for the realization of the power capacity is expected to be in India. The eventual goal is to raise
plan. added this financial year, which is $400 million from membership fees,
Analysts warn that India may twice the target, Goyal was quoted by and international agencies. While
slash its coal imports as a result Indian media as saying. signatory nations mostly hail from the
of the plan, which, if becoming Demonstrating India’s strong tropics, several European countries
reality, would deal a heavy blow to commitment to developing solar are also on board with the initiative,
BP expected to set gas price its shares or creating a new gas through virtual pipeline scheme.
for fertilizer mid this year formula,” he said. “The LNG will be supplied in small,
The Ministry of Industry expects Aside from fertilizer plants, the medium, large scales depending on
BP Indonesia, the leader of Tangguh government expects petrochemical the demand,” he said.
consortium, to set by the price of gas industry will also be built in the The LNG receiving terminals will
for fertilizer plants by the middle of Bintuni Gulf industrial zone, he said. be built either floating or onshore in
this year. several areas, such as Central Java,
Director General of Chemical, Govt to continue expanding West Java and eastern Indonesia,
Textile and Miscellaneous Industries gas infrastructures Agus said, adding the government
Harjanto said recently that there The government will not extend expects the terminals will be built by
are two fertilizer plants planned the existing contracts of LNG exports the private sector.
to be built in Bintuni Gulf near the and allocate all the national gas Aside from LNG receiving
Tangguh LNG plant and the gas for production for domestic market. terminals, the government will also
the fertilizer plants is expected to As such, the government will build more pipelines to create wide
come from the fields that now supply keep expanding the national gas pipeline networks, he said.
gas to the LNG plant. The government infrastructures to allow the domestic
has allocated 180 mmscfd of gas from market to absorb all the gas, a senior Petrochemical plant
Tangguh for the fertilizer plants. official of the Ministry of Energy and in Bintuni needs
According to Harjanto, at present, Mineral Resources said. 200 mmscfd of gas
BP is certifying gas reserves in the “We now export (most of our) gas Ministry of Industry said that a
fields now producing gas for Tangguh in the form of LNG. As long as we don’t petrochemical plant that the joint
LNG plant and calculating production have enough LNG receiving terminals venture of German firm Ferrostaal
costs before deciding the price. The in the country, we will never stop and Japanese firm Sojitz plans to
certification process which is being exporting gas,” Director of Oil and Gas develop in Bintuni Bay regency in
carried out together with upstream Program Oversight at the Directorate West Papua will need about 200
authority SKK Migas is scheduled for General of Oil and Gas Agus Cahyono mmscfd of gas.
completion in April of this year. Adi said recently. “The government has yet allocate
“The government will be involved As such, Agus said the government gas for the project. It is still under
in the price-setting price in order to will push for the development of discussion. The gas is most likely
make it affordable either by reducing LNG infrastructures in the country sourced from Kasuri block owned by
Genting (Malaysian firm),” Director
Courtesy of SKK MIGAS
Courtesy of Elnusa
Trade ministry, BPH Migas
sign MoU on oil fuel meter
The Directorate General of
Consumer Protection and Trade
Order (PKTN) at the Ministry of Trade
and downstream regulator BPH Migas
signed on Feb.16 a memorandum of
understanding (MoU) to supervise
the use of metering equipment in fuel
distribution.
The measure aims to protect
consumers from being abused by oil
fuel distributors, PKTN’s Director
General Widodo said.
“We have often been informed
of complaints over the quantity of
oil fuels received (by consumers).
Thereby, the government needs to He said the sharp drop in oil The firm however did not provide
implement a supervision system, prices has affected drilling activities, comparative figures from the
which is effective and efficient, to but business opportunities still exist previous year.
detect any misuse of metering tools in operation and maintenance. “Although operating costs rose
by irresponsible people,” Widodo “We know that oil and gas 36.39 percent, operating profit
said. business has been existing in recorded a significant growth,
Indonesia for decades. There are reaching 212 percent of the target.
Elnusa targets to bag many facilities aged more than 20 or Net profit in 2015 reached $2.487
$50-80m new contracts 30 years old, which need professional million (unaudited),” PDSI’s President
IDX-listed oil and gas service firm workers or expertise to upgrade Director Lelin Aprianto said.
PT Elnusa Tbk targets to grab new the effectiveness and productivity The firm said in a statement that
contracts worth US$50-$80 million of equipment. This is a business its sales rose significantly last year,
this year aside from the $317 million opportunity for us and hopefully 31 percent above target. EBITDA
contract that has been secured by the we can get projects like this in days margin reached 32.71 percent
firm since the start of this year. ahead,” he said. Rig productivity reached 43.4
Elnusa’s President Director While its drilling service may percent, above the target of 34.8
Syamsurizal Manaf said at present, face challenges due to the market percent set in the firm’s work and
the firm has $400 million contracts downturn, the firm is optimistic budget plan.
on hand, but not all of them would be about its financial performance For this year, the firm targets
realized this year. thanks to other business lines such as rig availability at 98.54 percent
Despite the oil price drops, the fabrication and logistic service. and productivity at 49.38 percent.
firm continues receiving contracts, The firm plans to expand overseas
which reflected costumers’ PDSI booked $2.5m this year, to countries such as
confidence in the firm’s capability in in profit last year Algeria, Brunei Darussalam and the
competition with foreign players. PT Pertamina Drilling Services Philippines. The firm will send a rig to
“Contracts for this year were Indonesia (PDSI), the drilling service Algeria around August to be used at
mostly received from Pertamina to arm of state owned oil and gas firm Pertamina’s field in the country.
carry out the firm’s operation and PT Pertamina, said recently it booked According to Lelin, leasing cost of
project maintenance. Pertamina gives an unaudited net profit of US$2.487 rig has dropped 50 percent amid the
us competitive prices,” he said. million last year. oil price drop.
Petromindo|Khalsa
Ophir’s Halmahera-Kofiau supply three High Integrity Pressure around a HIMA Planar 4 fail-safe
PSC in termination process Protection Systems (HIPPS) to protect solid-state logic solver. Turnock
The Halmahera-Kofiau PSC, against over-pressure on a subsea gas adds: “As a solid-state logic solver
offshore West Papua, which is owned field development in Indonesia. there’s no software with which to
by UK-based oil and gas exploration Between them, the three HIPPS contend and the Planar 4, which can
firm Ophir Energy Plc., is currently will protect the product pipes and even be used in SIL4 applications,
in the process of termination, downstream equipment for almost a offers extremely high reliability and
according to upstream authority SKK dozen subsea wellheads, the company availability.”
Migas year-end report obtained by said in a statement. Each of the three HIPPS will be
Petromindo. Eddy Turnock, Hima-Sella’s mounted in a stainless steel cabinet
SKK Migas did not give further Sales & Marketing Director, on the processing barge and will
details. comments: “This is a complex subsea interface with a number of actuator-
The block was signed on Nov. 30, development with several production controlled valves and pressure
2009 and was awarded to Canadian flow lines, umbilicals, a tethered sensors. Each cabinet will have a tile
firm Niko Resources Ltd. processing barge close to the field mimic containing lamps, switches
In October 2014, Ophir Energy and export pipes for processed gas and pushbuttons. Information from
entered into an agreement with and condensates. It is essential to the HIPPS - including system status,
Niko to acquire interest in seven protect all equipment downstream of pressure readings and valve closure
deepwater PSCs in Indonesia, the wellheads against high pressures, times – will be made available
including the Halmahera-Kofiau PSC. and we’re delighted that the operator to other systems via a Modbus
has turned to Hima-Sella to engineer communications facility.
Hima-Sella wins a high-integrity, fail-safe solution.” The three HIPPS cabinets are
Indonesia contract The company said the overall currently under construction at
UK-based specialist safety solution is to meet Safety Integrity Hima-Sella’s premises in Stockport,
instrumentation systems provider Level (SIL) 3, as defined under and installation and commissioning
Hima-Sella said Monday it has been functional safety standard IEC-61508, of the equipment is scheduled for the
awarded a contract to develop and and Hima-Sella is building each HIPPS quarter of this year.
Minister approves North Kalimantan, a senior official of (FID) for the project is scheduled to
termination of Mandar, the ministry said recently. be made at the end of this year. It will
South CPP PSCs “The PoD will be signed soon,” be followed by EPCI works which
Upstream authority SKK Migas Director General of Oil and Gas IGN take at least two years. The Badik and
has terminated two oil and gas Wiratmaja said in a statement. West Badik fields are thus expected to
production sharing contract (PSC), Approval from the North start producing in 2019, he said.
namely Mandar PSC, offshore West Kalimantan provincial administration “Based on plans, gas from the
Sulawesi, and South Coastal Plains for the PoD – a crucial administrative fields will be used local, while the
Pekanbaru PSC, onshore Riau. requirement for the PoD – has been oil will delivered to Pertamina’s
According to SKK Migas’s Head obtained, Djoko Siswanto, Director Balikpapan refinery (in East
Amien Sunaryadi when presenting for the Management of Upstream Kalimantan) alongside oil from the
SKK Migas year-end report, a copy of Activities at the directorate general, fields operated by Pertamina EP
which was obtained by Petromindo, said, adding that the ministry and the Bunyu and Pertmina EP Sembakung,”
both blocks were approved for provincial administration signed the he said.
termination by Minister of Energy agreement on the PoD on Feb. 4. One option for the utilization of
and Mineral Resources Sudirman said Gunung Sardjono, President the gas from the fields is to channel
in September 9 of last year. Director of PT Pertamina Hulu Energi it to Pertamina’s ethanol plant on
The Mandar PSC was awarded (PHE) which operates the block said Bunyu. The plant has been long
to American firm ExxonMobil on under the PoD, Badik and West Badik deactivated. The firm will carry out
March 21, 2007. ExxonMobil owns 80 fields will produce 1,800 bpd of oil a study to check the plant before
percent interest in the block, and the and 60 mmscfd of gas. making a decision to channel the gas
remaining is held by Malaysian firm The project includes the drilling to the ethanol plant, he said.
Petronas. In early 2013, following of eight wells and installment of The block is operated by PT
the negative results of its drilling three offshore rigs, subsea pipeline Pertamina Hulu Energi with a
activities, the company decided to to deliver to output to onshore 66.67 percent interest. It partners
return the block to the goverment. processing facility on Bunyu Island. with Indian firms Videocon
The South CPP block was signed If engineering and commercial Industries (20.83 percent) and
on Nov. 13, 2008 and was awarded aspects are complete in line with the Bharat PetroResources Ltd. (12.50
to Ranhill Energy, a subsidiary of timeline, Final Investment Decision percent).
Canada listed oil and gas company
Petromindo|Khalsa
Pan Orient Energy Corp. A 227 km 2D
seismic program was completed in
the second quarter of 2013 and after
evaluation of the seismic program
result, Pan Orient has decided to
relinquish the South CPP PSC. As a
result of this decision, the company
recorded a net impairment charge of
US$13.7 million in 2013.
Fishermen holds rally to habitat of the area,” he was quoted by southern part of Banten province. The
protest M3nergy drilling JPNN. 30-year PSC was signed on March 22,
Dozens of fishermen coming from Cikiruhwetan village head in 2007 and was awarded to Malaysia
three districts in Banten province -- Cikeusik district, Pandeglang regency firm M3nergy Gamma Sdn. Bhd.
Wanasalam, Binuangeun districts in Lukmanul Hakim said the drilling
Lebak regency and Cikeusik district, was carried in fish migration and Pelindo to operate new LNG
Pandeglang regency – held a rally catchment zone. Thus, if the firm hub terminal in Celukan
to protest the drilling activities of insists on drilling in the area, the Bawang end-2016
Malaysian firm M3nergy Gamma area will be damaged and the local PT Pelindo Energi Listrik (PEL),
Sdn. Bhd in Indian Ocean on Feb.13, fishermen will lose their livelihood. a subsidiary of state-owned port
according to local media. He regretted the fact as a village operator PT Pelindo III, expects an
Using boats, about 80 of them head he had never been sent by the LNG hub terminal in Celukan Bawang,
came close to the drilling site, provincial government or central Bali, currently under construction to
encircling the site and voicing government a copy of the permit for start operation in the fourth quarter
their protests using megaphones. the firm to carry out the drilling. of this year.
Police and military members were SKK Migas said last December that “After the operation of the
present at the rally. They tried M3nergy planned to spud Cula # 1 Benoa LNG terminal, PEL expects
to persuade the angry fishermen exploration well in Ujung Kulon block the Celukan Bawang LNG hub to be
to talk with the company’s in offshore Banten, starting at the end ready for operation in November
management, but the fishermen of the month. of December,” said PEL Director
turned down the offer. Dwi Nurcahyanto, Head of Survey Gembong Primadjaja to Petromindo
Andi Rahman Head of Lebak’s Realization and Exploration Drilling recently.
Binuangen Fishing Community Division at upstream authority He explained that PEL currently
Communication Forum, said the local SKK Migas told Petromindo that the operates two ports in Bali, namely
fishermen were angry because no drilling will be completed in one Celukan Bawang and Benoa. “We
socialization had been held prior to month. hope that from these points, gas
the drilling. The Ujung Kulon PSC covers an can be supplied to (power plants
“The drilling activities will area of approximately 3,706 sq km in) Lombok, Makassar, and Kolaka,”
certainly cause damage on fish both onshore and offshore in the Gembong said.
Petromindo|Khalsa
PIEP targets output at in Malaysia. Our assets in Algeria and In reviewing the case, DGC
112,000 boepd this year Iraq are already in production and concluded that the implementation
PT Petamina Internasional EP there’s no exploration there,” he said. of the permit granted to JSR by
(PIEP), the international upstream BKPM was not in accordance
arm of state owned oil and gas firm KS Energy complaining about with the terms of the permit and
PT Pertamina (Pesero), targets total import duty imposed on therefore assessed that import duty
oil production at 112,000 boepd drilling rig and fines totaling Rp 197.0 billion
this year, slightly lower than 2015 SGX-listed KS Energy is (approximately S$20.5 million based
realized output of 113,000 boepd. complaining about the import duty on the exchange rate of S$1.00 to Rp
PIEP’s President Director Slamet imposed by the custom authorities on 9,600) are due and payable by JSR.
Riadhy said the firm’s fields are its drilling rig brought into Indonesia. As a result, a customs bond arranged
experiencing natural decline. The firm The firm said in a statement by KS Drilling has been called upon
however will try its best to achieve recently that PT Java Star Rig (JSR), to settle the amount.
the target. held by a joint venture company of KS KS Energy said the import duty
“The oil price is falling, but we Drilling Pte Ltd, has received notice and fines will negatively impact the
continue producing. Our production from the Ministry of Finance of the net result for the full year ended Dec.
cost is US$20 per barrel. Thus, we Republic of Indonesia ‘s Directorate 31, 2015.
still survive (amid the low oil price General Customs and Excise (DGC) JSR is currently reviewing the
environment),” he said. that the importation of the jack-up decision of the DGC with their legal
He explained 80-83 percent of drilling rig named the KS Java Star advisors and plans to file an appeal at
PIEP’s output is taken to Indonesia was not in accordance with certain the Indonesian tax court.
to meet Pertamina’s crude needs. terms of the importation permit KS Drilling, an 80 percent-
The rest is delivered to PT Pertamina and customs duty exemption facility owned subsidiary of KS Energ, is an
Integrated Supply Chain (ISCP). issued by the Indonesian Investment investment holding company. The
When asked about PIEP’s Coordinating Board (BKPM) and main activities of its subsidiaries
acquisition plan, Slamet said it therefore not exempted from import are in the provision of onshore
depends on the government. At duty. and offshore drilling services, rig
present, te firm is concentrating on The permit was granted to JSR management and support services,
developing its existing assets. in Q4 2012 by BKPM prior to the oilfield equipment ownership and
“Our exploration blocks only exist importation of the rig into Indonesia. leasing.
Petromindo|Boim
Energi Dian Kemala to
commence for construction
of FSRU in Banten
PT Energi Dian Kemala is
conducting final preparations for the
construction of a floating storage and
regasification unit (FSRU) in Banten,
according to a senior official of the
firm.
“The engineering work for the
FSRU Banten has been completed.
We will start the construction
after the rainy season ends,” the
company’s Director Joe Bunyamin
told Petromindo.
He also said final investment
decision (FID) for the FSRU has not
been made because the company
still needs to review costs and prices
with oil prices falling and the world Sudirman Said recently. “In our work and budget plant
economy slowing down. “It’s good if we “(At peak production), the field is for 2016, we have allocated $5.3
look again at current prices,” Joe said. projected to produce 1,200 mmscfd billion for capex to increase upstream
He said earlier that his company of gas and 24,000 bpd of condensate,” and downstream businesses,”
has received an allocation of two Sudirman said, adding the field’s gas said Pertamina Vice President for
LNG cargoes from Bontang plant, but reserves (90% P1) reaches 10.73 Corporate Communications Wianda
he did not provide details about the tcf, based on the evaluation and Pusponegoro as quoted by Antara
offtakers of the gas. Joe projected that certification by the ministry-owned news agency recently, adding that the
delivery of two cargoes to the FSRU to research agency, Lemigas. capex will be financed internally.
happen in 2017. Sudirman made the statement, She said that about $4.7 billion
The planned FSRU is designed apparently to counter speculation will be allocated for the upstream
with a total capacity of 1.5 million that the block may have huge gas business development, and the
tons per annum (mtpa). Global reserves, larger than the current remainder for the downstream
engineering and construction firm estimate. This has become a reason business.
Foster Wheeler has been appointed for some people to press ahead with Wianda said that in the upstream
as the engineering, procurement, and the option of building onshore LNG business, the company will continue
construction (EPC) contractor for the plant to process Abadi gas. They said to develop its existing oil and gas
project. aside from LNG, the gas can also be fields, and acquire overseas assets.
used to develop other industries, such In the downstream side,
Production period of as petrochemicals, in the region. Pertamina will increase the capacity
Masela block estimated of its refineries, and build and install
for 24 years only Pertamina allocates $5.3 new gas pipelines.
Gas reserve discovered in Abadi billion for capex Wianda said that the company
field within Masela block in Maluku State-owned oil and gas firm may increase the 2016 capex later
province is only enough for 24 years PT Pertamina has allocated US$5.3 on particularly as more funds are
of production. billion for capital expenditure this likely required in upgrading its oil
This was said by Minister of year to support its upstream and refineries. As such, the company will
Energy and Mineral Resources downstream businesses. seek alternative funding sources.
Petromindo|Dasir
Suriyanto
I
nfrastructure development gasification, gas conditioning and gas hydro-power plant, and to shipping of
will be a driving force for local infrastructure, to power plants. gas—CNG ship and LNG ship,” he said.
companies to grow during the “Just look at the history. He stated that all of the businesses
current sluggish condition Countries like the US started mega were implemented by business units
of global economy. “We have to infrastructure project when it was hit of the company.
maximize the involvement of local by economic recession long time ago. “In 2015 we spin off the business
companies in the development of By doing so, the US managed to boost units, transforming them into new
the infrastructure projects,” said its economic growth. So I think the subsidiaries. That way we make them
President Joko Widodo (Jokowi) current infrastructure projects like more focused, dynamic, and efficient
during a ceremony recently. the 35,000 MW that’s implemented in pursuing each of the businesses,”
The government under the by the Indonesian government are in he said.
leadership of President Jokowi will right moment to boost our economic Basically, he said, all of ETI’s
at least realize the development growth, while other sectors like previous services were restructurized
of gas infrastructure to increase mining, oil and gas is slowing,” he into two main pillars of businesses
local gas consumption, and the told Petromindo Magazine in a special under PT ETI and PT PadiMas. The
mega power project of 35,000 interview in his office in Kelapa new PT ETI is now focused on seven
megawatt (MW) to raise its rate of Gading recently. lines of businesses in energy sector,
electrification and fulfil the rising To benefit from the infrastructure namely gas infrastructure such as
need of local industries. The 35,000 development, PT EnviroMate CNG, LNG and Gas pre treatment,
MW mega project alone will need a Technology International (ETI) renewable energy such as mini hydro,
total investment of US$ 73 billion, pursued a restructurization in biomass power plant and solar cell,
consisting of US$ 53.7 billion for early 2015. Previously, its line of gas transportation either land or
development of power plants, businesses include the engineering, sea for CNG and LNG, rental and
US$ 10.9 billion for instalment of procurement and construction complete OnM for compressor, and
transmission, and US$ 8.4 billion for (EPC), investments in projects under independent power plant mainly
instalment of substations. schemes of BOO or BOOT, agents of in PLTMG, fabrication of CNG, LNG
“Amid the current sluggish several products of water treatment, and oil fuels (BBM) storage and new
condition of global economy and water and gas compressors, drilling energy venture department.
low prices of oil and minerals, bits, SO2 removal, chemical cleaner On power plant, ETI has already
Indonesia needs such mega projects for boiler and other products, developed its own gas-fired power
to boost up our economic growth. which are all derived from famous plant such as PLTMG at Musi Rawas
It’s a huge opportunity for us to principals. “We also provide services and micro hydro power plant at
grow,” said Suriyanto B.com MTM, of operation and maintenance for Ciherang and Batang. It is now eyeing
President Director of PT EnviroMate gas plants, waste management and several power projects under the
Technology International (ETI), a treatment, and processing of drilling 35,000 MW mega project.
leading provider of energy-related mud. Recently, we ventured to the In developing the gas storage
services from EPC and BOO of power business by developing our fabrication, ETI is on progress of
CNG peaker, LNG storage and re- own gas-fired power plant, and mini building local fabrication for both
CNG and LNG storage. This was pursues businesses of trading Gas peaker
expected to meet the government’s and services for several agency Due to the current low prices
requirement of increasing the use of products ranging from water of oil at the global market, many
local content up to 40 percent. treatment equipment, aquarator, other companies, perhaps, already
The second pillar, PT PadiMas chemical injection, chloronation considered to return to the use of
holding is focused on other product, to SO2 removal. The SkyAim MFO or diesel fuel. If it is realized
businesses which were previously Venture is focused on developing it will be against the efforts of the
under ETI’s business units. It has innovative and most exciting big government to increase the use of
three main lines of businesses, ideas as indicated by the name gas at local market. “We’ve seen
pursued through three subsidiaries, SkyAim, which means that the sky the impact of the low oil price to
namely PT.EnviroMate Technology is the limit. “Several inovative and our businesses. It affected our gas
Indonesia (Etindo), PT Lumbung revolutionary ideas are developed business in certain cases. In some
Technolgy Envirotama, and SkyAim here such as App application. But I cases the prices of MFO is cheaper
Venture. cannot tell you much about this yet. than gas. Some of customers decided
Etindo is focused on hazardous Let’s just wait for the launching of to stop or postpone using gas and
waste management and drilling its products, I believe it will be so have even planned to reinvest in the
waste management . PT Lumbung amazing” he said. use of MFO. However it is a wrong
“It has proven that oil prices are such as CNG peaker, LNG and CNG built the first CNG vessel in the
highly volatile. For business, high shipping, and methane booster. world. It’s very exciting. It has
volatility is not good. Businesses “We developed this CNG peaker as revolutionized the world of shipping
need stability in costing and price. Indonesia needs gas storage facility industry as previously there has
By using gas we can have a more and high level of power peak load. been no means of transporting CNG
stable business. We can even This CNG peaker is invented in through the sea. Some countries
predict prices up to 10-15 years. Indonesia, and ETI is the leading have even approached us for
Some of our contracts, we see only provider of CNG peaker. We’re further inquiries on the CNG vessel.
a gradual increase of 3 percent per trusted to build most of big CNG Shipping magazines had categorized
year. The cost is stable. I strongly plants in this country,” he added. it as one of the 10 most exciting
advice customers to consider that Among the projects of the CNG ships being built in the world,” he
stability is the most important thing. peaker include Grati Plant at a said.
Additionally, I’m also happy with capacity of 15mmscfd, Tambak Lorok According to him, the methane
PT PLN which has tendered the IPP plant at 18.9mmscfd, Gresik Plant at booster is also very exciting one
(Independent Power Producers) by 28.52 mmscfd, and Lombok plant at for gas users. “We can boost the
using LNG under 20 year contract. It’s 20 mmscfd. methane load higher. That way we
good for PLN and private contractors With its leading position, ETI can maximize the gas engine of power
which develop power projects using is optimistic that it can expand its plants to reach a high performance. In
LNG as the LNG price is much lower business operation to other countries. indonesia many gas has low methane
and follows the percentage of ICP, like “We have several superior products number, so increasing its methane
13% of ICP. And again much more and services that can be sold abroad. number shall deliver more Kwh”, he
stable too,” he said. For example, the CNG peaker. Other said.
Considering the factors, foreign countries with peak time He added that the increasing use
combined with the government’s problem like Indonesia will also need of coal power plants in Indonesia has
policy to increase the use of gas for our CNG peaker. We started to have created a need to solve the problems
households, industries and power inquiry on it,” he said. of emission, like SO2 coming from it.
plants, ETI has embarked to provide He added that its other products “ETI provides solution for removing
a number of gas-related services, include CNG Vessel . “It’s ETI which SO2 from PLTU stack,” he said.
T
here’s concern that the as “new and renewable energy”. The the commitment. And this has been
sharp drop in fossil fuels Indonesian government has however warmly welcome by Investors,
– oil, gas and coal – would demonstrated its commitment to either local or international, which
dampen interest in many developing the energy remains strong. was evidenced among others by
countries in developing clean The development of clean energy the enthusiasm of people, mostly
energy, better known in Indonesia has gained momentum thanks to investors, to participate in the Bali
mix by 20125. For a period of four 1929, more than a decade prior to the (OECD). Indonesia was accepted as
years, CoE will focus on supporting country’s independence. One of the member last November.
the development of the 35 GW wells drilled during the period still “Everywhere, new and renewable
electrification programs, of which produces steam at present. energy is dependent on technological
25 percent of 8.8 GW will come from After Indonesian gained capabilities. We’ve been a member of
renewable energy,” Sudirman said. independence, little attention EIA. It will give us an opportunity to
IEA promised to support the was given by the government to interact with foreign sides. If we can
CoE. “The IEA firmly believes that clean energy. The era of President encourage them to build our national
the global transition to a clean Soeharto from 1970s to 1990s is capacity here, that will speed up
energy system requires a new era of remembered as the period in which our way of acquiring technology,”
collaboration, on a scale the world Indonesia started seriously carried Sudirman said in an interview with
has never seen. The IEA’s partnership out economic development program. Petromindo last December.
with the Indonesia Centre of During the period, a number of Early this month, the President
Excellence is a great step forward power plants were built, but they issued a presidential regulation to
in this direction,” Birol said in his were mostly of fossil fuel type. establish a special agency tasked
opening remarks. The availability of more accessible with purchasing and selling power
At the end of the Bali meeting, energy sources, such as coal, gas generated from clean energy. The
energy ministers from 17 countries and oil and private investment for regulation is aimed to spur the
issued a declaration underlining their the development of power plants growth of clean energy development
commitment to develop clean energy. using such types of fuel pushed clean as it will create a sense of security for
“There has been a growing energy into second priority. investors, Sudirman said.
awareness that we cannot rely fully Indeed, in 1990s, the government At present, the task of purchasing
on fossil fuels as the fossil fuels will started to promote the development and selling power is given to state
last one day, and to replace it we need of power plants using clean energy owned electricity firm PT Perusahaan
to develop new and renewable energy such as geothermal but few investors Listrik Negara (PLN). Power
sources,” he said. were interested to develop it because generated from clean energy costs
Sudirman said that through power generated from clean energy higher than power generated from
the international forum, Indonesia are unable to compete with power fossil fuels, even the selling price of
proclaimed itself as taking a leading generated from fossil fuels such as PLN. Purchasing power from clean
position in pushing for the transition, coal and gas. energy has thus caused financial
or even revolution from fossil fuels Concerned with the almost zero burdens for PLN. By creating a special
to renewable energy. “We’ve been growth in the development of clean agency tasked with purchasing and
too long dependent on fossil fuels. energy, the MEMR set up a special selling power from clean energy, the
We should stop it. So, regardless of office to handle clean energy, called government apparently seeks to ease
oil low price, we in Indonesia we’ll the Directorate General of New, PLN’s financial burdens.
stick to our plan of developing the Renewable Energy and Energy Sudirman said during the
renewable energy,” he said. Conservation (EBTKE) in 2010. interview in December that his
Efforts to push for the office plans a major revamp of
Commitment development of clean energy have regulation this year to speed up the
The development of clean energy been intensified now under President development of clean energy.
in Indonesia dates back to the Dutch Joko Widodo. As parts of the efforts, “The President has instructed that
colonial era. The oldest power plant last year, Indonesia applied to be a regulations hindering development
in the country is PLTP Kamojang in member of the Paris-based IEA, which should be revoked. So, there will be
Garut, West Java province, a power is known as the leading organization big deregulations in the new and
plant which uses geothermal steam of renewable producing countries renewable energy sector. Our aim is
as fuel. The first geothermal wells under the Organization for Economic to make the tariffs more attractive,”
at Kamojang were drilled in 1926- Cooperation and Development he said.
Courtesy of Len
Center of Excellence for
Clean Energy built in Bali
By: Cepi Setiadi
T
he Bali Clean Energy Forum CoE is an integrated center for 35,000 MW power project, of which
(BCEF) 2016, which was the research, development of research 25 percent or around 8.8 GW will be
first of its kind held in Bali, results, education, increasing derived from renewable energy.
had drawn a lot of attention capacity, and facilitating investments While construction of its building
from industrial players in the energy for development of clean energy is going on, the CoE will temporarily
sector, especially those involving in with three main menus, namely have its office building besides the
the new and renewable energy. information, technology, and Bali Governor’s office building.
The convention which was financing. The ministry of energy and
organized by the ministry of energy Energy and Mineral Resources mineral resources’ (MEMR) New,
and mineral resources in cooperation Minister Sudirman Said stated, “CoE Renewable Energy, and Energy
with the IEA (International Energy will function to prepare our country Conservation Director General Rida
Agency) was attended by more than to realize an energy system based Mulyana said that the development of
2,000 participants, far exceeding the on clean and sustainable sources renewable energy is not a choice, but
target at 500 participants. of energy, and support efforts of rather a must for Indonesia although
One of the breakthroughs made accelerating the development of the oil prices at the global market
during the international forum renewable energy up to 23 percent has been declining. Bali was chosen
was the formal launching of Clean of the total energy mix in 2025. For as the location of CoE because it has
Energy Center of Excellence (CoE) the next 4 years, CoE will focus on a lot of renewable energy sources.
by Vice President Jusuf Kalla. The supporting the development of the “But first, who will refuse when asked
Petromindo|Dasir
announcement is likely to contradict Decree (PD) No. 22/1981, which over 3000 MW. However, the
with the present laws and regulations granted Pertamina with the right Asian Financial Crisis forced the
on geothermal undertaking, to explore and exploit geothermal renegotiation of the projects and their
which does not limit the foreign resources for power generation. associated purchase agreements,
participation based on the size of Based on Petroleum Law No. resulting in much lower tariffs. As
power plant. The announcement 44/1960, the PD 22/1991 was recommended by the IMF, some
reflects a lack of understanding and later supplemented by PD 45/1991 projects were postponed or cancelled
coordination amongst the Indonesia’s and PD 49/1991. The PD 45 of (two cancelled projects were ended
policy makers on resolving the real 1991 authorized private sector at the arbitration). Following the
problems and constraints in the development of geothermal potential Asian Financial Crisis, in 2000 then
development of these abundant with fundamentally different President Abdulrachman Wahid
renewable resources. In particular, terms. Under the PDs, there were issued Presidential Decree No.
it fails to consider the unique two alternatives to participate in 76/2000 to replace the previous
characteristics of geothermal power Indonesia’s geothermal venture; decrees.
development, which differ from the first alternative was to only No interest or contract has been
Independent Power Project (IPPs). explore and develop the steam field signed under the PD 76/2000; in
Geothermal energy has unique in cooperation with Pertamina and 2003 it was replaced by new Law
attributes, which pose challenges to sell the geothermal energy to 27/2003 on geothermal, which
to its development. Unlike coal PLN. The second alternative was mandated that future geothermal
or gas power plant, commercial total project through Joint Operation fields must be transparently
development of geothermal energy Contract (JOC) with Pertamina and competitively tendered
requires electrical power plant involving upstream and downstream for development. The law also
development on-site. Also, the size activities and selling the electricity grandfathered the fields previously
of power plant will ultimately be produced to PLN under Energy Sales allocated under PD 45/1991, enabling
determined upon the completion of Contract (ESC). Pursuant to the PD existing operators to retain control.
exploration activities. So it would 49/1991, the applicable tax rate for The government also developed a
not be practical to distinguish the total project would not exceed geothermal blueprint, including road
at the outset which of the plant 34 percent of the net income. The 34 map to develop a total of 6,000 MW of
may be owned partly or wholly percent included any taxes, duties or geothermal capacity.
by the foreigner. In addition, the levies in respect of the geothermal Under the new Law 27/2003,
development requires high initial operations. This was supplemented 51 geothermal power projects were
capital costs, including initial by PD 37 of 1992 which formed a granted under the Second 10,000
exploration and the commitment legal basis for IPPs. PD 37 of 1992 MW Fast-Track Program, consisting
to purchase a large portion of the stipulates that foreign entity has to of 6 projects to be carried out by
eventual fuel supply at start-up take at least 5 percent participating Pertamina-PLN or PLN. The 51
in the form of development wells. interest of domestically owned entity projects consisted of 3 expansion of
Long term operating costs, however, to form an IPP, regardless of the brown fields and 11 fields which have
are quite low. Thus, geothermal capacity of the IPP. This is intended been granted to Pertamina to carry
contracts require base load status and to build up the local capacity to out exploration and exploitation,
long term price security in order to participate in geothermal power 31 green fields (including 9 fields
justify development. projects. to-be-tendered), with a total
Looking back at its development, Under those PDs, the government capacity 0f 4,000 MW. However,
the majority of existing geothermal granted 11 JOCs to private most of the green field projects
power capacity (1,300 MW) was geothermal developers (all were were stranded due to failure of the
installed as result of Presidential foreign) to eventually exploit project developers to raise funds for
exploration as result of insufficient c) The process and procedures for competency of company and financial
pre-exploratory data, poor project issuance of Geothermal Licenses commitment need to be reviewed
preparation, failure to appreciate by the central government and diligently in the bidding process.
exploration risk, cumbersome permit Direct Utilization Licenses by the Moreover, it is of interest to note
and license processes, and low bid central and local governments that in 2011, the government has also
price. Also, although the new law established Geothermal Fund Facility
On Aug. 26 2014 a new has considered the geothermal is (GFF) with more than $200 million
geothermal law was introduced, not mining activities; however, of initial capitalization to mitigate
with major changes that are meant the relevant forestry regulations resource risks related to geothermal
to ease development of the country’s still classify geothermal as mining development by way of:
geothermal energy industry. The activities, thereby the forestry law 1) Enhancing data and information
breakthrough of new law includes may need to be further amended obtained during the preliminary
removing geothermal undertaking as before the provisions of the new surveys that have been conducted
mining activities and improvement geothermal law related to the conduct by the government agency,
of the structure of geothermal of geothermal activities within forest including Magnetic Telluric (MT)
transactions, coupled with the areas can be effectively implemented. survey and other geological and
feed in tariff (FIT) regulation. In addition, several barriers must geophysical surveys to better
Also, the new geothermal law has still be overcome for the country locate the site of first deep well(s).
fundamental changes to the process to reach its full potential. One of 2) Drilling the first deep well(s)
and procedures related to geothermal the factors which has potential for to acquire better geological
development in Indonesia, as the conflict in the execution relate to the information, including but
majority of the licensing and tender facts that developments of various not limited to pressure and
process which was within the energy sources are found in various temperature gradient, fluid
authority of governors and regents/ laws and regulations. Unlike fossil chemistry, steam quality,
mayors under the old law is now fuel projects, geothermal projects reservoir permeability, and
within the authority of the central require integrated efforts and risk exploratory proven reserves. The
government and the geothermal management between upstream information and data obtained are
activities are now classified as non- and downstream activities. The used to improve the definition of
mining activities. installation of power plants will the working area and will be made
However, its effectiveness remains involve various stages of work available during the tendering
to be seen, with respect to how the and clearances, including project process.
new law will be implemented. As of identification, project allotment, The GFF was initially managed
today, after about 17 months since pre-feasibility report, detailed project by Pusat Investasi Pemerintah
its promulgation, no government report, techno-economic clearance, (PIP) or Government Investment
regulations for implementation have environmental and other clearances, Agency, but it later was transferred
been issued. It is envisaged that financial closure, finalizing contracts to PT Sarana Multi Infrastruktur
the implementing regulations to be for civil and mechanical work, and (Persero) or SMI when the PIP was
drafted to at least provide guidelines commencement of construction. liquidated. However, while $200
on: Also, the government may million has been allocated from the
a) The process and procedures for still need to provide assistance in government budget, no GFF has
tender of working areas by the securing the land, in particular the been used. This was due to the fact
central government; project that has been included in the that consistent with its vision and
b) The process and procedures Accelerated Power Plant Project. mission SMI decided to change the
for issuance of forestry licenses The lack of finance sources has also purpose of GF. Under the original
due to exclusion of “geothermal hampered the development of the plan, the establishment of the GF was
activities” from mining activities; geothermal resources. Accordingly, initially intended to provide potential
and the financial capability and technical developers and investors with
sufficient, high quality information Indonesia TAC holders seemed to renewable energy development
(temperature and chemical have lack of appreciation for the would face substantial uncertainties
characteristics, and potential risk. This suggests that in awarding and continuing challenges.
reserves) of pre-selected green field the geothermal license, the financial Indonesia’s geothermal program to
geothermal sites that will be offered capability of company needs to be support renewable energy program
during the tendering process of new reviewed diligently in the bidding has run into serious difficulties, which
areas, but later it was extended to process and by closely supervised will require major reforms in policy
support the Indonesian company with the fulfillment of their commitment and the institutional framework.
funds for conducting drilling first in the execution in the form of work The geothermal development is
well. The program, however, has not program and investment. an important source of renewable
proceeding well as many domestic In 2012, the MEMR also issued a energy. The development requires
investors have difficulties to meet FIT policy for geothermal electricity. high capital costs with high resource
the collateral for the fund. Also, many Despite these efforts, progress in risk and long pay-back period for
exploration permits have expired and the last few years has been slow. No investment. The cumbersome
many requests for extension have power purchase agreements (PPAs) permit and license processes, and
been delayed due to the promulgation were signed under the 2012 FIT. inappropriate regulation have
of new geothermal law. Between 2010 and 2013, only 135 impeded Indonesia’s geothermal
Such bitter experiences are not MW was added, mainly from the development. Accordingly, the
surprising, looking at Pertamina’s existing developed fields, suggesting BKPM’s plan to issue a new regulation
experiences in early days with non- a need for a focused action program that limits the foreign participation in
performing Technical Assistance by the government to resolve small geothermal power development
Contract (TAC) involving domestic institutional, regulatory, and tariff would not be effective; in fact it may
oil contractors. Besides having constraints. be counter-productive, if the intent
limited funds for start-up (including In closing, the government’s is to boost investment in renewable
payment of bonus) many of the plan for increasing investment for energy.
• How will PLN determine which of Aside from IPPs, PR 4/2016 area (pinjam pakai permit); and
the projects on the RUPTL should also will make MOF guarantees e) building construction permit
be put forward for guarantees? available for loans obtained by (IMB).
PR 4/2016 does not set out any PLN in relation to development For some of the above licenses,
criteria for the projects which of power infrastructure projects. e.g., the IUPTL and the pinjam pakai
PLN must propose to the MOF to This scheme seems to be similar to permit, the relevant ministers have
obtain the government guarantee the guarantee provided to PLN’s already previously delegated the
(e.g. large scale? Underdeveloped lenders under the First Fast Track authority for the issuance of the
regions in Indonesia? Renewables Program. Recently, by the issuance licenses to BKPM (so in that respect,
in priority to thermal?). Leaving of Presidential Regulation No. 82 PR 4/2016 merely re-states what
this discretion with PLN may of 2015 on Central Government is already in existence). For the
result in PLN again being unwilling Guarantee for Infrastructure remaining licenses listed above,
to make any decision as to which Financing through Direct Loans from the authority to issue the licenses
IPP should be put forward for International Financial Institutions may lie with the local government.
guarantee, for fear of allegations to State-Owned Enterprises (PR For example, under Law No. 32
being levelled against PLN based 82/2015), a government guarantee of 2009 on the Environment and
on a lack of transparency or giving can also be issued to international its implementing regulations, the
preferential treatment to certain development financial institutions Governor has the authority to issue
developers over other developers. with respect to loans which are (i) the environmental license for a
• As a reference to the guarantee made by those institutions to “Eligible power project that is located within
must be made in the PLN Borrowers” (i.e., BUMNs that fulfill one province. For these licenses,
procurement documents, any certain criteria), and (ii) made to fund PR 4/2016 now provides that
IPP projects which have already “Qualified Infrastructure Projects”. applications will be submitted to
commenced their procurement BKPM, and BKPM is responsible to
processes will not be eligible to Accelerated Licensing submit the applications to the relevant
take up the guarantee. PR 4/2016 seeks to expedite governor or regent/mayor through
The guarantee under PR 4/2016 the processing time for licenses and the local PTSP. Hence, the applicant
is a business viability guarantee for non-licenses for power projects only needs to deal with BKPM to
PLN’s financial obligations under and streamline the process at the obtain these five main licenses.
the PPA and the scheme appears to one-stop services (PTSP) at the • Shorter processing timelines
be similar to the business viability Investment Coordinating Board PR 4/2016 provides a much-
guarantee under the Second Fast (BKPM) as well as the provincial accelerated time limit on BKPM
Track Program. and regency/city PTSP through the for issuance of licenses as follows:
PR 4/2016 provides that the following approaches: (see Table)
Ministry of Finance must give its • One stop services to apply for PR 4/2016 also requires
approval of PLN’s request for a licenses required to start a project ministers/heads of institutions,
guarantee within 25 business days PLN, subsidiaries of PLN and IPPs governors and/or regents to issue
after the MOF receives a complete can now submit applications for the recommendations which are
submission from PLN; however, PR five types of licenses and non- required for the issuance of licenses
4/2016 also mandates the issuance of licenses which are required to and non-licenses as specified above
an implementing regulation to further start the implementation of a within five business days after
implement the guarantee application power project as follows to BKPM: receiving all the required documents.
and grant mechanics. This seems to a) electricity supply business license Previously, the timeline for issuance
suggest that despite the issuance of (IUPTL) of recommendations depended
PR 4/2016, this guarantee may not b) stipulation of location; heavily on unwritten policies of
be available in practice until the MOF c) environmental license; the relevant institutions, and the
issues that implementing regulation. d) borrow-to-use permit of forest availability of the officials.
Table
Name of License PR 4/2016 Normal Processing Time
3 working 30 working days (under Minister of Energy and Mineral Resources Regulation No. 35 of 2013 on
IUPTL
days* Licensing Procedures for Electricity Business)
5 working
Stipulation of Location Depends on the relevant local regulation.
days
60 working
Environmental License 75 working days (under Government Regulation No. 27 of 2012 on Environmental License).
days*
Borrow-to-Use Permit of Forest Area 30 working Approximately 165 days (under Minister of Forestry Regulation No. P.16/Menhut-II/2014). In
(pinjam pakai permit) days* practice, the process may take over one year.
5 working
Building Construction Permit (IMB) In practice, 14 days, which may differ from region to region.
days
25 working days for the issuance of receipt until the issuance of proposal to MOF by Head of BKPM,
plus the period for issuance of the approval by the MOF- which may varies in practice as the period
Tax Facilities for Income Tax and/or Value 28 working
is not specifically regulated. (under Head of BKPM Regulation No. 13 of 2015 on Procedures for
Added Tax days*
Application for Corporate Income Tax Reduction Facilities as amended by Regulation No. 19 of
2015).
*: The authority to issue these licenses and non-license have been delegated to BKPM.
PR 4/2016 also clarifies that This checklist can be used for imposition of administrative sanctions.
the extension process of a license licenses and non-licenses concerning If there is still no action from the
or non-license must not affect the matters which do not have material regent/mayor after this sanction, the
development of a project. BKPM and impact to the environment, which governor may take over the issuance of
the local PTSP should issue permit include building construction the license/non-license.
extensions within five business days permits, nuisance permits, and A similar avenue exists for a
after receiving a complete and correct technical approvals of building governor’s failure to issue the licenses/
application. If they do not do so, then construction plans. non-licenses within the stipulated
the extension is deemed to have been It is still not entirely clear how deadline. In such situations, BKPM
granted. The substantial lessening this checklist mechanism will be may convey this issue to the Minister
of the risk of non-renewal also has implemented in practice, and how this of Home Affairs for the imposition of
benefit for PLN, which is typically new mechanism can be made to fit administrative sanctions. If there is still
required to take responsibility under within the myriad existing laws and no action from the governor after this
the terms of the PPAs for delays or regulations on licensing procedures. sanction, the Minister for Home Affairs
failure of the government in issuing PR 4/2016 requires ministers/ may take over the issuance of the
permits. heads of institutions, governors and license/non-license.
• Non-material licenses in the form regents/mayors to issue implementing • Delegation of authority to BKPM
of checklist regulations or technical guidelines on and Local PTSP
PR 4/2016 allows some licenses this matter within 30 days after the PR 4/2016 also requires
and non-licenses to be stipulated enactment of PR 4/2016. ministers/heads of institutions,
in the form of a checklist. The • Central government may take over governors and regents/mayors
checklist includes a list of technical the issuance of licenses and non- to delegate their authority for the
requirements that must be fulfilled licenses from local government issuance of licenses related to
independently by the applicant, and Where an application for a licence/ power projects to BKPM and the
the applicant’s commitment to fulfill non-licence is complete, and the local PTSP, except for licenses that
those requirements. The commitment regent/mayor fails to issue the licence/ cannot be delegated due to legal
is then submitted and registered non-licence within the stipulated or technical considerations. If the
at BKPM or the local PTSP and the deadline, BKPM may convey this licenses cannot be delegated, the
registration is deemed as an approval. issue to the relevant governor for the relevant authorities must stipulate
• IPP developers procure the land as National Land Agency, in practice, we (and sign all future) renewable
a proxy of PLN using procedures would expect that in practice the onus energy PPAs, which will then in turn
and power under the Land will remain on the IPP developer to re-sell the power to PLN.
Acquisition Law, PLN receives right ensure that local landowners have In addition, PR 4/2016 clarifies
to manage (hak pengelolaan) land been consulted with (and most likely that hydropower, geothermal or
title, and the IPP developer receives compensated) before development wind projects can be developed in
right to build (hak guna bangunan) activities can be carried out. high-conservation forest areas (e.g.
sitting on top of PLN’s title; or Construction of transmission lines national parks).
• IPP developers procure the land in conservation forest
through private direct agreements PR 4/2016 allows construction of Decriminalization of PLN actions
with land owners through among transmission lines within conservation Whilst corruption reforms over
other things sale and purchase by forest (Kawasan Suaka Alam and the past decade have clearly been
direct agreement, land exchange, Kawasan Pelestarian Alam). Further a step in the right direction for
lease, land utilization agreement or revisions to the existing forestry Indonesia’s investment climate, those
any other agreed methods (i.e., the regulations will be required to reforms have lead to the “decision
way land was acquired prior to the effectively implement this provision. freeze” phenomenon within state-
issue of the Land Acquisition Law). owned institutions, where directors
Unfortunately, in our discussion Other reforms under PR 4/2016 of state-owned companies have been
with the National Land Office, it is still Support for new and renewable unwilling to take decisions on a vast
unclear whether private developers energy projects array of matters that are part of the
can freely acquire the land through PR 4/2016 provides certain normal “business as usual” governance
direct agreements with landowners forms of fiscal support for new and and management of companies. PR
considering that the Land Acquisition renewable energy projects, in order 4/2016 attempts to prevent any
Law itself only allows land acquisition to facilitate the government achieving criminalization of the management
methods where the land price its energy policy target of 25% of of PLN and its subsidiaries in
is subject to valuation from an its power generation from new and relation to the implementation of PR
independent appraisal. So there are renewable energy sources by 2025. 4/2016 by suggesting that any legal
concerns that there may be inherent While PR 4/2016 does restate a problems related to the management
conflicts between PR 148/2015 number of the government incentives of PLN and its subsidiaries must
(which allows for privately negotiated already available under existing be resolved based on the use of the
settlement arrangements) and the regulations for renewable energy Indonesian Company Law, instead of
Land Acquisition Law (which states projects (e.g., fiscal incentives such an immediate resort to Indonesia’s
that public appraisal is required). as import duty relief), some of the criminal law. The Minister of Energy
new forms of government support and Mineral Resources and the
Land issues in forest area introduced include: Minister of State-Owned Enterprises
For projects to be developed in • establishment of a new entity also will have more concrete functions
forest area, PR 4/2016 places the onus to procure electricity from as PR 4/2016 instructs the ministers
on the National Land Agency to advise renewable energy sources, and to respond to public reports and
developers whether any traditional on-supply that power to PLN (i.e. conduct investigations related to legal
land ownership rights exist in the a renewable aggregator); and problems in the development of power
forest area. If the National Land Agency • the provision of subsidies infrastructure. The investigation
advises that no such land rights exist, specifically for renewable energy results will determine whether such
then the developer can simply proceed projects. cases must be brought to prosecutors
to acquire the necessary forestry There have been recent press or the police. So it is expected that
approval (pinjam pakai) from BKPM to reports indicating the government is having the two ministers involved
commence the development activities. considering establishing a new PLN as “gate keepers” between PLN
Despite this onus being placed on the subsidiary to take over all existing management and prosecutors and the
Petromindo|Lucky
Dwi Soetjipto
S
tate owned oil and gas firm production of 100.555 bpd of oil businesses to Pertamina’s
PT Pertamina estimated its against the target of 115,000 bpd; consolidated profit was estimated
profit from the downstream 1,015 mmscfd of gas, or 97 percent of at fifty-fifty. In terms of value, the
sector in 2015 at US$800 the target of 1,052 mmscfd. upstream business contributed $800
million, lower than the previous year, Dwi said with as a result of the million,” Dwi said.
due to oil price drops. oil price drop to between $48-$50 Pertamina has three upstream
Pertamina’s President Dwi per barrel last year, the contribution subsidiaries, namely PT Pertamina
Soetjipto said Pertamina’s upstream of upstream business to Pertamina’s EP (PEP), PT Pertamina Hulu Energi
production last year is estimated at consolidated profit dropped (PHE), which are both focused on
607,000 barrels of oil equivalent per significantly. In 2014, upstream assets in Indonesia; and PT Pertamina
day (boepd), up 11 percent on the business accounted for 90 percent of Internasional Eksplorasi & Produksi
previous year. the firm’s $1.3 billion. (PIEP) which handles assets overseas.
The biggest contributor is “In 2015, the contribution PEP produced 100,555 bpd
PT Pertamina EP with estimated of upstream and non-upstream of oil and 1,015 mmscfd of gas in
P
eople in North Sulawesi commercial operation on Jan. 16, the government a special economic
and Gorontalo provinces followed by MVPP Zeynep Sultan zone, given its strategic location on
on Sulawesi Island should on Jan. 28. Both power plants have the international sea lane linking
feel happy now since state added significant power supplies Australia and East Asia. It is being
owned electricity firm PT Perusahaan to the Sulutgo (North Sulawesi- built to become a hub for exports
Listrik Negara (PLN) has recently Gorontalo) grid which had been of fish and agribusiness products.
announced that the era of power power deficit for many years. North Sulawesi is also close to the
shortage in both provinces has been The region, particularly North Philippines, one of the fastest growing
over. Sulawesi, is among the provinces economies in Asia at present.
This is thanks to the operation of with the fastest economic growth in One of the long-standing
two new power plants there, namely the country. Last year, the province problems in the province was power.
MVPP Zeynep Sultan marine vessel booked a 6.8 percent economic “Everybody knows the problem in
power plant and PLTG Gorontalo gas growth, surpassing the national North Sulawesi is power supply. In
turbine power plant. growth figures. The province’ seaport Manado (North Sulawesi’s provincial
PLTG Gorontalo started city, Bitung, has been declared by capital), power blackout happens
Petromindo|Khalsa
ADB releases funds for
Sumatra power grid
T
he Asian Development Bank to reach the remaining 16% of the Infrastructure Fund—totaling
(ADB) announced recently Sumatran population with no access $600 million for a RBL program to
the first disbursement of to modern energy services.” strengthen the Sumatra electricity
US$120 million under a Tabor said that an efficient grid in Indonesia. This was the first
$600 million results-based lending and strong electricity grid should ever RBL program globally in the
(RBL) program to strengthen the underpin Sumatra’s efforts to energy sector, as well as ADB’s first
electricity grid in Sumatra, after transform itself from a commodity loan to a state owned enterprise,
the state-owned power company producer into a major industrial PLN, with a Government of Indonesia
Perusahaan Listrik Negara (PLN) met center of Indonesia. guarantee.
the conditions for release of the funds. Future disbursements will be This RBL loan will finance the
“Disbursing against results made annually over the next four upgrading of the power grid on the
helps ensure that ADB assistance years, after PLN has achieved agreed island of Sumatra to meet growing
can be utilized by PLN in a flexible results in strengthening Sumatra’s power demand efficiently and
manner and through its own systems, power transmission and distribution effectively. It will also connect at
but with a focus on development system. The cost of the overall grid least 13 million new customers to
outcomes,” said Steven Tabor, ADB strengthening program in Sumatra an expanded and stronger power
Country Director for Indonesia. is in the range of $7.3 billion, and grid. The program utilizes the RBL
”Modernizing the power grid is financing for this program is being financing instrument to support
a prerequisite for success of the mobilized from various sources. PLN’s program for expanding and
government’s 35 gigawatt power ADB approved in December improving Sumatra’s grid, and seeks
generation expansion program. 2015 two loans—$575 million to help improve the PLN’s corporate
ADB is proud to help support that from its ordinary capital resources systems for the design and delivery of
program, while also assisting efforts and $25 million from the ASEAN the grid upgrading program.
Andang Bachtiar
B
P Indonesia, the operator of authority SKK Migas. Director General of Oil and Gas at
the Tangguh LNG project in “The FID for Train III will be made the Ministry of Energy and Mineral
West Papua, is expected to in the middle of this year. Meanwhile, Resources IGN Wiratmaja confirmed
make the final investment preparations (for the project) are that the FID will likely be made in this
decision (FID) for the expansion ongoing, including for instance, for June.
project, known as Tangguh Train III, trustee borrowing,” Deputy Head of “Actually, if you look at the limit
in the middle of this year, according SKK Migas Zikrullah said in Jakarta of the validity (of the contracts on
to a senior official at upstream recently. Tangguh gas fields), which is 2035,
explained.
The Tangguh LNG plant receives
natural gas from fields in the Berau
and Bintuni bay area of West Papua.
Significant volume of gas was
discovered around the LNG plant’s
site in 1994. By 1998, substantial
reserves had been delineated from
six fields within three PSC’s: Berau,
Muturi, and Wiriagar. The gas fields
have proven reserves (P1) of 14.4 tcf,
and together with probable reserves,
Tangguh has the potential to yield a
total of 23.7 tcf of gas.
The Berau PSC, the Muturi PSC,
and the Wiriagar PSC which were
originally set to expire in 2017,
2022, and 2023, respectively, have
been extended until Dec. 31, 2035
to meet the Tangguh LNG’s supply
commitment.
BP Indonesia holds a 37.16
percent stake in the Tangguh LNG Zikrullah
Courtesy of Energypost
Christoph Frei
S
GX-listed Ramba Energy by leading global investment firm, “Mandala is very appreciative of
Limited and Mandala Lemang KKR. Mandala is led by an executive the timely approval of the transfer
Singapore Pte Ltd announced management team of three highly by SKK Migas. We are excited to
recently that they have experienced, technically based implement our complementary
received SKK Migas approval for the co-founders with over 75 years of partnership with Ramba such that
transfer of a 35 percent interest in the combined experience in oil and gas together we can initiate early oil
Lemang Production Sharing Contract operations, and who have spent the production and then aggressively
from PT Hexindo Gemilang Jaya to majority of their careers in South East pursue the very significant upside
Mandala and the transaction is now Asia. KKR partnered with Mandala in in the Lemang PSC,” said Barry
deemed to be completed. early 2015 to bring complementary O’Donnell, CEO of Mandala.
Lemang has a relatively low technical and financial capability to Prior to the transaction, Hexindo,
operating and capital cost structure regional independent and national which is 80.4 percent indirectly
which is favorably positioned for operators across the exploration, owned by Ramba Energy, owned
development, even in the current oil development and production 51 percent of Lemang with the
price environment, and both parties spectrum in order to drive portfolio remaining 49 percent owned by
remain excited about progressing the growth and maximize asset potential. Eastwin Global Investments Limited,
project through 2016 and bringing it “Despite the current low oil a company incorporated in the
into production. Through a secondment price environment, we are excited British Virgin Islands. Concurrently
agreement, Mandala’s team will to have reached completion and with the farm-in agreement with
bring its complementary technical look forward to our long term Mandala, Hexindo signed agreement
experience and capabilities to work partnership with Mandala and at the to acquire a 15 percent interest in
actively alongside the Ramba team. same time, taking advantage of the Lemang from Eastwind. As a result
The parties look forward to building lower cost environment to reduce of the transactions, Lemang is now
on the strength of this partnership to our development costs further. This 35 percent owned by Mandala, 31
maximize the potential of the project. is a further upside to the already percent by Hexindo, and 34 percent
Mandala is a South East Asia- low cost of production we expect by Eastwin.
focused oil and gas exploration from the Lemang block.” said David
and production company backed Soeryadjaya, CEO of Ramba. — Ruli Setiawan
Courtesy of Monochroma
David Soeryadjaya
Petromindo|Khalsa
T
otal EP Indonesie, a One of the terms and conditions of is low, contractors may get up to 70
subsidiary of French energy the new contract that has been signed percent, according to the source.
giant Total SA, will probably by state owned oil and gas firm PT Meanwhile, state owned oil
pull out of Mahakam block Pertamina and upstream authority and gas firm PT Pertamina’s
after its contract expires at the end of SKK Migas is revenue sharing based Spokesperson Wianda Pusponegoro
2017 since the terms and conditions on “Split Sliding Scale and Revenue said at present Pertamina is talking
of the new contract on the block is over Cost (R/C), which the firm about two important aspects related
not interesting. considers too small and different to the transition of operatorship
A source told Petromindo that from the previous split. If the oil price in the block, namely transfer
the chance is 60 percent for the firm is low, contractors will only receive arrangement and financial terms.
to pull out of the block as the firm 35 percent for gas and 20 percent for “With regards transfer
considers that the block is no longer oil at maximum. If the oil price is high, arrangement, (the question is,) Are
economical in view of the 30 percent contractors will get 25 percent for gas there options for Pertamina to place
interest offered by the government and 10 percent for oil at maximum, its people as observers to study (the
for the firm together with its Japanese according to the source. block prior to the expiry of the block).
partner, Inpex, and the terms and In the Revenue over Cost scheme With regards financial terms, there
conditions of the new contract. applied in Malaysia, if the oil price will be negotiations on prices, size
etc,” she said, adding that Pertamina
Mahakam block’s new revenue split expects to clinch deals with the
Government Split (After Tax) Contractor Split (After Tax) existing contractors on both aspects
R/C
Oil Gas Oil Gas simultaneously.
0< x ≤1 80.00% 65.00% 20.00% 35.00% The government has allowed to
award 70 percent of the block to
1< x ≤12 82.50% 67.50% 17.50% 32.50%
Pertamina after the expiry of the
12< x ≤14 85.00% 70.00% 15.00% 30.00%
existing contract.
14< x ≤16 87.50% 72.50% 12.50% 27.50%
x>16 90.00% 75.00% 10.00% 25.00% — Febry Silaban
Petromindo|Khalsa
Six oil, gas projects included
in strategic project list
P
resident Joko Widodo has signed Presidential Most of the projects belong to state owned oil and
Regulation No 3/2016 on the acceleration of 225 gas firm PT Pertamina (Persero), including the Tuban
national strategic projects. and Bontang refineries and the Belawan-Sei Mangkei
Directorate General of Oil and Gas at the pipeline project. Pertamina is now in the phase of
Ministry of Energy and Mineral Resources said in a selecting partners to develop the Tuban and Bontang mega
statement that six oil and gas projects are included in the projects, while the Belawan-Sei Mangkei developed by PT
list of the national strategic projects. Pertamina Gas (Pertagas) is now in the final construction
According to the presidential regulation, related phase.
government offices and regional administrations are With regards the LPG terminal project in Banten,
required to provide support to help accelerate the there are several companies that reportedly planned to
implementation of the national strategic projects build LPT terminals in Banten. One of them, according
particularly in speeding up the permitting procedure and to the previous reports, is Pertamina. It was reported
land acquisition. in September 2012 that Pertamina planned to build a
The directorate said that the six oil and gas projects floating US$250-million LPG refrigerated terminal in
include a number of refinery projects namely the planned Tanjung Sekong, Merak, Banten with a capacity of 80,000
Bontang refinery project in East Kalimantan, and Tuban tons.
refinery project in East Java, and the upgrading of existing Another company that planned to build a LPG
refineries in Central Java, Riau Islands, South Sumatra, terminal is petrochemical firm PT Chandra Asri
West Java, and East Kalimantan. Petrochemical. According to a report The Jakarta Post
Other projects are the construction of a 1 million-ton reported in February 2011, the firm in partnership
per annum LPG terminal in Banten, construction of a with Vopak Pte. Ltd of Singapore planned to invest
139.24-km gas pipeline linking Belawan and Sei Mankei $150 million to build an LPG terminal in Merak, Banten.
in North Sumatra with capacity of 75 mmscfd, and the The LPG channeling and distribution capacity of the
development of mini LNG plant and LNG-LCNG station in terminal was expected to reach one million tons per year,
Central Java, South Sulawesi, and Banten. according to the firm.
T
he government has kits for fishermen in Bekasi, capacity of 96,500 kl. The storages
allocated around Rp 2 Cirebon, Cilacap, Demak, Karang will be built in 25 locations. This is
trillion in state budget Asem, Tuban, Jakarta Utara, a multiyear project to be executed
for the development of Pemalang atau Pekalongan and from 2016 through 2017. Total
several oil and gas downstream Lombok Barat. A total of 5,000 budget for the project is Rp 82.58
infrastructure projects this year, packages will be delivered to billion, including Rp 35.61 billion
Director General of Oil and Gas IGN fishermen as part of the project. for this year.
Wiratmaja said recently. - Rp 31 billion for the project Pertamina’s spokesperson
Most of the funds are allocated to distribute oil fuel-to-CNC Wianda Pusponegoro confirmed
for the projects aimed to increase the converter kits to public buses and that it will receive funds from the
domestic use of natural gas instead of taxis in Bekasi regency, Bogor 2016 state budget to build gas
oil fuels. regency, Balikpapan city, Subang connections to 40,000 houses this
Breakdown of the budget regency. A total of 1000 packages year. The gas connections will be
allocations is as follows: will be distributed built in Prabumulih in South Sumatra
- Rp 1.33 trillion for the project - Rp 42.8 billion for the project to province (32.250 houses), Balikpapan
to expand and develop city gas develop LNG-LCNG stations. The in East Kalimantan province (4,000
networks in six cities: Batam, project involves the development houses), and Cilegon in Banten
Balikpapan, Surabaya, Tarakan, of one mini LNG plant in Karawang province (4,000 houses).
Prabumulih and Cilegon. The with a capacity of 5 mmscfd and On top of this, she said, Pertamina
projects include the development four LCNG stations each with the is going to build gas connections to a
of pipe connections to houses capacity of 0.5 mmscfd, located total of 27,000 houses in a number of
and environmental, FEED/DEDC in Cirebon, Karawang, Gresik and cities this year.
studies. State owned oil firms, Banyuawangi respectively. This is “We managed to build gas
PT Pertamina (Persero) and PT a multi-year project to be executed network in four cities (Prabumulih,
Perusahaan Gas Negara (PGN) are from 2016 through 2018. Jambi, Sengkang, Sidoarjo) rapidly
assigned to build gas connections - Rp 95.89 billion for the project last year. This year, we (plan) to build
to 40,000 and 49,000 respectively. to develop LPG storages with a additional gas network in Bulungan,
- Rp 255.63 billion for the project total capacity of 6,000 tons. The Bekasi, Sidoarjo, Ogan Hilir, Subang,
to develop online CNG stations storages will be built in Bima, Lhokseumawe, and Bontang. A total
in two areas, namely Prabumulih Wayame, Kupang and Jayapura. of 27,000 household connections will
city and Bekasi regency, for This is a multiyear project to be be built,” Wianda said.
Courtesy of SKK MIGAS
transportation. Pipeline networks executed from 2016 through She said, two gas networks,
will also be built in the two areas 2018. Total budget for the project namely in Bulungan and Bekasi
as part of the project. The project is Rp 127.45 billion, including Rp regencies, were already operating in
will be handled by Pertamina. 95.89 billion for this year. the first quarter of 2016.
- Rp 80 billion for the project to - Rp 35.61 billion for the project to
provide diesel-to-gas converter develop oil fuel storages with total — Bernard Loebs
T
he Ministry of Energy and reaches 90.6 cargoes from Bontang 30.4 cargoes from Bontang and eight
Mineral Resources unveiled and 81 cargoes from Tangguh. cargoes from Tangguh.
recently the latest supply Meanwhile, contractual domestic Of the total uncommitted cargoes,
and demand of Indonesian sales commitment reaches 17 cargoes 28 cargoes are now in the phase of
LNG, indicating most of the LNG to be from Bontang (for Nusantara Regas) negotiation with prospective buyers,
produced in the country this year has and 12 cargoes from Tangguh (for including Kyushu Electric (three
secured buyers. public utility PT Perusahaan Listrik cargoes), Kansai Electric (three
Director General of Oil and Gas Negara (PLN) and Arun Storate and cargoes), CPC (one cargo), Shell (8.2
IGN Wiratmaja explained that the Regasification Terminal). cargoes), TGPL (4.80 cargoes), and
Bontang LNG plant in East Kalimantan Besides, the government has interuptible Kogas (eight cargoes).
will produce 152.5 std cargoes of allocated 26.5 cargoes from both LNG “There are thus a total of 10.4
LNG this year, while production from plants for other domestic buyers such cargoes which still have no buyers or
Tangguh LNG plant in West Papua will as PLN Benoa, FSRU Lampung etc. interested buyers,” he said.
reach 115 std cargoes. There are thus a total of 38.4
Contractual export commitment uncommitted cargoes, consisting of — Febry Silaban
Courtesy of LNGWORLD
Pelindo signs contract with JSK
for LNG Terminal in Bali
By: Febry Silaban
P
T Pelindo Energi Logistik 40 mmscfd for a 200-MW diesel and The LNG terminal will built on the
(PEL), an affiliate of state gas power plant in Pesanggaran, Bali property owned by PT Pelindo III and
owned port operator —called PLTD Pesanggaran— owned will be operated by PEL, Denny said,
PT Pelabuhan Indonesia by PT Indonesia Power, a subsidiary adding that PEL has signed a contract
(Pelindo) III, signed on Jan. 22 a of state owned electricity firm PT worth US$500 million with Indonesia
contract with Jaya Samudera Karunia Perusahaan Listrik Negara (PLN). Power to deliver gas to PLTDG
Group (JSK Group) to provide Floating “Indonesia will soon have a mini Pesanggaran.
Regasification Unit (FRU) and Floating LNG terminal, that is Benoa LNG “The existence of the terminal is
Storage Unit (FSU) for a mini LNG terminal,” PEL’s President Director in line with the Nawacita program of
terminal in Benoa, Bali owned by PEL. Denny Hermanto said, adding that the the Joko Widodo government, which
The Benoa LNG terminal will be LNG will be sourced from the Bontang aims to increase productivities by
built to provide gas at a volume of LNG plant in East Kalimantan. improving efficiencies in logistical
BONTANG IN DECLINE
B
ontang LNG plant in East Kalimantan province, Bontang LNG plant gets most of its gas supplies from
which was once called the world’s largest LNG Mahakam block operated by TEPI and Sanga-Sanga block
plant, has seen its production declining since the operated by Vico. TEPI’s contract on Mahakam expires in
middle of the past decade. Going forward, the 2017, while Vico’s contract on Sanga-Sanga is due in 2018.
plant’s production will further decline due to the lack of The government has decided not to extend their contracts
gas supplies. and award the blocks to Pertamina once their contracts
Back in 1999, when it was called the world’s largest expire.
LNG plant, the Bontang plant had eight trains operation. As a result of the supply cut, Bontang will only receive
Today, there are only four trains that are still in operation, 1,400 mmscfd of gas this year, compared to 1,600 mmscfd
according to Salis Aprilian, CEO and President Director of las year. In 2017, the supply is expected to fall further, the
PT Badak NGL, a subsidiary of state owned oil and gas firm source said.
PT Pertamina, the operator of the plant. The source said that TEPI, the largest gas supplier
In the second semester of this year, one of the four to Bontang, was reluctant to maintain its production at
trains will be deactivated, leaving only three trains still in last year’s level despite a guarantee from the Indonesian
operation due to the lack of gas supplies, Salis said. government that it will get a return on its investment once
Gas for the LNG plant is sourced from gas fields in East the contract has ended.
Kalimantan operated by Total E&P Indonesia (TEPI), Vico There are also fears that gas production from
Indonesia and Chevron Indonesia Company. both blocks will significantly drop once Pertamina
Salis did not explain the reason behind the decline have come in to take over the operation. To prevent
in gas supplies, but sources said both Total and Vico are such thing from happening, Pertamina is seeking
going to cut are going to cut their gas supplies to the plant to gain entry into both blocks prior to the expiry of
due to two reasons; First, they are going to lower their their contracts by among others contributing to the
production due the drop in oil and gas prices; secondly, investment.
they are not interested to make investment to maintain or
increase production since the contracts going to end soon. — Bernard Loebs
Petromindo|Boim
P
rices of spot liquefied cheaper competing fuels, which many was insufficient to support the prices
natural gas (LNG) for March utility power generators opted to burn of LNG in Asia, as the number of
delivery to northeast Asia rather than LNG.” available cargoes in the Asian Pacific
saw their largest year-over- At $7.436/mmBtu, the monthly basin alone outstripped the demand,”
year drop on record, plunging 61.7% average JKM for March delivery had Wilson explained. “Over the course of
from March 2014 to average $7.436 reached levels not seen since 2010, the assessment period, NBP became
per million British thermal units (/ when the July monthly average was the premium market, ending $1.437/
mmBtu), according to latest Platts $9.639/mmBtu. mmBtu above the JKM for March
Japan/Korea Marker (Platts JKM™) In the years following the 2011 delivery. However, this spread did not
data for month-ahead delivery. Fukushima disaster and the subsequent enable cargoes of Asia Pacific origin
This is the largest year-over-year loss of nuclear power in Japan, March to be sold into the Atlantic basin,
fall since Platts began assessing the JKM monthly averages had been largely owing to the shipping costs.”
JKM in February 2009. The figure consistently above $10/mmBtu. The widening spread, however,
reflects the daily Platts JKM assessed The March 2015 monthly provided opportunities for portfolio
between January 16 and February 13, average had also dropped 25% from sellers who were loading cargoes in the
expressed as a monthly average. February, as the market shifted into Atlantic with a view to ship the cargoes
In 2014, March JKM daily prices a backwardated* structure, reflecting to their buyers in Asia. Higher onshore
had reached a historic high of $20.20/ the seasonal reduction in demand European gas prices have enabled them
mmBtu on assessment date February going into the northern hemisphere to sell these Atlantic loading cargoes
14. By comparison, March-delivery spring. This exerted further downward in the same basin at more attractive
JKM prices in 2015 bottomed at $6.80/ pressure on prices, as buyers were in prices, and procure spot cargoes within
mmBtu on assessment date February no rush to procure cargoes. Asia to fulfill orders within the region.
5, the lowest since June 2010. The softening market was in stark This led to a slight rebound in
“Moderate temperatures and high contrast to Northern Europe, where prices towards the end of the trading
buyer inventories continued to cap colder temperatures had resulted in month, with the JKM gaining $0.10 to
demand for spot cargoes in northeast a spike in onshore gas prices for the close at $6.90/mmBtu on the last day
Asia, despite the lower prices in March,” prompt month. The average spread of trading for March delivery.
said Stephanie Wilson, managing editor between the March JKM and UK NBP Meanwhile, the price of possible
of Asia LNG at Platts, a leading global had narrowed to a historical low of competing fuel thermal coal
energy, petrochemicals and metals $0.36/mmBtu during the assessment decreased 13.1% year over year,
information provider and a premier period, as the arbitrage between the while fuel oil was down 49.9% over
source of benchmark price references. Atlantic and Asia Pacific basins closed. the year during the January 16 to
“Exacerbating the oversupply were “Even this closure of the arbitrage February 13 assessment period.
Petromindo|Khalsa
Cirebon groundbreaking
scheduled for May 2016
P
T Cirebon Energi Prasarana Heru, however, revealed that the power plant in operation, owned by
(CEPR), the sister company development of the project could be CEP with a capacity of 600 MW. The
of PT Cirebon Electric Power delayed if the national spatial master transmission line from the power
(CEP), expects to break plan, locally known as RUTR Nasional, unit to the substation is of 150 kVA
ground on its 1000 MW power plant for the area where the project is type.
project in May 2016. supposed to be built, is not amended “For the 1000 MW project, we
Heru Dewanto, President Director soon. need a 500 kVA transmission line.
of CEPR told Petromindo.com “Some of the lands supposed So, we need to build new towers,” he
recently that the target is set on the to be used for the project have said.
condition that the environmental been designated as traditional salt “We are waiting for the
impact study (Amdal) of the project production area. Meanwhile, we government to issue a new regulation
is approved by the government this need (to clear the area) to build a to revise the RUTR for the area.
month (February 2016). transmission line along 18 km (to Otherwise, the development of the
“If the Amdal is approved in link the power plant to the nearest project will be delayed,” he said. .
February as scheduled, we expect substation owned by state owned CEPR is a consortium comprising
to sign financial closing in March electricity firm PT Perusahaan Listrik of Marubeni Corporation, Indika
or April, which will be followed by Negara),” he said. Energy Tbk, Samtan Co. Ltd, Korea
groundbreaking in May,” he said. As a matter of fact, a Midland Power Co. Ltd, and Chubu
He revealed that currently transmission line has been existing Electric Power Co. Inc. The firm has
the company has commenced to connect the existing power signed Power Purchasing Agreement
preparation at the location. “For plant with PLN’s substation, but (PPA) with PLN for the 1000 MW
physical development we are technically the new power plant will project.
still waiting for the Amdal to be not be able to use it. The Cirebon
approved,” he said. power plant complex already has a — Cepi Setiadi
DSSA sets up new unit Kendari-3 coal-fired power plant in electricity firm PT Perusahaan Listrik
to grab new power project Southeast Sulawesi, with construction Negara (PLN)
IDX-listed energy and coal mining expected to start this year, and The current government has set a
firm PT Dian Swastatika Sentosa Tbk completed in 2018. five-year plan to develop a combined
(DSSA) has recently set up a new indirect The power plant business 35,000 MW power plants until 2019,
subsidiary that would participate in currently accounts for 9.7 percent of of which about 10,000 MW to be
future power plant tenders held by state DSSA’s total revenue. The company developed by PLN and the remainder
electricity company PT Perusahaan will have a combined capacity of by independent power producers.
Listrik Negara (PLN) 700 MW when the Sumsel-5 and Novias said that Wika, the
DSSA Director and Corporate Kendari-3 have been completed. The country’s largest builder, has
Secretary Hermawan Tarjono told Sinar Mas Group, DSSA’s holding, extensive experience in the
Petromindo.com recently that the aims to have a combined 1,100 MW of construction of power plants in the
company was hoping to get at least power plants until 2020. country, pointing out it has so far
one additional coal-fired power developed five power plants with
plant project this year as it seeks to Wika seeks to grab 10% combined capacity of 200 MW.
increase revenue contribution from of 35GW power plant projects He said that tenders being
the power plant business. IDX-listed engineering and followed by the company include a
Hermawan said that the new unit construction firm PT Wijaya Karya 2x660 MW coal-fired power plant
called PT DSSP Power Sumsel Dua Tbk (Wika) intends to grab about 10 project in Lampung and the PLTU
was set up by DSSA subsidiaries PT percent of the construction business Java 5 2x1,000 MW coal-fired power
DSSP Power Sejahtera and PT DSSP provided by the planned 35,000 MW plant project in Serang, Banten. In
Power Utama with paid up capital of power plant projects. addition, Wika is also eyeing tender
Rp 400 billion. General Manager of Power Plant for a 800 MW combined cycle power
DSSA is nearly completing and Energy Department at Wika, plant called PLTGU Java 3 this year.
construction of the Sumsel-5 2x150 Novias Surendra, said that the “PLN will soon announce tender
MW coal-fired power plant in South company will participate in power for the PLTGU Java 3. Perhaps we will
Sumatra. The company is also plant engineering and construction participate in the tender in the near
planning to develop a 2x50 MW tenders held by state-owned future,” he said.
Petromindo|Boim
Petromindo|Khalsa
PJB allocates Rp 1.2t
capex this year
PT Pembangkitan Jawa Bali (PJB),
a wholly-owned subsidiary of state
owned electricity company PT PLN,
has allocated Rp 1.2 trillion for capital
expenditure (capex) this year.
Muljo Adji, acting President
Director PT PJB told Petromindo at
the recent Bali Clean Energy Forum
2016 that the funds will be used for
internal operational expenses.
“As we are taking care of many
big capacity power plants, surely we
need big expenditure,” he said, adding
that the funds will be used for power
plants maintenance and repair, and
coal purchase. Utama (99 percent owned by the thus play a vital role in sustaining
Muljo said that this year the firm) is raised to Rp 682 billion from power supplies on the tourist island.
company will need coal supply of Rp 671 billon, while DSSE Power Mas PLN said the 150 kV high-voltage
around 2 million tons. “So far our Utama (also 99 percent indirectly power line complied with the existing
(coal) need is around 2 million tons, owned by the firm) has its issued regulation and met the international
same with the previous year,” he said. capital raised to Rp 618.7 billion from health standards of the World Health
Rp 608.7 billion. Meanwhile, issued Organization (WHO) either in terms
Dian Swastatika forms capital in DSSP Power Sejahtera (also of the height of tower and cleared
new power unit 99 percent indirectly owned by the areas.. It will thus pose no dangers to
IDX-listed energy firm PT firm) is raised to Rp 10.25 billion health.
Dian Swastatika Sentosa Tbk from Rp 250 million. People need not to worry living
announced recently that on Feb. under the high-voltage power line,
15, its subsidiaries, PT DSSP Power PLN completes installment PLN’s acting Corporate Communication
Sejahtera (99 percent indirectly of Celukan Bawang high Head Agung Murdifi said
owned by the firm) and PT DSSP voltage power line Agung said Bali power system
Power Mas Utama (99 percent State owned electricity firm PT now has total installed capacities of
indirectly owned by the firm) have Perusahaan Listrik Negara (PLN) around 950 MW, including 570 MW
set up a joint venture called PT DSSP (Persero) said recently it has finished from Gilimanuk, Pesanggaran and
Power Sumsel Dua. installing the 150 kV overhead high- Pemaron power plants and 380 MW
The new firm has Rp 40 billion in voltage power line which connects from Celukan Bawang. Peak load at
authorized capital with ownership PLTU Celukan Bawang coal fired night reach 800 MW, meaning the
structure comprising 9,990 shares for power plant (380 MW) to the Java- island has a surplus capacity of 150
DSSP Power Sejahtera and 10 shares Bali power grid. MW. Nevertheless, the island still gets
for DSSP Power Mas Utama. While Bali is part of the Java-Bali supplies from Java through undersea
Dian also said it has raised the grid, it is not easy to channel power lines.
amount of issued capital in three from Java to Bali in case of emergency Following the operation of PLTU
units, PT DSSE Energi Mas Utama, PT since Bali use 150 kV interconnection Celukan Bawang, PLN will place its
DSSP Power Mas Utama, and PT DSSP system, while Java uses 500 kV diesel power generators on the island
Power Sejahtera. interconnection system. The Celukan as reserve since its operating cost is
Issued capital in DSSE Energi Mas Bawang high-voltage power line will high.
Elnusa to diversify
into power business
IDX-listed oil and gas services
company PT Elnusa Tbk plans to
diversify into power plant business
to help cope with the current drop in
oil price.
Elnusa President Director
Syamsurizal was quoted by Investor
Daily as saying on Wednesday that
the company will utilize flare gas
for the planned power plant project,
which is in line with the government’s
wish to take advantage of flare gas.
He said that the company, a
subsidiary of state-owned oil and gas
firm PT Pertamina, has been in talks
with upstream oil and gas authority Supramu Santosa
BPPT develops small-scale at the Lahendong geothermal power scheme for the project,” he said
geothermal power plant project, which can produce 100 kW of adding that this project is part of
The Agency for Technology power. the ASEAN Grid which is planned to
Application and Assessment (or be built to cover all ASEAN member
BPPT) said it is currently developing PLN, PTBA and TNB Malaysia countries.
small-scale geothermal power plant to develop mine mouth power The government will not interfere
to supply power in the country’s plant in Riau with the project, leaving the three
islands such as in East Nusa Tenggara, PT Perusahaan Listrik Negara firms to negotiate on business
West Nusa Tenggara, and Muluku. (Persero) (PLN) and PT Bukit Asam to business, he said, adding the
BPPT Head Unggul Priyanto said Tbk (PTBA), two Indonesia state government will only regulation to
in a statement issued last week that owned enterprises, plan to cooperate provide legal umbrella for the project.
small-scale geothermal power plant Malaysian utility Tenaga Nasional
has never been developed as it was Bhd in developing a 2x600 MW PLN operates new power line,
considered non-economical. mine mouth power plant in Peranap relay stations in Sumatra
But he said that if imported district, Indragiri Hulu regency, Riau State-owned electricity company
components can be produced at home, province. PT PLN has recently operated new
the cost could be significantly reduced. Jarman, Director General of power infrastructure facilities including
He pointed out that the generator can Electricity and Energy Utilization, a transmission, relay station, and
be manufactured by stated-owned PT Ministry of Energy and Mineral transformers in Sumatra, a region which
Pindad, turbine by state-owned PT Resources told Petromindo on the has become one of the government’s
Nusantara Turbin and Propulsi, while sidelines of the Bali Clean Energy priorities in its power sector
the condenser can be produced by Forum 2016 last week feasibility development over the next five years.
state-owned PT Boma Bisma Indra. study for the project has been PLN said in a statement recently
He said that the technology will completed. that on Feb. 10, it started operation of
utilize excess steam from major “Feasibility study for the project a 150 kV high voltage power line and
geothermal power plants. He said has been completed and the three a 60-mega volt ampere (MVA) relay
that a pilot project is being developed firms are now talking about business station at the Sei Mangke industrial
estate in North Sumatra.
Petromindo|Boim
Chevron may dispose Luzon. These plants have a combined the company currently have eight
geothermal assets generating capacity of 692 MW. financing projects for hydro and
US energy giant Chevron Corp. mini hydro power plants with
is evaluating possibility to sell its SMI provides Rp 3.1t about Rp 1 trillion in financing
geothermal assets in Indonesia and geothermal funds commitment; two advisory projects
The Philippines. PT Sarana Multi Infrastruktur in wind energy; two advisory
A Petromindo source said that the (Persero) (PT SMI), an infrastructure projects in waste to energy; two
company is reviewing the assets in financing company 100 percent advisory projects in hydro and
response to unsolicited expressions owned by the government, stated mini hydro power plants; and
of interest. that it has a mandate to manage also financing sector expansion to
The process will take some time funds amounting to Rp 3.1 trillion energy efficiency. In addition, the
and no final decisions on divestment to support the development of company has financing and advisory
has been made, the source said. geothermal projects in the country. cooperation with multilateral
Chevron Indonesia officials were Darwin Trisna Djajawinata, institutions to promote renewable
not available for comment. Director at SMI said in his energy infrastructure development
In Indonesia, Chevron operates presentation on Friday at Bali Clean in Indonesia.
the Darajat and Salak fields, West Energy Forum 2016 that the fund will “Hence if there are investors
Java, which have a combined be utilized to promote geothermal who are interested in entering the
operating capacity of 647 megawatts. exploration and exploitation activities geothermal sectors, and has enter the
Chevron also has a 40 percent in Indonesia. exploration stage, they can call us to
interest in the Philippine Geothermal “SMI has strategic initiatives get into the Geothermal Support Fund
Production Company, Inc., the focusing on clean energy (program),” he said to Petromindo.
operator of the Tiwi geothermal infrastructure, one of the initiatives is PT SMI was established in
facility in Albay Province and the providing geothermal support fund,” 2009 to support the government’s
Mak-Ban geothermal facility in he said, adding that other initiatives infrastructure development agenda
Laguna and Batangas provinces. are financing and advisory focus and through partnerships with private
These fields provide steam to the institutional cooperation. and/or multilateral financial
third-party Tiwi and Mak-Ban Darwin explained that in the institutions in Public-Private
geothermal power plants in southern areas of financing and advisory Partnership (PPP) projects.
PLN installs new transformer replaces the old 10 MVA transformer. (765.77 ha), and port area (406.10
at Pagar Alam substation “The 30 MVA transformer is a kind ha).
Sate owned electricity firm PT of present from PLN to its customers The industrial and port areas are
Perusahaan Listrik Negara (PLN) as it help the firm to provide the best managed by a joint venture between
(Persero) announced recently it has service to them,” PLN’s Senior Public AKR and Pelindo III, with respective
installed a new transformer – a 30 Relation Manager Agung Murdifi said. ownership of 40%-60% for the port
MVA type – at the 150 kV substation and 60%-40% for industrial area.
in Pagar Alam, South Sumatra as part Pelindo III, AKR plan 660 MW
of its efforts to improve the quality of coal-fired power plant Teluk Lamong power plant to
its service in the region. State-owned port operator PT come onstream this March
The Pagar Alam substation Pelindo III and IDX-listed logistics A 13 MW gas-engine power plant
functions to channel power to the and supply chain company PT AKR which will support the operation
Sumatra power grid. Thanks to the Corporindo Tbk are planning to build of the Teluk Lamong International
30 MVA transformer, the quality of coal-fired power plant with a capacity Terminal in East Java is projected to
power received by customers in the of 2x330 MW in Gresik, East Java. come into operation this March.
region will be improved and more “The tender plan for the project This was said by Rahmat Satria,
reliable, the firm said. will be commenced by AKR this year,” Director of Operations & Business
Previously, the substation is Director of Operations & Business Development of state-owned port
equipped with two transformers Development of Pelindo III, Rahmat operator PT Pelindo III, the owner of
of 10 MVA and 15 MVA types Satria told Petromindo recently. the project.
respectively. As load increased, Last year, it was reported that Rahmat said that the power
problem immediately occurred both companies have allocated plant would be operated by
anytime one of the transformers Rp 1.03 trillion to develop basic PT Lamong Energi Indonesia,
was broken as the other one could infrastructure at the Java Integrated a subsidiary of Teluk Lamong
not carry the load. As a result, PLN Industrial and Port Estate (JIIPE) Terminal, in partnership with IDX-
imposed rotation blackout, causing in Gresik. JIIPE has a total area of listed state-controlled construction
disappointment among customers. 2,933.2 ha comprising of industrial and engineering firm PT Adhi Karya
The new 30 MVA transformer estate (1,761.40 ha), residential area Tbk.
Petromindo|Khalsa