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Suriyanto, President Director of PT EnviroMate Technology International (PT ETI)

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

14 INDUSTRY NEWS: OIL & GAS

38 FOcus
Clean energy gaining momentum 32
42 Center of Excellence for
Clean Energy built in Bali

44 OPINION | Madjedi Hasan


Renewable energy development
for geothermal case

48 OPINION | Hadiputranto, Hadinoto &


Partners (www.hhp.co.id)
New Presidential Regulation
to accelerate 35GW program

54 COMPANIES
Pertamina’s upstream profit
drops to $800m

56 pOWER
N. Sulawesi, Gorontalo have
enough power now

58 ADB releases funds for Sumatra COVER sTORY


power grid
ETI advances technology
59 OIL & GAS
Exploration Committee gets
to support 35,000 MW
extension of job period “Amid the current sluggish condition of global
economy and low prices of oil and minerals,
60 FID for Tangguh Train III Indonesia needs such mega projects to boost up
project expected in mid-2016 our economic growth. It’s a huge opportunity
for us to grow,” said Suriyanto B.com MTM,
62 OPINION | Sampe L. Purba President Director of PT EnviroMate Technology
RI’s LNG challenge International (ETI).

2 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


PETROMINDO FEBRUARY 29 – MARCH 29, 2016
3
CONTENTS

64 INTERNATIONAL
63 OIL & GAS

ovt offers investors
G
WEC: Unconventional gas
is changing global markets

66 OIL & GAS


mini refinery projects
SKK Migas approves Lemang farm-in The government plans to build mini refineries
in eight clusters near marginal oil fields and
67 COMPANIES the projects will be offered to private sector,
Sugih Energy sets capex at $25m, the Directorate General of Oil and Gas at the
names new president Ministry of Energy and Mineral Resources said in
a statement recently.
68 Pertamina receives eco vessel

69 OIL & GAS


PetroChina still committed to exploration
66
70 Total may pull out of Mahakam block

71 Police detains two top executives


of BPMIGAS

72 Six oil, gas projects included


in strategic project list

73 Rp 2 trillion for downstream infrastructures

74 Ministry unveils LNG balance for 2016

76 Cooper sells exploration assets


to Mandala Energy

4 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


PETROMINDO FEBRUARY 29 – MARCH 29, 2016
5
CONTENTS
77 OIL & GAS 85 OIL & GAS
Pertamina selecting partners March-delivered LNG plunges 61.7%
for refinery projects
87 POWER
78 PSC holders asking for helps PLN signs Rp 47t geothermal agreements
to weather oil crisis
88 INDUSTRY NEWS: POWER
79 Massive layoff in oil industry
96 STATISTICS
80 Chevron to return East Kalimantan PSC

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

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www.mind-sense.biz www.eCoalChina.com www.pilot.de

6 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


PETROMINDO FEBRUARY 29 – MARCH 29, 2016
7
EDITOR'S NOTE

Momentum for clean energy

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.

8 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


PETROMINDO FEBRUARY 29 – MARCH 29, 2016
9
INTERNATIONAL

Courtesy of Wikipedia

10 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


A new green energy superpower
India building 100,000 MW
solar power
By: Johannes Simbolon

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,

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


11
INTERNATIONAL

including France. Companies involved to 10 percent lower than coal. This


in the project include Areva, Engie, will disrupt the traditional power
Enel, HSBC France and Tata Steel, generation ecosystem, KPMG said.
according to reports. Another major disruptor
France’s climate change identified by KPMG is the advent
ambassador, Laurence Tubiana, of the rooftop PV market in India.
had called the group “a true game- Although rooftop PV is already
changer”. competitive in India for many
industrial, commercial and some
Cheaper than coal power residential customers, it is being held
The latest auction of solar energy back by immature or non-existent net
capacity in India has achieved a metering policies and the poor state
new record low price of 4.34 rupees of India’s grid.
(6.37 US cents) per kWh, prompting But KPMG said this could change
Goyal to say that solar tariffs are now with the “significant evolution”
cheaper than coal-fired generation. expected in storage technologies,
The results of a reverse auction which will make self-consumption of
tender of 420 MW of solar capacity solar power generated particularly
conducted by the Rajasthan in residential settings more attractive.
government revealed that Finnish “The bigger disruption which
group Fortum Energy bid the lowest we are yet to see may come from
price of 4.34 rupees per kWh for a the solar rooftop business. This will
70MW solar PV plant. be supported by a rise in storage
“Through transparent auctions technologies, and together they could
Courtesy of Greenpeace

with a ready provision of land, change the energy landscape. Solar


transmission and the like, solar tariffs rooftop power, today, is already
have come down below thermal competitive compared to grid power;
power cost,” Energy Minister Goyal however, it requires net metering
said in a tweet. support. Though, going forward, this
International consultancy firm will change due to the significant
KPMG, in its report released last evolution that is expected in storage and Financial Analysis (IEEFA) in its
November, said solar prices in India technologies,” the report said. report released last August said India
could be substantially lower than The consultancy predicted that is rapidly transforming its power
coal by 2020, helping the technology India’s rooftop market could reach sector, which have far-reaching
become a major part of the country’s 10,000 MW by 2020 and 49,000 MW consequences for seaborne thermal
energy mix. by 2025. Initially, the rooftop market coal.
KPMG’s report titled “The rising will be dominated by industrial The report titled “India’s Electricity
sun: Disruption on the horizon” consumers over the next five years, Sector Transformation” states the
predicts that over the next decade but then accelerate after 2020 due Indian government is on track to
solar will scale up significantly, to the likelihood of storage solutions achieve its goals of doubling domestic
reaching a 12.5 percent market making rooftop solar more attractive coal production, modernizing the
penetration by 2025. to householders at around this time. electricity grid and installing 175GW
A key factor in this scenario is In the long term, residential PV will of renewable energy, underpinning
the falling cost of solar, with KPMG be the dominant player in the rooftop sustained economic growth in India of
predicting that by 2020 solar power market, according to KPMG. 6-8 percent per year.
will have reached 4.20 rupees per kWh Meanwhile, US-based research “The profound transformation
and 3.59 rupees per kWh by 2025, up firm Institute for Energy Economics announced in 2014 by the Indian

12 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


government is gaining momentum,” dropped by 80 percent in 5 years,” While many commodity
said Tim Buckley, Director of Energy said Tim Buckley, Director of Energy forecasters have assumed Indian
Finance Studies at IEEFA. “While Finance Studies at IEEFA. imports will continue to grow, as a
most financial commentators have According to IEEFA, taking wind result of the transformation, IEEFA
questioned India’s capacity to installs to 60,000 MW could deliver forecasts a peak in Indian thermal
deliver, all sign are pointing towards 18 percent of the required uplift, with coal imports in 2015, with a rapid
success.” a combined capacity expansion across ~20 percent pa decline thereafter.
The installation of 175,000 MW of nuclear, gas, biomass and hydro Energy Minister Goyal has
renewable energy is one of a number providing a further 26 percent. made it clear that India’s reliance
of key policy initiatives that will In this context, the Government of on thermal coal imports is not
enable the rapid transformation. India’s ambition to more than double sustainable for the economy, rate
“India is replicating Germany’s Indian domestic coal production payers nor commercially viable for
and China’s systematic electricity to 1,500 million tons per annum the coal-fired power plants involved.
sector transformation, with the added (mtpa) by 2021/22 would oversupply Goyal in May 2015 said: “We are
advantage that the cost effectiveness India with coal by 400 mtpa, with confident that in the next year or
of this is accentuated by the fact dire consequences for the seaborne two, we will be able to stop imports
that the price of solar electricity has thermal coal market. of thermal coal.”

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


13
INDUSTRY NEWS: OIL & GAS

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

of Basic Chemical Muhammad


Khayam at the ministry told
Petromindo.
Aside from petrochemical plant,
there is also a plan to build two
fertilizer plants in the area. Gas for
the two plants – at a combined rate
of 180 mmscfd – is expected to come
from the fields that now supply gas
to the Tangguh LNG plant, which is
operated by BP Indonesia.
Last January, Minister of
Industry Saleh Husin said that the
investment for the petrochemical
plant is estimated at about US$10-
15 billion.

14 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


PETROMINDO FEBRUARY 29 – MARCH 29, 2016
15
INDUSTRY NEWS: OIL & GAS

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.

16 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


PETROMINDO FEBRUARY 29 – MARCH 29, 2016
17
INDUSTRY NEWS: OIL & GAS

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.

18 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


PETROMINDO FEBRUARY 29 – MARCH 29, 2016
19
20 PETROMINDO FEBRUARY 29 – MARCH 29, 2016
PETROMINDO
PETROMINDO
DECEMBER
FEBRUARY2229– JANUARY
– MARCH 29,
22, 2016
21
INDUSTRY NEWS: OIL & GAS

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.

Minister soon to sign


PoD for Nunukan PSC
Minister of Energy and Mineral
Resources Sudirman Said is expected
to soon sign the First Plan of
Development (PoD 1) of Badik and
West Badik fields in Nunukan PSC in Sudirman Said

22 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Petromindo|Dasir
Indonesia mulls importing
gas from Papua New Guinea
Indonesia is mulling importing
gas from Papua New Guinea (PNG)
for fertilizer production in Papua
province and talks between the
governments of both countries are
now in progress, the Directorate
General of Oil and Gas said in a
statement recently.
The import plan comes in line
with the government’s plan to
develop agricultural sector in Papua’s
Merauke regency, situated in the
Indonesian border with PNG.
Director General of Oil and Gas
IGN Wiratmaja said in Bali over the
weekend that the Indonesian Gas
Balance indicates that the Indonesian
government has to import gas IGN Wiratmaja
starting in 2019. Meanwhile, PNG has
relatively huge gas reserve. That’s technologies and resources of LNG 3. Up to $7 million in cost recovery
the reason the government plans and refinery. “We have an education payments in respect of existing
to import gas from the neighboring center for LNG in Bontang (East sunk costs from past expenditure
country as feedstock for fertilizer Kalimantan). Our friends in PNG in the Pase PSC A and B fields;
plant. can study in Bontang, Cepu etc,” 4. Signature Bonus of $1.5 million
“We have a program to develop a Wiratmaja said. payable to the Indonesian
vast agricultural estate in Merauke. Government; and
We shall build a fertilizer plant in the Triangle completes 5. A Performance Bond of $1.5
area and import gas for the fertilizer sales of Pase PSC million in favor of the Indonesian
plant from PNG,” he said. ASX-listed Triangle Energy Government.
Both countries are now in talks (Global) Limited announced recently The completion of the sale is
about the amount of gas needed by that it has completed the sale of its significant to Triangle in the current
Indonesia and the amount that can interest in the Pase PSC, Aceh to Enso operating environment. The cash
be provided by PNG. The agricultural Asia Inc. (EAI), a nominee of PT Enso proceeds will enable the company to
estate is planned to be built in the Asia. consider new growth opportunities
areas bordering PNG, while the gas The key financial terms of the Sale coupled with an asset in the form of
field is situated in the Indonesian- are as follows: potential non-operated cash inflows
PGN borders. The gas will thus be 1. Cash consideration of US$4.5 from cost recovery payments and
delivered through pipelines. million (less agreed deductions); royalties from the Pase PSC, the firm
Wiratmaja said the fertilizer 2. Production royalty on new said.
plant’s gas need is estimated at 150 developments on the PSC equal Prior to the transaction, Triangle
mmscfd. to 5 percent of EAI’s profit share has 75 percent of the shares in Aceh
Aside from the gas import, (excluding cost recovery) up to a Pase Global Energy Pte Ltd (APGE),
Indonesia and PNG plan to cooperate maximum of $2 million per annum which wholly owns Pase PSC. The
in studying potential joint exploration and capped at $25 million in remaining 25 percent is owned by the
in the border areas and sharing aggregate; Acehnese government.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


23
INDUSTRY NEWS: OIL & GAS

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

24 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Courtesy of SKK MIGAS
oil, gas and geothermal operations,
including exploration, production,
project development and business
support services.
Prior to joining Chevron, Green
was Chief Executive Officer of
Unocal Thailand, Ltd., and Vice
President of International Energy
Operations for Myanmar, Thailand
and Vietnam from 2004 until
Chevron’s merger with Unocal
in 2005. After the merger, Green
served through 2007 as Managing
Director of Chevron’s Asia South
business unit, adding Bangladesh,
Cambodia and China to his previous
responsibilities.

Total to drill 40 wells this


year on oil price assumption
LPG tank projects and 2x500 tons in Bima (West Nusa of $50/barrel
enter tender process Tenggara). Total E&P Indonesie (TEPI)
The planned construction of four plans to drill 40 wells this year but
LPT tanks with combined capacity Stephen W. Green named the number is likely to be reviewed
of 6,000 tons have entered tender President of Chevron Asia in view of the continued drop in oil
process, according to Agus Cahyono Pacific E&P prices.
Adi, a director at the Directorate US energy giant Chevron TEPI’s Head of Media Relations
General of Oil and Gas of the Ministry Corporation has named Stephen W. Kristianto Hartadi said the plan to
of Energy and Mineral Resources as Green President of Chevron Asia drill 40 wells is based on the oil price
reported by Bisnis.com recently. Pacific Exploration and Production assumption of US$50 per barrel.
“It’s still in tender process,” he effective April 1, 2016. He said the firm would not drill
said recently on the sidelines of a Green, 58, succeeds Melody B. wells which do not have economic
discussion on energy. Meyer who is retiring from Chevron value in the current low oil price
He said that the ministry has after 37 years of service. Green, environment.
appointed state-owned oil and gas who is currently Corporate Vice The firm has no new projects
firm PT Pertamina to carry out FEED President of Policy, Government and to be developed this year as it has
for the multi-year projects with Public Affairs, will oversee Chevron’s completed its last projects – Bekapai
estimated investment requirement exploration and production activities Fase 2B in Bakapai and Peciko fields
of Rp 871.45 billion, to be financed in nine countries across the Asia- and Jempang Metulang (JM1) rig in
via the 2016, 2017, and 2018 state Pacific region. South Mahaka field – last year.
budget. Previous to his current position, As reported earlier in this portal,
Under the plan, an LPG storage Green served as President of Chevron TEPI’s investment is projected to
tank with capacity of 2x1,000 tons Indonesia Company and Managing decline to $1.1 billion this year, from
will be developed in Jayapura Director of the Chevron IndoAsia $1.97 billion last year. According to
(Papua), a 2x1,000 tons capacity plus Business unit from 2008 to 2011. Kristianto, the decline in investment
jetty in Wayame (Maluku), 2x500 During this time, he was responsible comes a result of the decline in oil
tons in Tenau (East Nusa Tenggara), for all aspects of the business unit’s prices.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


25
INDUSTRY NEWS: OIL & GAS

Courtesy of SKK MIGAS


LNG Indonesia, a subsidiary of
state owned gas distribution PT
Perusahaan Gas Negara (Persero)
Tbk, to supply the LNG regasification
facility that supply gas to Antam’s
power plant in Pomalaa, Southeast
Sulawesi.
The power plant provides power
for Antam’s ferronickel plant in the
area.
IDX-listed mining company PT
Antam Tbk currently operates an
8x17 MW dual fuel power plant.
Presently, the plant runs on fuel oil,
but it can also run on natural gas.
“We submitted the bid document
to participate in the tender on Jan.
26, 2016,” President Director of
Humpuss Theo Lekatompessy said to
Petromindo.
Theo said there are 12 firms
Four firms sign MoU to The power plant is designed with interested in this project, but only a
provide gas for smelter a capacity of 200 MW, but in the first few of them finally submitted bids
in Sulawesi stage, PJB will build a 65 MW, he said. including PT Humpuss Transportasi
PT Pembangkitan Jawa Bali Padma Energi’s President Kimia (HTK), a subsidiary of HIT,
(PJB), a subsidiary of public utility Budi Indianto said the LNG to the which has been involved in LNG
PT Perusahaan Listrik Negara (PLN) Kolaka receiving terminal will be transportation business for 30 years;
(Persero), has signed Memorandum delivered from an LNG receiving and and FSO specialist firm PT Duta
of Understanding with PT Titis distribution terminal that will be Marine.
Sampurna, PT Padma Energi Indonesia built in Celukan Bawang, Buleleng, “Two other companies were too
and PT Ceria Nugraha Indotama to Bali. The terminal, which is designed late to enter their documents,” he
provide power for a planned nickel to be a LNG distribution terminal for said, hoping that the contract award
smelter in Kolaka, Southeast Sulawesi. eastern Indonesia, will be built by can be made at the end of this month.
The MoU was signed on Feb. 10 on the firm together with PT Pelnido According to Theo, the requested
the sidelines of the Bali Clean Energy Energi Logistik, which is a subsidiary size of the vessel is 12,000-14,000
Forum 2016. of state owned port operator PT cubic meters.
Under the MoU, Titis Sempurna Pelindo III. Late last year, Humpuss won
and Padma Energi will build an LNG The project is scheduled for an LNG delivery contract from
receiving terminal and provide gas completion in the first quarter of PT Pelindo Energi Logistik (PEL)
for a gas-fired power plant to be built 2017. operating the Benoa LNG terminal,
by PJB and the power will be supplied in which Humpuss is obliged to
to the nickel smelter to be built by Humpuss participating in deliver LNG sourced from Bontang
Ceria, Muljo Aji, President Director Pomalaa LNG carrier tender plant in East Kalimantan for a
PJB told Petromindo after the signing IDX-listed energy transporter PT power plant in Pesanggaran,
that the MoU. Humpuss Intermoda Transportasi Denpasar, Bali. The firm uses
“We’ll cooperate from upstream Tbk (HIT) hopes to win the LNG tanker with a size of 20,000 cubic
side to downstream side,” he said. carrier tender held by PT PGN meters.

26 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Bahana named as gas Tampubolon, Pertamina’s SVVP for The office of Pertamina
infrastructure consultant Upstream Business Development, told Iternasional Timor SA (PITSA) was
The Office of the State Minister Petromindo recently. inaugurated by Ahmad Bambang,
of State Owned Enterprises has Denie explained that the chip-in Commerce and Marketing Director of
appointed state-owned securities firm scheme is something unprecedented. Pertamina, on Feb. 11.
PT Bahana Securities as consultant Pertamina used the scheme before it PITSA will be active in
for the ministry in mapping out gas took over blocks from ExxonMobil in downstream sector, operating oil
infrastructure projects of state-owned Aceh. fuel storage, selling oil fuels and oil
gas distribution firm PT Pertamina As part of the transition process, products such as lubricants, LPG
Gas (Pertagas) and state-controlled Pertamina has asked permission to and asphalt for industries and retail
gas distribution firm PT PGN Tbk, see the block’s data room. According customers. In oil fuel retail market,
Bisnis Indonesia reported recently. to Denie, PT Vico Indonesia, the it will sell oil fuels through two
The paper quoted Deputy Minister current operator of the block, agreed types of gas stations, which carry
overseeing energy and logistics, on Jan. 22 to open the data room. Pertamina logo and Pertamina-
Edwin Hidayat Abdullah as saying The block’s contract expires in 2018 Timor Gap joint logo respectively.
that the map is needed to avoid and Pertamina plans to take over the There are five gas stations to be
overlapping of gas infrastructure block once the contract expires. built this year, including three
projects by the two companies. The carrying Pertamina logo and two
ministry also plans to sinergize the Pertamina opens carrying Pertamina-Timor Gas joint
two companies, under which one office in Timor Leste logo.
of the options is to let PGN acquire State owned oil and gas firm PT “The brands of gasoline to
the gas infrastructure facilities of Pertamina has opened an office to run be sold are similar to the ones in
Pertagas. business in Timor Leste, a half-island Indonesia, except for the one sold in
Edwin said that Bahana has met country in Timor Island which broke in co-branded stations. It is called
with PGN and state-owned oil and away from Indonesia in 1999. Gazelina,” he said.
gas firm PT Pertamina, the parent of
Petromindo|Boim

Pertagas, to obtain the required data


to design the gas infrastructure map,
which is expected to be completed
later this month. No further details
were provided.

Pertamina plans to enter


Sanga-Sanga prior to expiry
State owned oil and gas firm PT
Pertamina (Persero) plans to enter
Sanga-Sanga PSC in East Kalimantan
prior to the expiry of the contract on
the block in order to ensure a smooth
transfer of the block to the firm after
the expiry of the contract.
“We want to chip in on the block
before the contract expires in 2018.
The efforts aim to ensure a smooth
transition process so that operation
performance and production
level can be maintained,” Denie

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


27
INDUSTRY NEWS: OIL & GAS

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.

Courtesy of SKK MIGAS

28 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Courtesy of SKK MIGAS
Kulim said in a statement recently
that the total consideration for the
proposed acquisition of 60 percent
shares in CSE has now been set at
US$80 million, down from $133.55
million agreed late in 2014.
The company added that the cash
consideration includes $15 million
in working capital for CSE to help
finance the development of its oil and
gas field in South West Bukit Barisan
Block (SWBB PSC), Central Sumatera.
The statement added that Kulin
has an option to increase its stake in
CSE by another 5 percent for $4.67
million within one year period.
As has been previously reported,
Kulin plans to acquire the CSE shares
from PT Wisesa Inspirasi Sumatra
(WIS) and PT Inti Energi Sejahtera
(IES).
Niko completes sale As Niko discontinued operating The Government of Indonesia
of North Ganal PSC to Ophir activities related to its Indonesian awarded the SWBB PSC to CSE
Canadian oil and gas firm Niko assets, the company said it has closed subsidiaries PT Radiant Bukit Barisan
Resources Ltd said recently that it has down its Indonesian office. E&P (RBB) and SKR International Ltd
completed the sale of its 31 percent Elsewhere, the statement said on November 13, 2008 for a period
interest in North Ganal PSC, in East that as at December 31, 2015, the of 30 years. CSE owns 99.9 percent
Kalimantan, to LSE-listed Ophir company’s exploration subsidiaries stake in RBB, an upstream oil and gas
Energy Ltd for net cash consideration that previously held interests in firm, and 100 percent shares in SKR, a
of US$1.5 million after working Indonesian PSCs had $62 million services and trading company.
capital adjustments. of accounts payable and accrued Under the SWBB PSC, RBB and
Ophir in April of last year liabilities and $139 million of SKR have participating interests of 51
completed the acquisition of four recorded liabilities for unfulfilled percent and 49 percent, respectively
other Niko Resources’ oil and gas exploration work commitments. in the SWBB block whereby RBB has
assets in Indonesia including West been appointed as the operator.
Papua IV, Aru, Kofiau and Halmahera- Kulim lowers acquisition The SWBB block is located
Kofiau PSCs in eastern Indonesia. As value of CSE amid oil drop onshore in West Sumatera province
has been previously reported, Ophir Kulim Energy Nusantara Sdn and situated within the Ombilin
was also in the process of acquiring Bhd, a subsidiary of Malaysia’s Basin (part of elongated trend of
another Niko Indonesian asset called oil palm plantation group Kulim Central Sumatera basin). The original
North Makassar Strait PSC. Bhd, had on February 7 reached exploration area of SWBB PSC was
But Niko said in the Wednesday a supplemental agreement with 3,895 square (sq) kilometers (km).
statement that “the transaction for the upstream oil and gas firm PT Citra Currently, the exploration area has
proposed sale of the company’s interest Sarana Energi (CSE) to significantly been reduced to 779 sq km mainly
in one additional Indonesian PSC (North reduce the acquisition value of due to compulsory relinquishment
Makassar Strait) will not proceed under shares in the latter company amid exploration area under the terms and
mutual agreement of the parties.” the current oil price drop. conditions of the SWBB PSC.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


29
INDUSTRY NEWS: OIL & GAS

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.

30 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Pertamina to use PDSI’s rig there was a fire incident at dawn percent of workforce from local area,
in Algerian block Feb.8 at the RDG-47 Jatibarang well, we hope it will empower the economy
PT Pertamina Internasional EP Jatibarang field in Indramayu, West of the local people in Dumai,” refinery
(PIEP), the international upstream Java. General Manager Afdal Martha said.
arm of stated owned oil and gas firm The company, however, said in The refinery has a processing
PT Pertamina (Persero) plans to send a statement it managed to put out capacity of 127,000 bpd.
a rig made by PT Pertamina Drilling the fire. It added that burnt wounds
Services Indonesia (PDSI) to Algeria victims were immediately sent to the
for utilization at PIEP’s fields in the Sumber Waras Hospital in Cirebon. Pertamina assigned to
country. Pertamina EP said that the fire operate East Ambalat
“The rig is now in finishing occurred while repair work at the in RI-Malaysia border
phase prior to mobilization,” PIEP’s well using Pumpindo Rig PEP 08 was State owned oil and gas firm PT
President Director Slamet Riadhy in progress. The company said it was Pertamina (Persero) has been assigned
said, adding the rig is 1500 HP type still investigating the incident. by the Ministry of Energy and Mineral
and scheduled to be shipped to Resources to operate the abandoned
Algeria in April of this year. Pertamina turning East Ambalat PSC located in Makassar
“If the government agrees the around Dumai refinery Strait area bordering Malaysia.
rig will be used to drill 20 wells State owned oil and gas firm Director General of Oil and Gas
owned by Pertamina there,” he told PT Pertamina is turning around its IGN Wiratmaja said his office has
Petromindo. refinery unit in Dumi, Riau province sent a letter sent, asking Pertamina
Last year, PIEP produced a total of until the end of this month. to talk with Malaysian state owned
113,000 bpd of oil, including 39,000 The Turnaround/Major Inspection firm Petronas Bhd over possible
bopd from Algeria, 36,000 bopd from program will last 38 days from Jan. 23 cooperation in developing the block.
Iraq and 38,000 bopd from Malaysia. through Feb. 29. “We have awarded East Ambalat
A total of 94 vendors are involved in to Pertamina. We asked them to look
Jatibarang well hit by fire the work, with a total of 5,900 workers, for partners preferably Petronas,”
PT Pertamina EP, an upstream including 3,600 locally recruited and Wiratmaja told Petromindo.
subsidiary of state-owned oil and 2,300 from outside the area. The East Ambalat PSC located in
gas firm PT Pertamina, said that “By involving local people —60 the Tarakan Basin offshore northeast
Kalimantan, and covers an area of
Petromindo|Khalsa

approximately 4,739 sq km.


The 30-year PSC was awarded to
Unocal East Ambalat Ltd. (now Chevron
East Ambalat Ltd) on December 12,
2004 for a term of 30 years.
In June 2009, upstream
authority BPMIGAS (now SKK
Migas) recommended an extension
of the exploration period of the
PSC. However, Chevron elected
to relinquish the block to the
government with effect from
the expiry of the initial six-year
exploration term in December 2010.
Both Malaysia and Indonesia
claim to have rights over the East
Ambalat block.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


31
COVER STORY

Petromindo|Dasir

Suriyanto

32 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


ETI advances technology
to support 35,000 MW
By: Benget Besalicto ST

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

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


33
COVER STORY

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

34 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


move made by customer. It is only which sees growing awareness over it. Many oil producers, such as Saudi
short term gain. For long term, global warming and the importance Arabia, had continued to produce
gas has proven to be much more of preserving environment. As a and sell oil at lower prices in order
competitive,” said Suriyanto. result, countries like the US started to pursue several goals, which
Further more, he said that for to stop using coal power plant. So include to push shale oil producers
ETI, gas is definitely the future. we need to educate the customers out of business, and to weaken some
There are several reasons for that, on this. This is a challenge that geopolitic competitors like ISIS.
which include cheaper and stable should be seriously addressed,” he Currently, the oil prices at the global
prices for average long term, lower said. market reached at around US$ 30
maintenance cost if using gas, and According to Suriyanto, the per barrel, as compared to more than
cleaner to enviroment compared current prices of oil is not economic US$ 100 per barrel just two years
to other kinds of fossil fuels. “Gas to lots of oil companies. The oil ago. “So it is only temporary thing,
is cheaper and more stable in the market has been oversupplied, as price will soon increase as those
long run. It is also cleaner compared supply is much higher than demand. countries cannot continue to lose and
with other products of fossil fuels Even at low demand, the supply is exploration of new field has stopped.
and coal. This has been a growing not slowing. They are producing with It will go back to balance by end of
concern at the international stage losses. But still they keep pumping this year” he said.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


35
COVER STORY

“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.

36 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Challenges local companies, the current low of price like in ministerial regulation
Despite of tougher competition at prices could also affect its business (Permen) no. 19/ 2015 can be solved
local market and sluggish condition of performance. Many companies are faster, so PJBL can be signed and
energy market globally and nationally, being tempted to turn to using oil Indonesia can show to the world its
ETI managed to win four projects at fuels which are now in cheap prices. support to renewable energy,” he said.
the end of last year (2015) and early In certain cases, the low oil prices “Overall, the current situation is
this year (2016). The projects consist had made certain projects of gas and really a challenge for us to deal with.
of EPC contract to develop CNG peaker gas-fired power plants or even the We’ve been doing our businesses
plant in South Sumatra, development renewable projects less competitive for more than 12 years now. We can
of LNG storage under a scheme of and less attractive, but he really survive and thrive with consistent
BOOT in Sulawesi, development hopes that customers will look at long government support. Challenges have
of CNG vessel in Kalimantan and term and preserve the environment. made us stronger and smarter. We’ll
development of PLTMG at the capacity He expressed the hope that the find the best way in dealing with the
of 10 MW at Kampar. “We hope we government will be consistent in situation,” he said.
can finalize all contract discussions empowering the use of gas such as Suriyanto B.com MTM also added
on those projects soon so that we can continuing efforts to push the use that in his life, he wants to make
start development,” he said. of gas for cars and other transport history and create legacy in what
He said that in addition to the system and continue push for use of he does. “We’ll only give the most
growingly tougher competition, as gas in power plant too. advanced, cost efficient and unique
more and more local companies will He added that government should technology for our customers. And we
enter the market as a result of the consistently support the development innovate to elevate our products and
government’s policy to empower of renewable energy. “I hope the issue services,” he concluded.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


37
FOcus

Clean energy gaining


momentum
By: Johannes Simbolon & Cepi Setiadi

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

38 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


current low price of oil should not
also become an excuse for Indonesia
to stop or delay the development of
clean energy since the low oil price is
only a temporary phenomenon.
“The BCEF meeting is very
important not only to strengthen
the energy development nationally,
but also internationally. Indonesia
has the honor to start the dialog
between countries that have similar
interests in developing clean
energy and to establish a global
partnership to bridge the gap (in
clean energy technology) and ensure
the achievement of sustainable clean
energy target for all,” Kalla said in his
keynote speech.
One of the main agenda of the
forum was the launching of the so-
called Center of Excellence (CoE) for
Clean Energy. CoE is an integrated
center for research, development
of research results, education,
capacity building implementation
and facilitation of investment in clean
energy development with three main
needs: information, technology and
Courtesy of ESDM

financing, according to the statement


from the MEMR. The facility will be
built in Bali using state budget.
Sudirman said that under its
Clean Energy Forum (BCEF), held in and IEA Executive Director Fatih energy development blueprint,
Nusa Dua, Bali on Feb. 11-12. Birol. Participants include energy Indonesia has set a goal of raising
Initially, the organizers – the ministers from Malaysia, Germany, the portion of clean energy in the
Ministry of Energy and Mineral Sweden, India, Australia, Thailand, national energy mix to 23 percent
Resources (MEMR) and the United Arab Emirates, Denmark, the from about 11 percent at present.
International Energy Agency (IEA0 Philippines, South Korea and United As part of the efforts to achieve the
– expected only around 500 people Kingdom. goal, the government has allocated
to come to the event. As it turned Kalla said while coal is now 25 percent of the 35,000 MW power
out, more than 2,000 people came to cheaper compared to clean energy, plant projects to be developed
the event from dozens of countries the costs payable by Indonesia on through 2019 for clean energy and
around the world. the long term for coal utilization the existence of the CoE is expected to
The conference was keynoted will be higher as the nation will also help Indonesia in achieving the goal.
by Vice President Jusuf Kalla and have to pay for the rehabilitation “CoE supports efforts to accelerate
chaired by Minister of Energy and of environment damaged as a the development of renewable energy
Mineral Resources Sudirman Said consequence of coal utilization. The up to 23 percent in the national energy

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


39
FOcus

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.

40 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


BCEF’s Ministerial Declaration
W
e recognise that energy technologies that can “leapfrog” and building in Indonesia and its potential
plays a crucial role in move towards sustainable energy contribution to the region and the
global economic growth sources. world.
and that increasing access We also recognize the importance We also welcome the
to sustainable and secure sources of of countries to explore appropriate announcement of Mission Innovation
energy is vital to improving global mechanisms to share their knowledge and the Breakthrough Energy Coalition
living standards. As energy currently and technology and to work at COP21 in Paris, two important global
contributes over two-­‐thirds of the collaboratively to bridge the gap in initiatives to accelerate clean energy
world’s greenhouse gas emissions, the use and utilization of clean energy technology innovation, among the
a transformation of the world’s globally. 70 other initiatives of the Lima Paris
energy system is essential and must We recognise that achieving such action agenda announced. They offer
be a uniting vision if our common a large-­‐scale change is challenging in energy specific frameworks useful to
sustainable development, energy and cannot be achieved without a collaborate and accelerate the energy
security and climate change goals are revolution in policies and financing transition.
to be achieved. models. We stand ready to work We believe collaboration between
Accelerating energy technology constructively with Indonesia and the public and private sector is crucial
innovation is central to meeting other emerging economies of the to bring clean energy technologies
sustainability goals while also Asia-­‐Pacific region, to develop the to market. Collaboration between
supporting economic growth abundance of renewable energy and researchers, policymakers and
and energy security. Successful energy efficiency opportunities that businesses supports the developments
development and accelerated exist in the region. of and investments in the technologies,
deployment of clean energy All countries can play a role in policies and good practices needed
technologies requires for stakeholders facilitating and accelerating the shift to reduce costs and further progress
worldwide to work collaboratively, to a global clean energy system. This towards a more clean, efficient
sharing knowledge and pooling can include implementing policies that and sustainable energy system.
resources to deliver integrated, enable sustainable solutions at scale, Furthermore, innovative regional and
cost-­‐effective solutions to common making clean energy technologies international collaborations should
challenges. We are encouraged that widely available to accelerate ensure clean energy technologies
the transformation to a safe and technology diffusion, employing a wide spread to markets where they are most
sustainable low-­‐carbon energy system diversity of clean, safe and sustainable needed.
is underway, with the International energy solutions, and enabling By working together to take full
Energy Agency (IEA) reporting that: new technologies to be integrated advantage of all of these opportunities,
• Renewables accounted for nearly into existing energy systems. We we can build momentum towards a
half of the growth in global acknowledge the critical need for transformed global energy system that
electricity generation capacity in an increased focus on clean energy achieves our common climate change,
2014, as supportive policies and policies and financing mechanisms development, economic, and energy
rapidly declining costs, such as to increase the deployment to realise security goals.
for solar photovoltaics, helped to the breakthrough in clean energy This Ministerial Declaration is
deliver a record-­‐high 130 gigawatts technologies, including renewable, endorsed by 17 countries participating
of new capacity around the world. low emission and energy efficiency in the Bali Clean Energy Forum as
• Energy efficiency regulations now technologies, necessary to achieve our follows:
cover 27% of the world’s energy shared climate goals, improve energy 1. INDONESIA
consumption (up from 12% in security, and provide energy access 2. ITALY
2005), providing incentives for the for affordable and reliable energy for 3. SWITZERLAND
deployment of the most efficient everyone. 4. INDIA
technologies. We appreciate the IEA’s 5. HUNGARY
• The rise of distributed generation, contribution in providing 6. DENMARK
smart grids and storage recommendations for enhancing 7. AUSTRALIA
technologies are rapidly changing the economic and environmental 8. FRANCE
the way energy is supplied and sustainability of the energy sector, 9. NEW ZEALAND
consumed. tracking energy-­‐sector transformation, 10. TIMOR LESTE
Development has historically been and increasing international 11. UNITED STATES OF AMERICA
strongly correlated with increasing collaboration in this area. 12. PAPUA NEW GUINEA
growth of GHG emissions, but it does We recognise the important 13. SWEDEN
not have to be. We are heartened by role that the Indonesia Centre of 14. FINLAND
the indications that many emerging Excellence on Clean Energy will play 15. SPAIN
economies are now firmly ready to to accelerate clean energy technology 16. MALAYSIA
adopt modern, highly efficient energy implementation and capacity 17. SRILANKA

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


41
FOCUS

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

42 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


to come to Bali? That means if we Sutijastoto said that the of cooperation, which include with
need assistance from abroad, such government is committed to the IEA, the Renewable Energy
as experts proposed by IEA, there accelerating the development of Laboratory of the US, South Korea,
are 6,000 experts ready to help CoE. the renewable energy. “But the ADB, UNDP, World Resources
I think if they are asked to come to technology of renewable energy Institute, etc,” said William.
Bekasi, they won’t come. But to Bali is not developed yet in a massive He claimed that the movement to
they will surely come. So that’s one scale. A strategy to develop it is by develop the CoE was very fast. “The
consideration,” he said to Petromindo establishing the CoE as a business support was not only in the form
on the side lines of the Bali Clean incubator that will function to of financing, but also technological
Energy Forum 2016. accelerate the development of knowledge sharing, and assistance
The second factor, said Rida, is its technology. Through the CoE, of expertise. From now on, every
the fact that Bali government is very we integrate all information month we’ll invite experts from
cooperative and has the same vision related to the new and renewable various countries, started from the
in developing clean energy. “Bali energy sources that are potential IEA for discussions on topics about
government has targeted that in the in Indonesia. Then later we can clean energy. So we’ll have a team of
next few years, power supply in the develop them further if we have experts, and they will send experts on
province should be 90 percent derived the technology or access to the clean energy,” he said.
from renewable energy sources. They technology. Through the combination William added that currently
had even provided a land site of 30 of information, technology, and several countries had also stated
hectare in Jimbaran for the location,” financing, as the most important their commitment for cooperation
he said, adding that the financing for factor, we will synergize all of our to develop the Coe on the field.
the development of CoE building is efforts through the CoE,” he said. “One of them is New Zealand
taken from the state budget and grant. Meanwhile, William Sabandar, which is interested in developing
The MEMR’s Research and the head of the new and renewable CoE in Maluku, especially on
Development (R&D) Head FX energy task force (P2EBT) said that micro grid. So the CoE is a forum
Sutijastoto said that the CoE during the last few months there for all actors, countries, private
headquarters will be built with state have been several countries signing sectors, and experts to contribute
budget because it is a government cooperation with CoE. “The CoE is to the development of the new
facility. “We target that its still virtual as it is physically non and renewable energy under the
development started this year. Some existent, but it has reached deals leadership of Indonesia,” he said.
parts are under a process of design,
Petromindo|Lucky

while other parts undergoing land


clearing and construction,” he said to
Petromindo.
According to him, the design of the
CoE building is the result of contest
organized by the MEMR’s R&D
division some time ago. “Our target is
that in 2017 its construction will be
finalized,” he added.
Sutijastoto said that the CoE will
be under the MEMR. “It will be like a
public service agency but functioning
like a business incubator. Now we
develop its system of information.
Its data base has been developed
through virtual office,” he said. Rida Mulyana

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


43
OPINION

Renewable energy development


for geothermal case
A
s part of the program to 67 percent. This was announced by the said regulation, the foreign
promote new renewable Franky Sibarani, Head of Investment participation in development of
energy development, the Coordinating Board (BKPM), who power plant is limited for a capacity
government will soon indicated that the proposed plan has of higher than 10 MW.
issue a new regulation that will been discussed with the minister of While it represents the
allow foreign investors to hold 100 energy and mineral resources, as government efforts to streamline the
percent ownership of geothermal part of the review of the negative approval, however many consider
power plants with a capacity of 10 investment list concerning sectors such BKPM’s regulation would not
MW or higher. For plants with a in which restrictions on foreign be sufficient to boost investment
capacity of less than 10 MW, the investment apply (Presidential in clean and renewable energy in
foreign investment will be capped at Regulation Nr. 39/2014). Under Indonesia. In fact, the BKPM head’s

Petromindo|Dasir

44 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Madjedi Hasan

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

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


45
OPINION

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

46 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Petromindo|Dasir

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.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


47
OPINION

New Presidential Regulation


to accelerate 35GW program
O
ne of the key platforms of back power generation projects in government achieving its new power
President Joko Widodo’s Indonesia, and see that they were generation build-out ambitions.
run for presidential addressed. Before the issue of PR 4/2016, there
office in 2014 was his That de-bottlenecking process were only two types of government
promise to accelerate Indonesia’s has resulted in the recent issue of guarantee available for IPPs:
movement up the curve in terms of Presidential Regulation No. 4 of 2016 • if the relevant IPP project was
its domestic infrastructure capacity, on Acceleration of Power Infrastructure listed as a “Second Fast Track”
to enable Indonesia to compete with Development (PR 4/2016). program project, the business
other ASEAN nations in the face viability guarantee issued by the
of the upcoming ASEAN Economic What’s New? Minister of Finance (MOF); and
Community reforms. A key pillar of this PR 4/2016 touches on a very • if the relevant IPP project was listed
infrastructure plan was the President’s broad range of issues affecting power as a public private partnership
desire to develop 35GW of new power project development in Indonesia. (PPP) project, a package of two
generation projects. However, the However, there are two main features guarantees provided by the
announcement by the Indonesian of PR 4/2016 that should accelerate Indonesia Infrastructure Guarantee
Government of aspirational power development of power projects in Fund and the MOF.
generation development programs was Indonesia if the remaining regulatory There are a large number of IPP
not a new phenomenon – the “First mechanics to implement them are projects which are not on either of
Fast Track” program of 10,000MW of put in place in short order. Those two these two lists, and accordingly before
new power generation was announced features are: the issue of PR 4/2016, no avenue for
in 2006, and the “Second Fast Track” • introduction of a new government obtaining a government guarantee
program of 10,000MW, coming largely guarantee for development of was available. Developers of those
from renewable energy projects, power projects, which would projects were then left with the task of
was announced in 2010. To date, the cover both projects developed by convincing bank credit committees to
realization of the targets of both of the State-owned utility company, take a credit risk on PLN.
these programs has been average-to- PLN, and those projects developed PR 4/2016 now creates a third
poor, and industry has cited the myriad by PLN in cooperation with program under which an IPP can
Indonesian laws and regulations, and independent power producers receive a guarantee form the MOF.
matrix of Indonesian Governmental (IPPs) or their subsidiaries; and Under this regulation, in principle,
institutions, that all need to be in • a shorter time period to obtain any IPP project which is listed
sync for these large capital intensive necessary permits for development in PLN’s Long Term Electricity
infrastructure projects to materialize. of power generation projects. Generation Plan (RUPTL) should be
Given the above, it was eligible for the guarantee. However
understandable that the Government Guarantees PR 4/2016 states that for an IPP
announcement by the President in The inability to obtain a project to obtain a guarantee, PLN has
2014 of the 35GW program met with government guarantee to back-stop to submit a proposal for the granting
some cynicism. But this time the PLN’s payment obligations under its of the guarantee to the MOF before
President promised action, saying Power Purchase Agreements (PPAs) the procurement process for the IPP
that his administration would look with IPPs has often been cited as award begins. This gives rise to two
critically at the bottlenecks holding the single biggest obstacle for the issues:

48 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


By: Hadiputranto, Hadinoto & Partners (www.hhp.co.id)

• 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.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


49
OPINION

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

50 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


detailed procedures, criteria and developers significant flexibility in 71/2012) - which allowed private
time periods for the processing of how land is acquired for IPP projects. developers to also use the Land
those licenses/non-licenses (and the Acquisition Law as a proxy for the
maximum processing period allowed Gradual broadening of Land relevant government agency/BUMN,
is 30 business days). Licenses/non- Acquisition Law scope and if land acquisition was carried
licenses the issuance of which has Since the issuance of the Land out by these private developers
been delegated to BKPM and the Acquisition Law, the government has as proxies, the developer could be
local PTSP must be processed within made a series of amendments in an granted a right to build (hak guna
three business days after receipt of a attempt to make the land acquisition bangunan) or right to use (hak
complete and correct application. processes as efficient as possible, pakai) land title to sit on top of the
whilst respecting landowner rights. government’s/BUMN’s right to
Land Acquisition Reforms Under the original concept of the manage (hak pengelolaan) land title.
All IPP projects must utilize the Land Acquisition Law: However, despite this flexibility, the
Land Acquisition Law • Only government institutions and problem remained that in order to
PR 4/2016 states that the state-owned companies (BUMNs) acquire the land (even where you had
land procurement for electricity that have received a “special a willing landowner ready to sell), the
infrastructure projects must be assignment” from the government full processes of the Land Acquisition
carried out in accordance with the could utilize the Land Acquisition Law needed to be completed.
Land Acquisition Law. Law (i.e. IPP developers could not At the end of last year, the
The passing of the Land avail themselves of the powers). President issued Presidential
Acquisition Law in 2012 was heralded • If a plot of land was acquired Regulation No. 148 of 2015 (PR
as a major step forward for the under this law, the land must 148/2015) - the fourth amendment
development of infrastructure projects then be owned in the name of the to PR 71/2012 which is an
as prior to this law, there were no government or BUMN (i.e., the implementing regulation of the Land
compulsory land acquisition powers land could not be owned in the Acquisition Law. This regulation
given to Government to facilitate name of the IPP). stipulates that if the acquisition of
public infrastructure projects. • A sole method of land land for public interest (for projects
However, because of complicated procurement was provided for - other than national defense and
procedures and a long land acquisition namely land acquisition where the security projects) is carried out
time period (which originally may value of the land is determined by by a private developer, it can be
take of up to 546 working days at its an independent appraiser after a done by way of sale and purchase,
extreme) under the Land Acquisition number of preliminary steps and exchange, or any other way agreed
Law, it may end up being faster for checks and balances have been by the landowners and the private
developers to negotiate mutual land completed. Accordingly, even developers. Thus, PR 148/2015
settlement arrangements with private where the land owner and the suggests that a private entity can
landowners, rather than invoking government/BUMN were willing acquire land for infrastructure
the procedures under the Land to reach a fast mutual agreement projects (regardless of the total area
Acquisition Law. over compensation, the full of the land) without having to comply
So on first glance, the requirement processes of the Land Acquisition with the land acquisition procedures
under PR 4/2016 which compels all Law had to be followed, and the under the Land Acquisition Law.
parties to use the Land Acquisition final price was determined based The result of these reforms is that
Law for power projects, may be on the appraised value. despite PR 4/2016 mandating that
viewed as a step backwards. But as In May last year, the President the Land Acquisition Law must be
discussed below, the expansion by issued Presidential Regulation No. used to acquire land for any power
the government over time of the ways 30 of 2015 (PR 30/2015) - the project development, there remain
in which the Land Acquisition Law third amendment of Presidential two methods open to IPP developers
can be used does give power project Regulation No. 71 of 2012 (PR to secure such land:

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


51
OPINION

• 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

52 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


police might facilitate PLN’s decision aspirations will translate into For further information please
making processes. effective implementation throughout contact:
the various levels of bureaucracy
Spatial planning re-alignment within the Indonesian Government. Luke Devine
Power plant developments have Further, there are elements of Foreign Legal Consultant
always had to comply with the some of the reforms in PR 4/2016 +62 21 2960 8600
luke.devine@bakernet.com
spatial planning requirements of that will need further detail and
the particular regency in which the implementation before they Kirana D. Sastrawijaya
project is being developed. Where have any meaningful effect on Associate Partner
a proposed power project does power project developments. For +62 21 2960 8541
not comply with the spatial plan, example, what criteria will apply kirana.d.sastrawijaya@bakernet.com
PR 4/2016 requires the relevant to determining which IPP projects
government institutions to look receive guarantees, and which ones Anita Karina Sungkono
at amending the spatial plan to will not? Associate
+62 21 2960 8613
accommodate the project. Outside of the PR 4/2016
anita.k.sungkono@bakernet.com
reforms, there remain other areas
Offshore loan reporting obligations that have been identified by industry Andika Setia Budi
reduced stakeholders as unnecessarily Associate
Under Presidential Regulation No. slowing down power sector +62 21 2960 8520
39 of 1991, any offshore borrowings development. These areas include: andika.s.budi@bakernet.com
by PLN or IPP companies related to • further clarity on implementation
Hadiputranto, Hadinoto & Partners
financing of power projects require of minimum local content
The Indonesia Stock Exchange
approval of the Offshore Loans requirements for power project Building, Tower II, 21st Floor
Coordinating Management Team developments; Sudirman Central Business District
(Tim PKLN). A number of project- • mandatory tender requirements Jl. Jendral Sudirman Kav. 52-53
financed IPPs have experienced under the construction laws and Jakarta 12190
months of delay in obtaining Tim regulations (which conflict with Indonesia
PKLN approval. PLN’s philosophy of ensuring www.hhp.co.id
PR 4/2016 removes the need for an experienced power plant
Martin David
PLN to obtain Tim PKLN approval construction contractor is part of
Principal
for PLN offshore borrowings, but the bidding consortium for new +65 6434 2588
unfortunately approval for IPP IPP projects); martin.david@bakermckenzie.com
borrowings is still needed. • liberalizing the ability of
experienced foreign construction Kim Hock Ang
Closing contractors to participate Local Principal
PR 4/2016 is yet another sign with Indonesian construction +65 6434 2534
kimhock.ang@bakermckenzie.com
from the government that it is serious companies in construction of
in trying to remove bottlenecks the full gambit of power projects Baker & McKenzie.Wong & Leow*
slowing down infrastructure on offer (noting the current 8 Marina Boulevard
development in Indonesia. There requirement that construction of #05-01 Marina Bay Financial Centre
are many good things that come out power plants below a certain MW Tower 1 Singapore 018981
of this recent regulation and the capacity can only be carried out www.bakermckenzie.com/Singapore
President should be commended for by Indonesian contractors; and *Hadiputranto, Hadinoto & Partners
and
his continuing efforts to promote • the ongoing need for Tim PKLN
Baker & McKenzie.Wong & Leow are
private sector investment in the approval for IPP projects, and member firms of Baker & McKenzie
power sector. As always, the key the time it takes to obtain that International.
will be whether these Presidential approval.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


53
COMPANIES

Petromindo|Lucky
Dwi Soetjipto

Pertamina’s upstream profit


drops to $800m
By: Febry Silaban & Bernard Loebs

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

54 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


2015, PEP’s President Director Rony Meanwhile, Wianda Pusponegor, producing fields, four development
Gunawan recently said. Meanwhile, Pertamina’s Vice President of structures, 14 discovery structures
PHE’s oil and gas production last year Corporate Commmuncation, and 16 exploration prospects.
reached 66,300 bopd and 678 mmscfd, explained that Pertamina now has oil “In Algeria’s fields, last year we
according to the firm’s President and gas assets in Algeria, Malaysia received the permit from Alfnet (the
Director Gunung Sardjonohadi. and Iraq. country’s oil and gas regulator) to
Harry Poernomo, a member In Iraq, the assets are TSC West produce from MLN (Menzel Lejmat
of the House of Representatives’ Qurna field with a participating North) field through PT Pertamina
Commission VII for among others interest of 10 percent in a partnership Algeria 54,300 bopd, up from 39,000
energy affairs, said time is now for with ExxonMobil, Petronas, Shell and bopd last year,” Wianda said.
Pertamina to go globally looking for South Oil Co. “Oil production there Pertamina’s assets in Algeria
oil and gas fields, leaving oil and now reaches 450,000 bpd and is consists of three fields, namely
gas fields in the country for the next projected to peak at 1.6 bpd in 2022,” MLN with a participating interest
generation to develop. she said. 65 percent, EMK (.6.9 percent) and
“We should not live on natural In Malaysia, the firm has interest Orhud (3.73 percent). Pertamina
resources. Instead, we should in six blocks in partnership with Shell serves as operator at MLN. Partners
live on competitiveness. As such, and Murphy. The blocks are K and H in the fields are Sonatrach, Talisman/
Pertamina should be supported by blocks where the firm has 24 percent Repsol. Anadarko, Cepsa, Maersk and
the government either politically or interest each; P block (18 percent); ENI.
through incentives to purchase fields SK 309, SK311 and SK314AA (25.5 According to Wianda, chances are
overseas,” he said. percent). The blocks consist of 11 big for Pertamina to boost production
Petromindo|Khalsa in Algeria in view of its good relation
with the country’s regulator Alnaft
and state owned firm Sonotrach.
PIEP’s President Director Slamet
Riadhy said buying oil and gas
fields overseas is a must to do for
Pertamina in order to secure energy
supplies in the country. Indonesia
has become a net oil importer since
2003 and the country’s oil deficit
has been consistently rising. Last
year, Indonesia’s crude consumption
reached 1.5 million bpd, while
national production stood at below
800,000 bpd.
Komaidi Notonegoro, Deputy
Executive Director of ReforMiner
Institute, said if Pertamina expands
its upstream business overseas, it will
be bring positive impacts on the firm.
First, the national production and
lifting will increase if Pertamina takes
the crude to Indonesia and secondly,
the state income and Pertamina’s
cashflow will get improved if the
crude is sold overseas.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


55
pOWER

N. Sulawesi, Gorontalo have


enough power now
By: Johannes Simbolon | Photos: Khalsa

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

56 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


every day, every week,” Minister
of Trade Thomas T. Lembong was
quoted by the media as saying last
year, when he was asked about
the main challenge faced in the
development of Bitung as special
economic zone.
Baringin Nababan, PLN’s General
Manager for North Sulawesi, Central
Sulawesi and Gorontalo provinces,
admitted that the lack of power
supplies had become a problem in
the region for many years. With the
operation of MVPP Zeynep Sultan and
PLTG Gorontalo, the problem will be
gradually resolved.
“Gradually, power supplies in
North Sulawesi and Gorontalo will
improve and continue to improve, move it to new location. Furthermore, said during the ceremony to mark the
while in the past, there was a power it is cheaper to operate because it operation of two units on Jan. 16.
deficit. At our request, big industrial may run on dual fuel, namely heavy Along with the power plant, PLN
and business customers had to use diesel oil or gas. PLN will be able to also completed the construction of
their own captive power during peak save costs by Rp 350 billion per year PLTG Gorontalo substation and six
load. Now, they can get our service using the power plant, according to high-voltage towers with a capacity of
back,” Baringin said during the PLN. The MVPP has six power units 150 kV, stretching 1.4 circuit km from
ceremony to mark the operation of each with the capacity of 20 MW. PLTG Gorontalo to Marisa substation.
MVPP Zeynep Sultan. Meanwhile, PLTG Gorontalo, PLTG Gorontalo, which is part of
The operation of MVPP Zeynep which is owned by PLN and the 35,000 MW power plant projects
Sultan was marked with the signing developed by state owned targeted by the government to be
of Commercial Operation Date (COD) construction firm PT Pembangunan completed until 2019, utilizes the
by Baringin representing PLN and Perumahan has four power TM 2500+ turbine manufactured
Noorchan and Osman representing generating units, each with the by General Electric (GE) plant in
Karpowership Indonesia, a subsidiary capacity of 25 MW. Only two units Hungary.
of a Turkish company, the owner of have be connected with the Sulutgo Machnizon said a total of 700
operator of the floating power plant. power grid. The power plant is workers were involved in the
The power plant stationed in located in Marisa, Pohuwato regency, development of the project which is
the waters of Amurang, Minahasa Gorontalo. located in in Maleo village, Paguat
Selatan regency, North Sulawesi, has “The development of the project district, Pohuwanto regency.
a capacity of 120 MW and is required was relatively quick, taking only four Until the operation of the floating
to supply a minimum volume of 96 months. It took only four months power plant, the Sulutgo grid
MW, or 80 percent of the capacity, to for us to install four turbines each experiences a 50 MW deficit with
the 150 kV Sulutgo power grid. with the capacity of 25 MW. We peak load reaching 325 MW. Thanks
PLN is leasing the MVPP from a have also carried out tests panel and to MVPP Zeynep Sultan and once the
Turkish company because it is easy transformer at PTLG Gorontalo’s 100-MW PLTG Gorontalo have started
to be relocated to any part of the substation and all were running well,” operation at full capacity in February
country to solve power shortage. I Machnizon Masri, PLN’s Director for of this year, the power grid will have
takes only three or four weeks to Sulawesi and Nusa Tenggara regions a reserve capacity of 170 MW.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


57
pOWER

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.

58 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


OIL & GAS

Exploration Committee gets


extension of job period
T
he Ministry of Energy and Mineral Resources has monitoring oil and gas reserves that it has identified,
extended the tenure of the National Exploration monitoring the kick-off of East Natuna block, monitoring
Committee (KEN) for one more year and expands the implementation of its recommendation for oil and gas
its scope of activities. data transparency and management system, the ministry
Aside from oil and gas resources, the agency is also said in a statement.
tasked now to identify geothermal, coal and mineral KEN is also tasked with continuing evaluation on the
resources in Indonesia, the Ministry of Energy and Mineral exploration potentials of expiring blocks.
Resources. Andang Bachtiar keeps his position as the Meanwhile, Andang said the government has also
leader of the agency. added new members to the Committee, bringing its
“The government has decided to extend the tenure of membership to 76 from 47. “The number of members
the National Exploration Committee for one more year has expanded to 76 thanks to the entry of people who
with an expanded task. Aside from oil and gas, it will also have expertise in geothermal, coal and minerals,” he
handle geothermal, coal and minerals,” Minister of Energy said.
and Mineral Resources Sudirman Said said on Jan. 26, after KEN was established on June 12, 2015 with an initial
holding a meeting with the Committee. working period of one year. KEN’s mission is to increase
Among the recommendations by the Committee that oil and gas Reserve Replacement Ratio (RRR) to above
have been implemented are the implementation of block 75 percent within five years by finding new reserves and
basis in PSC and changes in the development scheme of accelerating the discovery of reserves from 6-10 years to
non-conventional blocks. Now, the Committee is tasked 3-5 years after block award.
with monitoring oil and gas research activities, ensuring
that the researches will produce new oil and gas blocks, — Johannes Simbolon
Petromindo doc.

Andang Bachtiar

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


59
OIL & GAS

Courtesy of SKK MIGAS


FID for Tangguh Train III
project expected in mid-2016
By: Febry Silaban & Godang Sitompul

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,

60 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


then the decision of the FID must be plant. Its partners include MI Berau General of Oil and Gas IGN Wiratmaja
quick, possibly in June of this year, if BV (16.3 percent), CNOOC Ltd (13.9 told Petromindo
everything goes smoothly,” he said. percent), Nippon Oil Exploration Last year, the Central Bank issued
Some people speculate that (Berau), Ltd. (12.23 percent), KG a regulation requiring all companies to
the amount of investment for the Berau/KG Wiriagar (10 percent), carry out transactions in rupiah rather
development of Train III should be LNG Japan Corporation (7.35 than the US dollar, in an effort to support
lower now than the initial estimate percent ), and Repsol-Talisman (3.06 the local currency which sharply
as service costs have reportedly percent). depreciated against the US dollar amid
decreased globally along with the oil Separately, Wiratmaja said BP the global economic slowdown. Later,
price drop. However, Zikrullah said has asked the government to declare the Central Bank allowed oil and gas
thus far he has not seen any reports Tangguh III a “national strategic companies to carry out the transactions
indicating the amount of investment project”, a status which allows it to in the dollar for certain circumstances.
for the project will significantly carry out transaction for the project Talking about the progress of the
decrease. in dollar rather than rupiah. project, Wiratmaja said BP Indonesia
“If looking at the current costs “If the project is awarded the is still facing difficulties to find long-
of services, the decrease is not ‘national strategic project’ status, term buyers for the project.
significant, only about 20 percent. transactions related to the project can “BP Indonesia is facing difficulties
Investment for Train III project was be performed using the dollar (rather to find long-term buyers. PLN wants
initially estimated at approximately than rupiah), according to the Bank to buy on short-term basis. That
at US$12 billion. So it is not clear how Indonesia regulation. However, we is why they want the project be
much it has declined, because they still demand that 40 percent of the declared a ‘national strategic project’.
(Tangguh consortium) have yet to see LNG from the project be allocated The government is studying the
the result of the project’s FEED (Front for the domestic market,” Director request,” he said.
Engineering End Design),” Zikrullah
Petromindo|Lucky

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

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


61
OPINION Sampe L. Purba

RI’s LNG challenge


D
uring the last one and The development of technology, Medan. It was resulted from the fact
half years the global availability of ships, rising number that it is based on the calculation of
crude prices had dropped of LNG storages and re-gasification investment return by Pertamina and
from the previous US$ terminals, and the entrance of the PT PGN.
110 per barrel to US$ 30 per barrel. US into the LNG export market, have PT PLN is expected to be the
The current long term contract of made the global LNG market liquid. main user of LNG. But in reality, its
Indonesia’s LNG, whose formulation Now, the LNG market tends to be a absorption still low. In many power
based on the fluctuations of crude spot one. Many of LNG buyers are plants, PLN’s internal policy was
prices to the traditional market of not end-users, but also traders. But focused more on coal and oil fuels.
Japan, will end in the year 2020. in fact, for investors to get Financial LNG is more considered as reserve
The contract was signed in 1973 Investment Decision (FID) for for peaker. Meanwhile, for the
and 1981, when Indonesia had a the development of a gas field, a power supply through Independen
dominant role in the LNG market. certainty of long term offtaker is a Power Producers (IPP), PLN applies
The main players now in the Asian must. regulations that are not supportive
traditional market (Japan, South The new LNG of Indonesia will to domestic LNG. PLN which
Korea, Taiwan, China) are Australia, come from deepwaters, with higher monopolizes the power sector,
Qatar, Malaysia, Nigeria, Russia, cost of production, and tougher should not be only responsible for
Trinidad. Indonesia’s LNG from competition among producers. The just seeking profit. The company
Tangguh, Masela, Kalimantan (ENI, tough competition will be reflected should prioritize the sustainability
Chevron and Mahakam), will enter in the offering of commercial terms. and long term development of gas
the competition. A deregulation of Lack of commercial flexibility can field, as well as the strategy to
electricity in Japan has required make the Indonesian LNG not generate the national economic
a competition and efficiency. This competitive at export market. growth. To create monetization of
includes the unbundling of power What about the opportunity of local demand, at least two factors
plants from transmission. There is optimizing the use of Indonesian LNG should be considered: First, the
also a commitment to reduce energy at local market? integrity of all ministries concerned
mix from LNG, which currently In 2015, the domestic market in developing gas infrastructure and
accounts for around 46 percent to could only absorb around 39 cargos encouraging downstream industries.
27 percent in the year 2030, and of LNG or 61 percent of the total Second, the central and eastern part
replaced with the renewable energy. amount allocated by the government, of Indonesia should develop LNG
The economic deceleration in China and the rest had to be exported to hub to accommodate small ships and
and the tendency of the country to spot markets. Besides the economic CNG ships. Meanwhile to deal with
use coal, and bring its LNG equity deceleration of Indonesia, the the tight LNG market, the authority
from its companies operating abroad, expensive infrastructure had also to sell LNG should be given to a
will make its market no longer contributed. For example, the LNG single entity under Pertamina so
prospective. There has been also from Tangguh, whose landed price is that domestic production of LNG will
an indication that several long term around US$ 6 and $ 7 in Arun, Aceh, not compete, but instead becoming
contracts of LNG will see volume has to be burdened with additional one portfolio of Indonesia’s LNG.
reduced, while in the markets of costs of around $7 more for terminal
Korea and Taiwan, Indonesia has no cost, toll fee, trading, and distribution — The writer is a commercial
much experience. to end-users in the industrial areas of practitioner of Gas and LNG

62 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


oIL & gAS
Petromindo|Khalsa

Govt offers investors mini


refinery projects
T
he government plans to hundreds of kilometers away. If the Pangkalan Susu fields; Cluster 2 near
build mini refineries in output is taken to floating storage, EMP Malacca Strait and Petroselat
eight clusters near marginal the production process is considered fields; Cluster 3 near Tonga, Siak,
oil fields and the projects as an upstream scheme with the Pendalian, Langgak and West Area,
will be offered to private sector, the transportation cost considered as Kisaran fields; Cluster 4 in Palmerah,
Directorate General of Oil and Gas at part of cost recovery. If the output Mengoepeh, Lemang and Karang
the Ministry of Energy and Mineral is taken at the well’s site, it is Agung fields; Cluster 5 around
Resources said in a statement recently. considered as a downstream scheme Merangin III and Ariodamar; Cluster
The eight clusters are North with zero transportation costs. 6 around Tanjung fields; Cluster 7
Sumatra (Cluster 1), Selat Panjang “Rather than taking the near Sembakung, Mambrungan and
Malaka (Cluster 2), Riau (Cluster 3), production to floating storages Pamusian Juwata fields; Cluster 8
Jambi (Cluster 4), South Sumatra hundreds of kilometers away, it around Oseil and Bula fields.
(Cluster 5), South Kalimantan would be better to build refineries Agus admitted there are few
(Cluster 6), North Kalimantan near the well so that the output companies that have been licensed
(Cluster 7) and Maluku (Cluster 8). can be immediately processed into to do refinery business, namely
Director of Oil and Gas Program products,” Agus said. state owned oil and gas firm PT
Oversight Agus Cahyono Adi said that He noted however mini refinery Pertamina (Persero), PT Trans Pacific
the mini refineries will built at the has weaknesses. It is only able to Petrochemical Indotama (TPPI) and
wells of marginal fields in order to cut produce diesel since diesel production PT Tri Wahana Universal (TWU).
costs. is basically a simple process, while in The government will however issue
At present, marginal fields have order to produce gasoline, it needs temporary license for any companies
high production costs because, aside more advanced technology. interested in the project.
from producing a small amount of The mini refineries have an The ministry is drafting a
output, the operator of the fields average capacity of 10,000 bpd regulation to guarantee crude
have to take their output to floating each. The Cluster 1 refinery is supplies for the mini refineries, Agus
storages, some of which are located planned to be built near Rantau and said.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


63
INTERNATIONAL

Courtesy of Energypost
Christoph Frei

WEC: Unconventional gas


is changing global markets
T
he growth of unconventional Mexico, Saudi Arabia, South Africa, energy.”
gas is spreading across Poland and Turkey are mentioned The study identifies three
the world with major in the study as having significant emerging global trends:
implications over many potential for shale gas development. • Shifting portfolio allocations:
years for markets and prices Christoph Frei, Secretary General current price uncertainties are
according to a new World Energy of WEC, said: “Unconventional gas is resulting in operators shifting
Council (WEC) study “Unconventional causing a shift in the dynamics of the their capital to more flexible,
gas, a global phenomenon” which natural gas market which will be felt shorter-cycle investments rather
looks at where and how fast the for many decades to come. Its spread than in deep well projects which is
revolution is taking place. around the world is being accelerated exemplified by the United States.
The study, developed with because it can make gas more • International growth of
project partner Accenture Strategy, affordable to consumers and reduce unconventional gas operators:
says that despite an uncertain concerns about the security of supply. new operators across the
price environment, the magnitude “So far, the surprising resilience world are realizing the global
and speed of change is not only of the U.S. shale gas market has led opportunities and bringing new
influencing the United States market, the way in the shale gas boom, and supplies to the markets such as
but also other markets including whilst other countries may not have China, Australia and Argentina
countries such as China, Argentina the unique characteristics of the which will have an effect on
and Algeria which have similar U.S., they will learn how to become markets before 2020.
potential as the U.S. in shale gas LNG producers or exporters which • Interconnected markets: excess
production. Also, countries such as will change the global dynamics of supplies in some countries have

64 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


led to price normalization and that promote a liquid market and the world energy market develops,”
other structural shifts that are competition needed for security of Frei said.
making the market more global supply and the formation of clear “In particular, continued growth
and transparent across the three price signals. in the U.S. and Australia will
main regional hubs of Asia, • Consumers: Evaluate the significantly influence the balance of
Europe and North America. economic and environmental supply and demand with Argentina,
Lower oil prices and weakened benefits of diversifying energy China and Saudi Arabia emerging as
Asian demand has resulted in the assets with natural gas in power, unconventional gas producers out to
virtual disappearance of the price industry, transportation, and 2020-2025.”
spread between the Japanese LNG chemicals and consider innovative Melissa Stark, managing director,
and UK markets in 2016. Additionally, investment partnerships to secure Energy industry group, Accenture,
U.S. prices remain depressed due to supplies. and co-author of the report, added:
the continued build-up of domestic In addition, the study says “The report emphasizes the smooth
supplies. that there are also society and nature and optionality of the U.S.
In order to realize the full environmental concerns which shale gas supply. The U.S. LNG
potential of the global gas national oil companies are best exports are very different from any
phenomenon, the study goes on to placed to address and thereby puts supply we have seen before because
highlight the need for certain decisive them in a prime positon to take this supply can come on-stream
interventions to alleviate uncertainty advantage of growth opportunities. very quickly in response to market
in the market: “Already, the rapid growth in demand and prices. This LNG supply
• Industry: Bring a higher degree unconventional gas has significantly is driving fundamental changes and
of focus to portfolio allocation, disrupted global trade flows. With commercial innovation in the global
risk management, and efficiency concerns about affordability and LNG market.”
and continue to seek new security driving exploration into The rapid growth of
and innovative investment unconventional resources outside of unconventional gas is demonstrated
partnerships to deliver projects. North America, unconventional gas by the U.S. - in December 2015
• Policymakers: Establish policies will continue to be a key factor in how 49% of its gas supplies came from
unconventional gas and by 2019 it is
Courtesy of Lightgalleries

predicted that U.S. LNG supplies will


account for one fifth of global capacity
and that the U.S. will be the third
largest LNG exporter.
The study, which is the work
of leading industry and academic
experts from across the world who
are part of the Council’s Natural Gas
Knowledge Network, will be launched
at the Africa Gas Forum during the
Africa Energy Indaba on Monday 15
February.
‘Unconventional gas, a global
phenomenon’ is one of 15 Knowledge
Networks studies for the World
Energy Resources flagship study
which will be presented at the 23rd
World Energy Congress in Istanbul,
Turkey in October 2016.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


65
OIL & GAS

SKK Migas approves Lemang farm-in

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

66 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


COMPANIES
Petromindo|Boim

Sugih Energy sets capex at $25m,


names new president
I
DX-listed PT Sugih Energy Tbk has budgeted US$25 a lower intensity, so that when the price rebounds, we’ll be
million for capital expenditure (capex) this year, a ready,” he said.
significant increase from $6 million last year. Riyanto insisted the firm will go ahead with the plan to
Company Director Ferdinand Terdy said on the bring the Lemang block into production this year despite
sidelines of the company’s general shareholders meeting low oil prices.
that the $25 million capex is allocated for gas development He said that based on the 2016 Work Program and
in Lemang PSC (around $15 million) and gas development Budget (WP&B) that has been agreed upon by the firm
in Selat Panjang PSC (around $10 millon). with upstream authority SKK Migas, the block will start
Program for Lemang PSC includes the development producing in June of this year with an initial rate of 700
of three existing wells, preparation of Early Production bopd. The output will gradually increase to 2,000 bopd at
Facility (EPF) and drilling of five to eight new wells. the end of this year.
Program for Selat Panjang PSC includes workover on He said thus far, three wells have been drilled in the
existing wells to optimize production and drilling of new block and the firm will drill five other wells in the future.
wells to meet obligation set in the gas sales and purchasing Sugih Energy initially had a 49 percent participating
agreement. interest for Lemang Block through its subsidiary Eastwin
“The funds have been ready, 80 percent of which were Global Investment Ltd., while SGX-listed Ramba Energy
raised as bank loans and the rest sourced internally,” he said. Limited, through its local subsidiary Hexindo Gemilang
During an extraordinary shareholders meeting on Jan. Jaya, held a 51 percent working interest in the Lemang
21, Sugih’s shareholders appointed Riyanto Soewarno as block as the operator.
new President Director, replacing Andika Anindyaguna. Following the entry of Mandala Lemang Singapore Pte
Riyanto said that the company’s main focus in the Ltd into the block through a share acquisition last year,
short term is gas development and increasing sales of gas Lemang is now 35 percent owned by Mandala, 31 percent
amid the current oil price drop. “Because of the oil price by Hexindo, and 34 percent by Eastwin.
drop we’re slowing down, but it doesn’t mean we stop
operation. We continue carrying out activities, albeit with — Brigida Ernestina Elu Wea

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


67
COMPANIES

Pertamina receives eco vessel


S
tate owned oil and gas firm PT Pertamina said it with variable timing in its exhaust gas emission system.
is adding another tanker called MT Sanggau to its It is a new technological application for vessel engine.
crude transportation armada. Besides, the use of pre-shrouded vane (PSV) and rudder
The tanker with a capacity of 40,000 long ton bulb in the engine leads to a 5-7 percent cut in fuel
dead weight (LTDW) was built with the “eco ship” concept, consumption.
which makes it fuel efficient and environmentally friendly, Mulyono said Pertamina will receive two more vessels
the firm said in a statement recently. from Newtimes in March.
MT Sanggau was built by Newtimes Shipbuilding Co. He said Pertamina is buying the vessels in order to
Ltd, based in Jinjing, Jiangsu province of China. It is the improve its efficiency in crude transportation and in
66th vessel of the 273-strong armada now operated by line with the cabotage principle that obligates the use of
Pertamina to assure stability of energy supplies across the Indonesian-flagged vessel in domestic sea transportation.
country. The vessel worth US$31 million is scheduled to The firm ordered the vessels from the Chinese companies
depart from Newtimes’ shipyard on Jan. 29, 2016 and start because local shipyards are still unable to build some
operation in early March. large-size vessels.
“The vessel was initially scheduled to be officially “Local shipyards are still unable to build some large-
delivered (to Pertamina) in March 2016. However, size vessels, which is why Pertamina has to sign some
the delivery has been realized earlier than schedule,” shipbuilding contracts internationally. This is a challenge
Mulyono, Senior Vice President of Shipping at Pertamina’s (for local shipyards). They can achieve progress together
Directorate of Marketing, was quoted by the statement as with Pertamina since it is the largest buyer of vessels
saying in Jinjing on Wednesday. made by local shipyards,” Mulyono said.
He said Pertamina needs vessels which are fuel efficient As of end-2015, Pertamina has around self-owned 72
and environmentally friendly for the transportation of vessels, including 34 or 47 percent of the total were built
crude oil to meet the national oil lifting target. MT Sanggau by local shipyards. Of the 34, 30 are already in operation,
is one of such vessels. It is equipped with environmentally four still under construction.
friendly equipment such as Ballast Water Treatment, Oil “Pertamina has a long-term plan to strengthen its
Discharge Monitoring, and combustion engine that meets self-owned armada. It is highly committed to cooperating
the IMO Tier II standard for exhaust gas emissions. with local partners in building vessels needed by the firm.
In its propulsion system, the combustion engine uses Pertamina is committed to making progress together with
the Electronic Fuel Injection technology and is equipped other industries in Indonesia,” he said.

Petromindo|Khalsa

68 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


OIL & GAS

PetroChina still committed


to exploration
P
etroChina International recorded success during exploration Development (PoD) of the discovered
Jabung Ltd said recently that of four wells, namely Panen-3, Panen Tiung structure. The activity will start
it is still highly committed Utara-2, NEB Base-2 and Tiung in April. “The survey will take around
to the exploration drilling Utara-2. In Panen-3, the firm found eighth months,” Song said, adding the
plan for Jabung PSC in Tanjung oil and gas reserves with Drill Stem area covered by the new 3D survey is
Jabung Barat, Tanjung Jabung Timur Test (DST) results of 1.7 mmscfd of bigger than the area covered by the
and Muaro Jambi regencies in Jambi gas and 1,849 bpd of oil. Meanwhile, survey two years ago, which was 80
province that has been approved DST on Panen Utara-2 well resulted sq km.
by upstream authority SKK Migas in 1,045 bpd of oil, 136 bpd of Production target of Jabung
despite the low oil prices. condensate and 6.7 mmscd of gas; block for this year is 52,938 boepd,
For this year, the firm has planned Drilling at NEB Base-2 well confirmed consisting of 13,966 bpd of oil and
to drill at least two wells, namely the discovery of gas and condensate 154 mmscfd of gas and LPG.
Tiung-3 and NEB Ext-1. The Tiung-3 with DST results of 10.8 mmscfd and PetroChina is the operator
well was spudded early this month, 475 bpd of condensate, while DST on of Jabung block. Its partners are
while the drilling of NEB Ext-1 well is Sumur Tiung Utara-2 resulted in 18.2 Petronas Carigali (Jabung) Ltd, PP
still in the licensing process. mmscfd and 756 bpd of condensate. Oil & Gas (Indonesia-Jabung) Limited
“Exploration activities at the All the new reserves were and PT Pertamina (Persero). Aside
two wells reflect the commitment of discovered in sandstone and from Jabung PSC, PetroChina is also
PetroChina to continuing developing carbonate formations of Gumai and operator in Bangko block in Jambi.
Jabung block despite the reality Talang Akar from Miocene period. The firm also has interest in Kepala
the world oil prices continue to Following the successful discovery Burung PSC, JOB Salawati Island, both
decline. The oil price is indeed of hydrocarbon in Tiung Utara-1 well in Sorong, West Papua province; and
discouraging, but it does not keep us in 2014 and Tiung Utara-2 in 2015, JOB Pertamina-PetroChna East Java in
from continuing efforts to find new PetroChina will carry out 3D seismic Tuban, East Java province.
reserves,” Jabung General Manager survey on 320 sq km in order to
In 2015, PetroChina Jabung the speed up the making of Plan of — Johannes Simbolon
Petromindo doc.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


69
OIL & GAS

Total may pull out of Mahakam block

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

Courtesy of SKK MIGAS

70 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


OIL & GAS
Courtesy of Goliga

Police detains two top


executives of BPMIGAS
T
wo top officials of BPMIGAS, the agency that of the proceeds to the state, keeping the remaining $139
supervised the oil and gas upstream sector prior million for itself. According to Priyono, the case had been
to the establishment of SKK MIgas, has been put brought to court and the panel of judges had issued a
in police custody in an alleged graft and money ruling obliging TPPI to transfer the retained proceeds
laundering case involving PT Trans Pacific Petrochemical in installment for 15 years. The case had then been
Indotama (TPPI), according to the local media. considered closed.
“Two have been put in custody for 20 years. They can’t However, the police estimated the amount of
go home. We detain them to ensure legal certainty and proceeds which TPPI retained or failed to transfer to the
accelerate the investigation into the case,” a police officer government at more than $1 billion, based on the police
was quoted by Berita Satu as saying recently. investigation that TPPI booked more than $4 billion in
The two are Raden Priyono and Djoko Harsono. The sales, much higher than the $2.7 billion figures, claimed by
former was the head of BPMIGAS until the dissolution BPMIGAS.
of BPMIGAS in 2012, while the latter was his Financial, Priyono also said the decision to deliver state
Economic and Marketing Deputy. condensate to TPPI was taken during a meeting on May 21,
Another suspect in the graft case, Honggo Wendratmo, 2008 presided over by then Vice President Jusuf Kalla. Sri
the former owner of TPPI, has not been detained since he Mulyani Indrawati, then Minister of the Economy, now a
is now in Singapore. director of the World Bank, was also aware of the decision.
Investigation into the case has been ongoing since the “It was decided during the meeting that TPPI must
middle of last year. resume operation. Thus, it must be supplied with
The police claimed that BPPMIGAS had awarded condensate,” Priyono told reporters after being questioned
TPPI the contract to sell the state’s share of condensate by the police.
in the period of 2009-2010 in violation of the proper The police has yet to question Jusuf, but the vice
procedures: The contract was awarded to TPPI without an president once told the media that there was nothing
auction process and TPPI has yet to fully transfer the sale wrong with the decision to deliver the state condensate to
proceeds, causing huge losses on the government. TPPI as it aimed to enable the firm to resume operation.
After being named a suspect, Priyono told the media The decision was taken in view of the fact that the firm
in the middle of last year that the condensate sold by TPPI had been majority owned by the government. “There was
during the 2009-2010 period was valued by BPMIGAS nothing wrong with giving a work (to TPPI). (But TPPI did
at US$2.7 billion. The firm only transferred $2.57 billion wrong) by withholding the payment,” he said.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


71
OIL & GAS

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.

72 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


OIL & GAS

Rp 2 trillion for downstream


infrastructures

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

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


73
OIL & GAS

Ministry unveils LNG balance for 2016

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

Indonesian LNG balance for 2016


    Std cargo Mix cargo
No. Remarks Bontang Tangguh
1 Production plan* 152.50 115.00
2 Contractual commitment (export) 90.60 81.00
1973 3rd AR 19.60  
1981 3rd AR 19.80  
Deferral MCGC 1.00  
Badak VI 32.70  

74 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Badak V 17.50  
Fujian   41.00
Chubu   4.00
Tohoku   2.00
Kansai   4.00
Posco   9.00
SK E&S   8.00
Kogas   8.00
Sempra   5.00
3 Contractual commitment (domestic) 17.00 12.00
PLN-Regasifikasi Arun   12.00
Nusantara Regas 17.00  
4 Balance 44.90 22.00
5 Additional domestic buyers (allocated) ** 14.50 14.00
PT Pertagas Niaga (Arun Regas) 1.00  
PT Pertagas Niaga (FSRU NR) 1.00  
PT Pertagas Niaga (Kaltim) 0.50  
PLN (Benoa)*** 1.00  
PLN-Regasifikasi Arun   2.00
Nusantara Regas - FSRU NR 5.00 3.00
PGN LNG-FSRU Lampung   5.00
Additional reserve for domestic buyers (unallocated)    
PLN(Benoa) 1.00  
PLN-Regasifikasi Arun   1.00
PLN - NR 1.00  
PGN LNG-FSRU Lampunga 4.00 3.00
6 Sisa Uncommitted Cargo 30.40 8.00
7 Proposed export allocation 20.00 8.00
Kyushu Electric 3.00  
Kansai Electric 3.00  
CPC 1.00  
Shell 8.20  
TGPL 4.80  
Interruptible Kogas   8.00
8 Final Balance (Uncommitted) 10.40 -
Notes: Data as of February 2016
* Data on production and existing contractual commitment based on data as of December 2015
** Allocation assumption starting in February 2016 and evenly distributed through December 2016 in line with Minister of Energy and Mineral Resources (MEMR) Decree No:
10513/12/MEM.M/ 2015 dated Dec. 29, 2015
*** Allocation assumption for PLN (Benoa) starting in March 2016

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


75
OIL & GAS

Cooper sells exploration assets


to Mandala Energy
A
SX-listed Cooper Energy Investment Decision on the Sole Gas time for Cooper Energy to realize
announced recently that it Project”. the value available for its Indonesian
has signed agreements for The benefits from the transaction portfolio and to increase the focus
the sale of its Indonesian include the anticipated proceeds we bring to our Eastern Australia
exploration assets to Mandala Energy and the removal of existing license projects” Maxwell said.
Limited, a South East Asia focused oil commitments for seismic acquisition Cooper said it will now seek
and gas exploration and production and the drilling of two wells. Cooper to accelerate sale of the Tangai-
company, for consideration of Energy recently reported cash and Sukananti KSO. The KSO is currently
US$8.25 million. investments of A$30.2 million at Dec. producing at approximately 800 bopd
Cooper said the sale, which is 31, 2015. (gross) and presents the opportunity
effective from January 1, 2016, Mandala Energy Chief Executive for substantially higher rates,
is subject to the approval of the Officer Barry O’Donnell said: “The potentially to more than 2,000 bopd,
Government of Indonesia and is acquisition of these two large PSCs under a plan to upgrade processing
expected to complete within the marks a very important strategic and transport capacity and conduct
current financial year. The net cash milestone for Mandala Energy. From development drilling.
proceeds are anticipated to be a portfolio perspective, it significantly The Tangai-Sukananti KSO was
more than A$10 million at current increases our footprint in the prolific assessed to contain remaining Proved
exchange rates, after costs and South Sumatra Basin and provides us plus Probable Reserves1 of 3.1
Indonesian transfer taxes. with operatorship of two high quality million barrels (MMbbl) of oil (COE
Under the transaction signed in exploration assets. We look forward share: 1.7 MMbb) as at June 30, 2015
Jakarta Wednesday, Mandala will to executing an extensive seismic and with further exploration potential.
acquire 100 percent of the Sumbagsel drilling program in order to quickly Production from Sukananti since 30
and Merangin III PSCs located in the realize the potential of both blocks.” June has been 133.5 thousand barrels
South Sumatra Basin. Cooper Energy Maxwell said the decision to (kbbl), (COE share 73.5kbbl).
said it will continue the divestment divest the Indonesian assets was
Courtesy of SKK MIGAS

process for its 55 percent interest in driven by the maturation of the


the Tangai-Sukananti KSO production company’s eastern Australian gas
licence. strategy.
The sale is the first outcome of a “Our involvement in Indonesia
process initiated by Cooper Energy pre-dates the strategy adopted in
in the December quarter to divest its 2011 to focus on the opportunities
Indonesian portfolio. we foresaw in eastern Australian
“Today’s transaction marks gas supply. The Indonesian assets
another important step in our were retained on the strength of the
strategy to concentrate Cooper opportunities to add value through
Energy’s resources and efforts on the geologic studies in Sumbagsel and
eastern Australian energy market” Merangin III and increasing reserves
said Cooper Managing Director, and production in Sukananti.
David Maxwell. “Moreover, it will “Although we consider the
provide timely capital management Merangin III and Sumbagsel PSCs to
benefits as we move towards a Final be very prospective, now is the right

76 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


OIL & GAS
Petromindo doc.

Pertamina selecting partners


for refinery projects
S
tate owned oil and gas firm PT Pertamina (Pesero) Aside from the Tuban refinery project, Pertamina has
has started selecting partners for the project to also been assigned by the government to build a refinery
develop an estimated US$8-9 bilion refinery in in Bontang, East Kalimantan.
Tuban, East Java. Minister of Energy and Mineral Resources Sudirman
Processing Director of Pertamina Rachmad Hardadi Said recently stated that the government has decided
said to Petromindo that out of 12 companies that have to develop the planned Bontang refinery project in East
participated in a “beauty contest” held by Pertamina to Kalimantan through a public private partnership (PPP)
select a partner in the project, the company has picked out scheme, promising a couple of incentives including a tax
five firms. holiday of up to 15 years.
He said that the five companies include Saudi Aramco The government resorts to the PPP scheme due to the
(Saudi Arabia), Kuwait Petroleum International or huge investment requirement of the project, estimated at
KPI (Kuwait), Rosneft (Russia), Sinopec (China), and a around $14 billion-$16 billion.
consortium of Thailand firms PTT GC and Thai Oil. Sudirman said Pertamina will select a strategic partner
Rachmad said that some participants had decided to with the help of an international consultant. The state firm is
back down from the project. “In the end, Iran’s NIOC did expected to be able to select the would-be partner in October
not to continue, while JX Nippon and Idemitsu backed of this year, in the hope that construction of the project can
down because they want to focus their projects which are start next year.
currently in the finishing stages,” Rachmat said. Aside from the tax holiday, the government will also
Meanwhile, Indian Oil is not eligible to advance to the facilitate land use for the project as another form of
next stage, according to Rachmat. incentive.
“Currently, the five companies are still in the evaluation Meanwhile, Kontan reported that among of the
process. Tentative in the third week of February, there will foreign firms interested to invest in the project include JX
be a decision to determine who will be the JV partner with Nippon Oil, and Saudi Arabian businessman Syekh Said Al
Pertamina,” he said. Husaini.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


77
OIL & GAS

Courtesy of SKK MIGAS


PSC holders asking for helps
to weather oil crisis
P
SC production holders have asked the commitment amid the lingering weak oil price.
government for various incentives to help them Djoko explained that according to the Oil and Gas Law,
weather the oil price crisis. The incentives oil and gas contractors are given until 10 years to carry out
include tax holiday, waiver of First Tranche exploration activities. But with the current low oil price
Petroleum (FTP) and Domestic Market Obligation (DMO), condition, the PSC holders have difficulties in requesting
and change in profit split, according to an official of the for exploration funds from its head office abroad.
Ministry of Energy and Mineral Resources. Djoko said the government has yet to decide on the
With regards tax holiday, the PSC holders want to request, but it would likely apply it on a case by case basis
be exempted from tax-paying obligation over a certain as some companies may want other forms of incentives
period, Djoko Siswanto, Director for the Management of such as tax holiday, flexible commitment, etc given the
Upstream Activities at the Directorate General of Oil and wide gap in exploration and production cost among the
Gas, said. companies, which ranges from US$4 per barrel to $70 per
“So far, the government only gives five year (tax barrel.
holiday). In situations like these, the contractors want to “Thus, our action later is that one by one of the PSC
have a longer tax holiday, say 10 years,” he said. holders will meet and discuss with the government,
With regards FTP and DMO, PSC holders want the FTP whether they want to a moratorium or others, for example
and DMO obligations to be waived to allow them receive tax holidays, flexible commitment, etc.,” he said.
enough revenue to cope with the oil price drop. Elsewhere, Djoko said that some PSC holders have also
FTP refers to the portion of production shared by asked for flexibility to transfer exploration commitment
the government and contractors prior to cost deduction, particularly among companies that own more than one
while DMO is the portion of production allocated for the field, and flexibility to substitute types of exploration
domestic market. The DMO price is usually lower than the activities.
international price. “PSC holders that have more than one block want to
“With regards their request for change in production divert their exploration commitments from one block
split, such request is difficult to meet. What we have done to another block which is considered more economical.
is changing the production split for contract extension. Rather than having to drill today, the company wants to
(For instance), we’ve introduced a new production split replace it instead with seismic activity only. For example,
scheme for the new contract on Mahakam block, that is the seismic survey in the deep sea is more expensive in Papua
sliding scale (revenue over cost) scheme,” he said. and they want to transfer the seismic activity to Sumatra
Djoko also said the PSC holders have asked for a which is cheaper. That is flexibility,” he explained.
moratorium of exploration period requirement as they
have been facing difficulties in meeting the exploration — Febry Silaban

78 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


OIL & GAS

Massive layoff in oil industry


T
he country’s oil companies Amien. year and plans to cut another 4,000
have started cutting the Director General of Oil and Gas exploration and production jobs this
number of their workers as IGN Wiramaja explained that Chevron year, according to Wall Street Journal.
they are struggling to cope has to cut the number of its workers Service giant Schlumberger,
with the impacts of the oil price crisis as a consequence of organization which also has a strong presence
and wrestling with the prospect of a streamlining program. Chevron runs in Indonesia, announced in January
long-term low oil prices. its operation in Indonesia through that had cut 10,000 jobs in the past
PT Chevron Pacific Indonesia, the two separate organizations, namely three months as it suffered massive
country’s largest oil producer, is among PT Chevron Pacific Indonesia (CPI) losses due to the oil price slump. It is
the companies which has started laying based in Riau province and Chevron unclear how many jobs the firm has
off workers. According upstream Indonesia Company (CICo) based in and will cut in Indonesia.
authority SKK Migas, the firm will East Kalimantan. Meanwhile, Minister of Energy
lay off a total of 1,200 workers and The company has decided to and Mineral Resources Sudirman Said
is being carried out through several merge the two subsidiaries, which is said the layoff plans in the oil and gas
mechanisms, including voluntary causing position overlaps. As a result, upstream sector would not affect the
resignation and early retirement. the firm has to lay off some of its national lifting target. All oil and gas
“The layoff is being done in workers, Wiratmaja said. contractors are obligated to meet the
stages, starting in 2015,” SKK Migas’ In October of last year, Chevron targets set in the Work Program &
Chairman Amien Sunaryadi said. announced that it would slash its Budget (WP&B)
Another firm that has laid off capital budget for 2016 by 25 percent “What I know is that the
workers is BP Indonesia, the operator and lay off roughly 10 percent of contractors do not lower their targets,
of the Tangguh LNG plan in West its workforce or between 6,000 but only carry out efficiency. They
Papua, but its layoff number is not and 7,000 workers. Meanwhile, may carry out cost saving but the
as large as Chevron’s, according to BP slashed about 4,000 jobs last target should be achieved,” he said.
Courtesy of SKK MIGAS

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


79
OIL & GAS

Courtesy of SKK MIGAS


Chevron to return East
Kalimantan PSC
C
hevron Indonesia Company Development (IDD) project,” he Muara Bakau PSC which is controlled
has decided to return East said. We are proud of our strong by Italian firm Eni Spa.
Kalimantan PSC offshore partnership with the Indonesian Under the existing regulation, the
East Kalimantan to the people and government and is government will first offer expiring
government after its expiry in 2018, committed to a continued support blocks to state owned oil and gas firm
rather than asking for contract for Indonesia to develop its energy PT Petamina (Pesero). In case the
extension. resources in a safe, efficient and firm rejects the offer, it will be into
“Chevron through subsidiary reliable manner,” he said. auction.
Chevron Indonesia Company (CICo) According to Yanto Sianipar, When asked for comments,
has been operating East Kalimantan Senior Vice President Strategic Pertamina said it will evaluate the
(EKAL) PSC and supplying gas Business Support at Chevron Pacific block’s prospect including the reserve
sustainably to the Bontang LNG plant Indonesia, East Kalimantan PSC is that remains.
and the Balikpapan refinery. CICO an old block, now producing 60-70 “If the reserve that remains is still
won’t ask for extension for EKAL mmscfd of gas and around 20,000 quite large and economical to develop
PSC and will return the asset to the bpd of oil. of course, we are interested in the
government of Indonesia on Oct. 24, Based on the 2016 Work Program block,” Pertamina’s Upstream Director
2018,” Chevron IndoAsia Business and Budget (WP&B), the block will Syamsu Alam told Petromindo.
Unit’s Managing Director Chuck produce 14,470 bpd of oil this year. He added that the company is
Taylor said in a statement recently. Chevron also controlled several likely to look for a partner to develop
“The decision will not affect other blocks in East Kalimantan, the block.
our commitment to continuing our including Ganal PSC, Rapak PSC and “But everything depends on
90-year partnership in Indonesia Makassar Strait PSC, which are all the results of the evaluation on the
and implementing strategic projects parts of the IDD project. Another subsurface as well as economic aspects
such as the Indonesian Deepwater block included in the IDD project is in a comprehensive manner,” he said.

80 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


SHIPPING
Courtesy of Wintermar

Wintermar acquires new vessel


despite tough times
I
DX-listed shipping company PT Wintermar Offshore slowdown in economic growth and how long that will
Marine Tbk said it has taken delivery of SMS Steady, last; and in Indonesia, government regulation and the
its latest Indonesian built Anchor Handling Tug willingness to improve terms for the oil contractors to
(AHT) with 4400 BHP. attract investment in oil.
“She is chartered to a multinational oil and gas The company, however, said that in Indonesia, there
company working in the Natuna area for a 5 year are glimmers of optimism as some of the development
contract,” Wintermar said in a statement recently. The projects which were put on hold since 2014 seem to be
vessel is funded through a combination of internal cash starting activity again. Upstream authority SKK Migas and
and bank financing from a foreign bank, it added. state owned oil and gas firm PT Pertamina have indicated
Wintermar said since late 2015 there has been a pick an increase in upstream spending in 2016 compared
up in activity, albeit from a very low base. “Some projects to 2015, with projections for some new output coming
have started or are starting this year, like Husky CNOOC, onstream in 2018-2019 underpinning activity.
Santos, Petronas and Pertamina. However, activity is still “We will continue selective vessel sales where possible,
at a very low level compared to the peak in 2013,” the even at a book loss, to raise cash for reserves,” Wintermar
company explained. Rates have continued to be under said. The outstanding bank debt at end December 2015
pressure due to oversupply of vessels and a negative was US$ 121 million, due for repayment between 2016
outlook for oil. “So far the 1st quarter has started with an and 2021, and the group’s Gearing ratio is approximately
expectation of better utilization but at lower rates.” 63 percent. “We have secured a working capital financing
The company said that in the short term, there is a line for up to US$ 10 million. Our Capex spend in 2015 was
lack of visibility because there are many considerations: reduced to $13 million from an initial plan of $50 million
OPEC’s unwillingness to reduce production; the and we expect to spend $6 million in 2016.”
possibility of more high cost producers going out of The company said that at the end of December 2015 its
business; Iran’s ramp up in oil production; China’s total contracts on hand totaled $190 million.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


81
OIL & GAS

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

82 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


costs and strategic infrastructures,” Dennis said, adding that the FRU has a some docking areas thanks to
he said. capacity of 50 mmscfd, while the FSU the project, the project will bring
He explained the LNG terminal has a capacity of 26,000 CBM. benefit (to the nation) by cutting the
will be built floating at water area and He said if all diesel power plants government’s fuel subsidy,” Rahmat
JSK Group has designed special FRU in Indonesia use gas rather than said.
and FSU for the terminal. JSK Group is diesel oil, the government can The LNG from Bontang will be
a pioneer in making concepts of such cut its fuel subsidy significantly. delivered to the LNG terminal by
facilities in Indonesia. Furthermore, gas is cleaner than IDX-listed energy transporter PT
He said PEL deliberately chose diesel oil. Humpuss Intermoda Transportasi
to build the terminal offshore rather Tbk. Humpuss is scheduled to
onshore because a floating LNG Onstream in March transport the first LNG in late
terminal is faster to build than a land- Denny said the Benoa LNG February.
based one as land preparation is often terminal is projected to come “The first LNG delivery from
time consuming. onstream in March of this year. ‘We Bontang to Benoa will occur on
JSK Group CEO Dennis SK hope the operation to run smoothly,” February 25,” Director of PEL
said he expected the floating LNG he said. Gembong Primadjaja told Petromindo
terminal could be become a model Director of Operations & Business recently.
for the development of such facilities Development of Pelindo III, Rahmat Humpuss through its subsidiary
elsewhere in Indonesia and the Satria said that Pelindo III has PT Humpuss Transportasi Kimia
best solution for the Indonesian allocated some area of the docking (HTK) signed an LNG transportation
government to realize its 35,000 MW site of the Benoa’s port for the FRU contract with PEL on Dec. 16, 2015,
program in particular. and FSU. The area was originally used which will be effective for seven years
“JSK Group through subsidiaries for loading and unloading of goods since the first delivery. Under the
PT Benoa Gas Terminal and PT JSK and containers. contract, HTK is obliged to deliver
Abadi Lines has spent no less than “The synergy (between Pelindo, LNG for a power plant in Pesanggaran,
$100 million to procure the FRU and JSK Group and Indonesia Power) Denpasar, Bali. The company will use
FSU. Both are built in South Korea,” can benefit all. While we are losing LNG Carrier Triputra, formerly known
as Surya Satsuma, which previously
Courtesy of Wikimedia

used by Humpuss to transport LNG


from Bontang LNG plant to Japan LNG
buyers.
Humpuss will use a medium-size
LNG carrier with a capacity of 20,000
dead weight tons (DWT).
Director of Humpuss Taufik
Agustono said to Petromindo that
they are currently waiting for PEL’s
instruction to start transporting LNG
from Bontang.
“There will be one unit vessel
which will be going back and forth
from Bontang to Benoa to transport
the LNG. There will be two to three
deliveries within a month,” Taufik
said, adding that the contract value
with Humpuss is approximately
US$90 million.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


83
OIL & GAS

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

84 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


OIL & GAS

March-delivered LNG plunges 61.7%

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.

Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)


Year-over-Year Month-over-Month
Mar-15 Mar-14 Feb-14 Change % Change %
JKM ($/mmBtu) 7.436 19.419 9.911 -61.7 -25.0
Qinhuangdao coal ($/mmBtu) 3.562 4.098 3.665 -13.1 -2.8
180 CST fuel oil ($/mmBtu) 7.905 15.769 7.761 -49.9 1.9
The Platts JKM™ is an assessment of LNG prices for spot cargoes delivered to Japan and South Korea, based on the most recent trades and/or bids and offers from buyers and
sellers in the open market prevailing at the close of the trading day. The monthly JKM assessments are month-ahead delivered prices and are an average of the daily JKM price
assessments reported by Platts. The monthly reports on Asia LNG prices and market developments are typically published shortly after the 15th of each month.
Source: Platts

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


85
POWER

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

86 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


POWER

PLN signs Rp 47t geothermal


agreements
S
tate owned electricity firm PT Perusahaan Listrik Agreement for PLTP Kamojang’s Unit 5 (35 MW). It
Negara (PLN) (Persero) signed on Feb. 11 a number was signed by Irfan and Basir.
of agreements with several parties to develop - Amendment to Geothermal Steam Purchase Agreement
geothermal resources on the sidelines of an for PLTP Lahendong’s Unit 1 (20 MW) in North
international conference on clean energy in Nusa Dua, Bali. Sulawesi. It was signed by Irfan and Basir
Minister Energy and Mineral Resources, Sudirman Said - Amendment to Geothermal Steam Purchase Agreement
said the agreements involve a total of investment of Rp for PLTP Lahendong’s Unit Unit 2 (20 MW), Unit 3 (20
47.2 trillion. MW) in North Sulawesi. It was signed by Irfan and
The Bali Clean Energy Forum (BCEF) 2016, which Basir
was opened on Feb, 11 by Vice President Jusuf Kalla, was - Amendment to Geothermal Steam Purchase Agreement
attended by over 1,200 participants representing the for PLTP Lahendong’s Unit 4 (20 MW) in North
governments, experts and business players from many Sulawesi. It was signed by Irfan and Basir
parts of the world, including Saudi Arabia, Australia, - Geothermal Electricity Price Adjustment Agreement for
Malaysia, Denmark, Japan, Sweden, Finland and Britain. PLTP Muara Laboh (80 MW) in West Sumatra. It was
The conference is hosted by the Ministry of Energy and signed by PT Supreme Energy Muara Laboh Supramu
Mineral Resources and the International Energy Agency Santoso and Basir
(IEA), in which Indonesia has become a member since - Geothermal Electricity Price Adjustment Agreement
November of last year. for PLTP Wayang Windu’s Unit 1 (110 MW), and Unit
The agreements signed during the event are as follows: 2 (117 MW) in West Java. It was signed by President
- Geothermal Steam Purchasing Agreement for PLTP Director of PT Star Energy Geothermal Wayang Windu
Kamojang power plant’s Unit 1 (30 MW) Unit 2 (55 Rudy Suparman and Basir
MW), Unit 3 (55 MW) in West Java. It was signed by - Memorandum of Understanding between PT
President Director of PT Pertamina Geothermal Energy Pertamina (Persero) and Agency For The Assessment
(PGE) Irfan Zainuddin and President Director of PT And Application Of Technology (BPPT) on Assessment
Indonesia Power Antonius Resep Tyas and Application of Technology to Support Geothermal
- Second Amendment to Geothermal Power Purchasing Energy Utilization. It was signed by BPPT’s Head
Agreement for PLTP Kamojang’s Unit 4 (60 MW) Unggul Priyanto and Pertamina’s Upstream Director
in West Java. It was signed by by PGE’s Irfan and Syamsu Alam.
President Director of PLN Sofyan Basir
- Amendment to Geothermal Power Purchase — Godang Sitompul & Cepi Setiadi
Petromindo|Khalsa

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


87
INDUSTRY NEWS: POWER

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

88 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Petromindo|Khalsa
Yudhistira Director Pudjianto said
that the company will set up a new
subsidiary called PT Yudhistira Timor
Energi that would develop the power
plant project, the output of which to
be sold to state-owned electricity firm
PT PLN. He did not provide further
details about the planned project.

Minister seeks to revive


controversial energy
security fund
Minister of Energy and Mineral
Resources Sudirman Said stated that
the proposed energy security fund
can be started this year if the House
of Representatives Commission VII
on energy and mining, and the House
state budget committe provides their
approval.
Sudirman said recently that the
PLN reports higher cement, textile, tire, steel, chemical approval hopefully can be obtained
electricity sales and electronics among others at the upcoming deliberation of the
State-owned electricity company was driven by the 4.1 percent revised 2016 State Budget.
PT PLN said that electricity sales in electricity tariff reduction for the He added that the ministry
January of this year increased by consumer category. He added remains consistent with the planned
7.54 percent compared to sales in the that the economic policy package energy security fund, claiming that it
same month of last year amid rising introduced by the government to has drafted the necessary government
demand. help accelerate investment activities or presidential regulation, and
PLN Head of Corporate also contributed to the stronger made better prepartions including
Communications Agung Murdifi said power demand. setting up an institution that would
in a statement obtained recently that implement the policy.
it was a relatively strong sales growth Yudhistira plans biomass The minister proposed the
as monthly sales growth rate last year power plant in East Nusa controversial energy security fund
had never exceeded 3.7 percent. Tenggara policy last year, but suspended it
“The total terra watt hour sold in PT Yudhistira Energi is planning earlier this year following widespread
January 2016 was 17.57 TWh while in to develop a 5 MW biomass power protest, and pending better
January 2015 was only 16.34 TWh,” plant in Kupang, East Nusa Tenggara preparations including drafting the
Agung said in the statement. province, using calliandra wood as required regulation.
Agung explained that electricity feedstock. Under the plan, financing for the
demand from large industries The provincial administration energy security fund will come from
was particularly strong during the said in a statement that company fee collected from the sales of fuel
period, growing by 2.28 percent officials, facilitated by the products including automotive diesel
from a contraction of 4.31 percent in administration, met with local and the Premium brand gasoline.
December. residents recently to acquire the The funds among others will be used
He said that the higher demand required land for the project of about to help finance new and renewable
from large industries such as 1,200 hectares. energy projects in the country.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


89
INDUSTRY NEWS: POWER

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.

90 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


ICR studying 2x15 MW mine SKK Migas over the planned power of Muara Laboh geothermal power
mouth power plant project plant project, and hopes state-owned plant project in South Solok Regency,
in Jambi electricity firm PT PLN to respond West Sumatra Province. The power
Coal mining company PT Indonesia positively to the initiative. plant has a planned capacity of 2 X
Coal Resources (PT ICR), a wholly Syamsurizal, however, said the 110 MW
owned subsidiary of PT Antam Tbk, is company has yet to decide whether Supramu Santosa, Supreme
entering the power plant sector. to build the power plant or merely as Energy’s President Director told
Ady Taufik Yudisia, President supplier of the flare gas. Petromindo at the recent Bali
Director of ICR, told Petromindo Elsewhere, he said that despite Clean Energy Forum 2016 that the
recently that the company has the lingering weak oil price, funds will be used to finance the
conducted several studies on planned the company still see business construction of the first stage of the
development of a mini mouth power opportunities as some oil and gas power plant project.
plant project with the maximum contractors continue to maintain “For the first stage we will develop
capacity of 2x15 MegaWatt in production level. He added that there around 80 MW,” he said, adding that
Sarolangun, Jambi Province. are also opportunities at home as geothermal exploration and EPC have
“We are currently in the phase some foreign services companies been completed. “We expect to start
of pre- feasibility study on how to pull out from the country as part of construction in September 2016 and
maximize the benefits of our coal business streamlining measures. to be completed by 2019,” he ended.
mine in Jambi. We are mulling The power purchase agreement
developing a small capacity mine Supreme Energy allocates (PPA) for the project was signed on
mouth power plant,” he said adding $350m to develop Muara March 2, 2012 with state-owned
that the company is intensively Laboh power plant power firm PT PLN for a 30-year
communicating with state owned Power company PT Supreme period after commercial operation
electricity firm PT Perusahaan Listrik Energy has allocated US$350 million date (COD). In this project, Supreme
Negara (Persero). in capital expenditure (capex) this Energy has set up a joint venture with
Ady revealed that investment for year to help finance the development Engie and Sumitomo.
the project could be around US$ 1.2
Petromindo|Khalsa

million to US$ 1.7 million per MW.

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

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


91
INDUSTRY NEWS: POWER

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

The company said that the 30 kms


power line, which is linked with the
North Sumatra-Riau interconnection
system, comprises of 57 towers.
PLN also said in a statement that it
had on February 9 started operating
a 30 MVA transformer at the Pagar
Alam 150 kV relay station in South
Sumatra.
The new transformer, replaces a
10 MVA transformer, thus increasing
power supply reliability in the region.
Of the planned 35,000 MW power
plants to be developed over the next
five years until 2019, about 18,000
MW will be developed in Sumatra. A
total of 19,292 kms transmission lines
and 32,096 MVA will be developed on
Jarman the island.

92 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Petromindo|Khalsa

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.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


93
INDUSTRY NEWS: POWER

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

94 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


of its kind in Indonesia. “Currently,
we are looking for proper location
and we hope the project could be
developed soon,” he said.

PLN to operate another


unit of PLTP Ulumbu
State owned electricity firm PT
Perusahaan Listrik Negara (PLN) will
operate another unit of PLTP Ulumbu
geothermal power plant in Manggarai
regency, East Nusa Tenggara (NTT)
province as part of the efforts to
increase the utilization of clean
Courtesy of LEN

energy in the area.


PLTP Ulumbu, located in Wewo
has four power units with a combined
installed capacity of 10 MW or 4x2.5
PLN increases power supply PLN expects power demand in Java- MW, using as fuel geothermal steam
in Java-Bali system Bali region, where power peak load has from Pocoleok volcano. Thus far,
State-owned electricity firm PT reached a record level of 24,258 MW however, PLN only operates three
PLN has managed to operate two new on November 5 of last year, to further units. The first unit is fueled with
high voltage power lines, increasing increase. Total consumers as of last steam produced from a 1,887 m well,
power supply in the Java-Bali system. year have reached 39.04 million. the second unit from a 878.6 m well
The company said in a statement and the third unit from a 945.4 m well.
recently that it had started the Len Industry, Sumba Barat The fourth unit is scheduled to start
operation of the first of the two-circuit sign MoU to develop 10 MW operation in March of this year, PLN’s
500 kV high voltage power lines, solar farm Corporate Secretary Agung Murdifi
which distributes electricity from the PT Len Industry and Sumba said in a statement on Thursday,
660 MW Cilacap Expansion coal-fired Barat regency in East Nusa Tenggara adding once the fourth unit has come
power plant located in Cilacap, Central province have signed a memorandum into operation, PLN will deactivate all
Java, to the Java-Bali system. of understanding (MoU) to develop its diesel generators in the area.
The second circuit is expected to a 10 MW solar farm. The MoU was “At present, there are three units
start operation in March, it added. signed on Feb. 10 on the sidelines of in operation. In March, all four units of
PLN said that on January 20, it the Bali Clean Energy Forum 2016. the power plant will be in operation
operated a 500 kV high voltage power Len’s President Director Abaham and all diesel generators in the area
line, linking the PLTU 2 Jateng/ Mose told Petromindo that the company will be deactivated. Thereby, we shall
Adipala 1x660 MW coal-fired power has budgeted Rp 300 billion to develop save our costs as we shall no longer
plant, also in Central Java, with the the power plant in the regency. “And need to buy diesel oil,” Agung said.
Java-Bali system. the local government will provide lands The power plant supplies power
PLN said that during the past two for the project,” he said adding that to Manggarai and parts of Manggarai
months, it has also upgrade the capacity the firm will use internal resources to Timur and Manggarai Barat
of transformers in a number of relay finance the project. regencies. Peak load in the area is 4.4
stations to a combined 120 mega volt Sumba Barat Regent Paulus MW in daytime and 8.1 MW at night.
ampere (MVA), thus increasing the Sekayu Karugu Limu told Petromindo PLTP Ulumbu was inaugurated on
reliability of power supply to customers that once the project has been Nov. 11, 2011 and started operation
in the Java-Bali region. completed, it would be the biggest in January 2012.

PETROMINDO FEBRUARY 29 – MARCH 29, 2016


95
STATISTICS

Indonesian crude price (October 2015 – January 2016)


60
Indonesian crude price (US$/bbl)
BENCHMARK CRUDE Jan-15 Dec-15 Jan-16 50 43.68
41.44
1. SLC 45.56 34.61 26.63 40 35.48
2. ARJUNA 44.79 35.45 27.36
3. ATTAKA 47.38 37.27 29.17 27.49
30
4. CINTA 45.82 33.50 26.46
5. DURI 44.75 32.34 24.87
20
6. WIDURI 45.37 33.63 26.58
7. BELIDA 48.85 38.81 30.44
10
8. SENIPAH (C) 48.09 41.09 33.40 Oct-15 Nov-15 Dec-15 Jan-16
SLC Arjuna Attaka
Cinta Duri Widuri
Belida Senipah (C) ICP

OTHER CRUDE Jan-15 Dec-15 Jan-16


9. ANOA 47.78 37.67 29.57
10. ARUN (C) 48.09 41.09 33.40
11. BADAK 47.38 37.27 29.17
12. BEKAPAI 47.38 37.27 29.17
13. BELANAK 39.83 30.49 22.40
14. BENTAYAN 43.60 32.65 24.67
15. BRC 43.23 43.68 34.60
16. BULA 44.25 31.84 24.37
17. BUNYU 45.56 34.61 26.63
18. CAMAR 45.17 35.83 27.74
19. CEPU 40.15 30.81 22.72
20. GERAGAI 45.75 34.80 26.82
21. GERAGAI (C) 42.97 43.42 34.34
22. HANDIL MIX 44.94 35.60 27.51
23. JAMBI 45.75 34.80 26.82
24. JATIBARANG 45.56 34.61 26.63
25. JENE/SERDANG 45.56 34.61 26.63
26. KAJI 45.96 35.01 27.03
27. KERAPU 48.51 38.47 30.10
28. KLAMONO 44.25 31.84 24.37
29. COMP. PLB. SLT. 43.05 33.71 25.62
30. LALANG 45.61 34.66 26.68
31. LANGSA 46.98 36.87 28.77
32. LIRIK 45.45 34.50 26.52
33. MADURA 44.92 35.58 27.49
34. MENGOEPEH 45.75 34.80 26.82
35. MESLU 44.21 34.10 26.00
36. MUDIMIX 44.49 35.15 27.06
37. NSC/KATAPA/ARBEI 47.27 37.16 29.06
38. PAGERUNGAN (C) 47.34 40.34 32.65
39. PAM.JUATA/SANGA2 MIX 45.66 34.71 26.73
40. PANGKAH 43.49 34.15 26.06
41. RAMBA/TEMPINO 45.75 34.80 26.82
42. RIMAU/TABUHAN 45.46 34.51 26.53
43. SANGATTA 45.56 34.61 26.63
44. SELAT PANJANG 45.56 34.61 26.63
45. SEPINGGAN YAKIN MIX 44.79 35.45 27.36
46. SOUTH JAMBI (C) 46.15 39.15 31.46
47. TANJUNG 45.75 34.80 26.82
48. TAP 43.26 33.92 25.83
49. TIAKA 41.75 29.34 21.87
50. UDANG 45.64 34.69 26.71
51. WALIO MIX 42.74 33.40 25.31
52. WEST SENO 46.73 36.62 28.52
Source: Directorate General of Oil and Gas at the Ministry of Energy and Mineral Resources

96 PETROMINDO FEBRUARY 29 – MARCH 29, 2016


Suriyanto, President Director of PT EnviroMate Technology International (PT ETI)
INDONESIAN OIL, GAS & POWER CLEAN ENERGY GAINING MOMENTUM VOLUME 59 | FEBRUARY 29 - MARCH 29, 2016