Oil and Gas Activities in Indonesia in First Half of 2021

SSV Catarina drilled 5 Merakes development wells and the successful Maha-2 exploration well in ENI’s West Ganal block. Photo courtesy of Akhmad Syafrial.

The upstream oil and gas operators in Indonesia contributed 6.67 billion USD of revenue for the government of Indonesia in the first half of 2021. This amount is 91.7% of the full-year Indonesian government revenue target from E&P activities in 2021.

Mr. Dwi Soetjipto, the head of SKK Migas, is thankful that the 2021 first-half revenue contribution was better than expected in a meet-the-press event on 16 July 2021.

Here are the results from the oil and gas exploration and production activities in Indonesia in the first half of 2021 according to SKK Migas.

Oil Lifting Costs

The oil industry managed to lower the oil and gas production cost in 2021. The average production cost in the first half of this year is USD 12.17 per BOE (barrel of oil equivalent) whereas it was USD 13.71 per BOE in the same period last year. 

Oil and Gas Production

The average oil production in the first half of 2021 is 667,000 BOPD. This is below the 705,000 BOPD target set by the government for 2021.

The average gas production is 5430 MMSCFD in the first six months of 2021. This is below the 5638 MMSCFD targets of the government for 2021.

To make up for the shortfall of oil and gas production, SKK Migas is asking the oil operators to speed up their work programs.

The average combined oil and gas production in the first half of 2021 is 1.64 million BOEPD.

Proposed Incentives

To stimulate oil and gas exploration and production in Indonesia, SKK Migas is pushing for government approval on several incentives.         

The three incentives that are currently being proposed are:

  1. Providing a certain type of tax holiday to all oil and gas operators
  2. Reducing the processing fees charged by the Badak LNG plant to US$0.22 per MMBTU.
  3. Lowering tax paid by companies who provide certain types of goods and services to oil companies.

Completed Oil and Gas Projects in Indonesia

Seven upstream oil and gas projects out of the 12 targeted for 2021 have been completed in the first half of this year, according to SKK Migas.

These 1.46 billion USD projects contributed 9850 BOPD of new oil and 475 MMSCFD of gas.

Here are the 7 completed projects:
1. First phase production from Belato-2 oil field by Seleraya Merangin Dua in South Sumatera

2. EOR in Jirak Field by Pertamina EP in South Sumatera

3. Development of KLD gas field by Pertamina Hulu Energi ONWJ

4. Gas Supply to the Balikpapan refinery from Bontang by Pertamina Hulu Mahakam

5. West Pangkah field development by Saka Indonesia Pangkah Ltd

6. Merakes gas field development in East Sepinggan block by ENI

7. Gas supply from South Jambi B block to PLN Jambi by Jindi South Jambi B.

The Jambaran Tiung Biru Project

SKK Migas is working closely with Pertamina EP Cepu on the development of the significant Jambaran Tiung Biru project. This gas field development project in East Java is categorized as a national strategic project.

The Jambaran Tiung Biru project is more than 90% complete and gas production is expected to come on stream in the fourth quarter of 2021.

Plans of Field Development

SKK Migas approved 14 plans of field development (POD) that will potentially increase the oil and gas reserves by 131.2 million barrels of oil equivalent (BOE).

Exploration Drilling and Discoveries

Oil operators completed seven exploration wells with the following results:

  • Gas discovery in two wells: Maha-02 and Fanny-02
  • Oil discovery in two wells: Hidayah-01 and MSDE-01A
  • Three dry wells: Barakuda-1x, NSD-1 ExpTail and Plajawan Dalam.

The P50 reserves from Well Hidayah-01 are 87 MMBOE. The P50 combined reserves from wells Maha-02, Fanny-02, and MSDE-01A are 154 MMBOE.

P50 reserves are oil and gas reserves that have a 50% or greater probability of being recovered from a petroleum asset.

Drilling, Workovers, and Seismic Survey Activities

  • Number of development wells drilled – 186
  • Number of exploration wells drilled – 13
  • Number of workovers – 309
  • Number of well services – 11307
  • 2D seismic survey completed – 1917 Km
  • 3D seismic survey completed – 673 Km2

This article is adapted by Jamin Djuang based on the information provided by SKK Migas. He is the Chief Learning Officer of LDI Training.

Oil and Gas Activities in Indonesia in 2020

The upstream oil and gas industry of Indonesia invested 10.21 billion US dollars and performed well in 2020 according to SKK Migas, the special task force in charge of upstream oil and gas activities of oil companies in Indonesia.

The oil and gas industry of Indonesia successfully met and even exceeded some of the 2020 targets that were set by the Indonesian government in the following key areas:

  1. Reserve Replacement ratio (RRR).
  2. Oil lifting
  3. Controlling the cost recovery
  4. Revenue intake by the government
  5. Completion of oil and gas projects

RESERVE REPLACEMENT RATIO

The reserve replacement ratio in 2020 is 101.6%. The oil industry added 705 MMBOE of reserve in 2020.  

OIL AND GAS PRODUCTION

The average daily oil lifting in 2020 is 706,000 BOPD. This exceeded the government target of 705,000 BOPD.

However, daily gas production in 2020 is 5461 MMSCFD. This is below the government target of 5556 MMSCFD.

COST RECOVERY

The amount of cost recovery in 2020 is US$ 8.12 billion which is in line with the government expectations.

OIL REVENUE TO GOVERNMENT

The oil industry contributed US$ 8.4 billion of revenues to the Indonesian government. This amount is 41% higher than the expected amount of US$5.86 billion.

COMPLETION OF EXPLORATION AND PRODUCTION PROJECTS

Fifteen oil and gas projects went on stream in 2020. These new projects added 9182 barrels of oil per day and 111 million SCF of gas per day.

3199 Km of 2D seismic and 1251 Km2 of 3D seismic surveys were completed in 2020.

SKK Migas was active and running in 2020 to keep the oil and gas exploration and production activities at a high level. Here are some of the key actions that SKK Migas undertook in 2020: 

  • SKK Migas signed twenty-four PSC side letters and sixty-one letters of agreement (LoA).
  • The government reduced the prices of gas sold to domestic companies to stimulate economic growth.
  • Allowing oil and gas operators to delay topping up the Abandonment and Site Restoration fund.
  • Eliminating the costs to oil operators of using government assets in their exploration and production activities.
  • Allowing oil companies to accelerate asset appreciation.
  • SKK Migas and Chevron Pacific Indonesia signed the Heads of Agreement to ensure the continuity of a high level of activities such as well drilling and production optimization in the Rokan Block during the final phase of the PSC contract. Chevron will hand over the operatorship of The Rokan block to Pertamina when its production sharing contract expires in August 2021.
  • SKK Migas approved the Plan of Development (POD) submitted by Repsol for the development of the huge Kaliberau gas field having 445 billion SCF of gas reserve in the Sakakemang block. The total investment in this project is estimated at 359 million US dollars.

PERFORMANCE OF THE OIL AND GAS OPERATORS IN 2020

Here are the top nine oil and gas operators who exceeded their oil production targets in 2020.

  • Chevron Pacific Indonesia
  • Pertamina Hulu Mahakam
  • Pertamina Hulu Energi ONWJ  
  • Pertamina Hulu Energi OSES
  • Petrochina International Jabung
  • Medco E & P Natuna
  • Pertamina Hulu Sanga Sanga
  • Medco E&P Rimau
  • JOB Pertamina – Medco Tomori Sulawesi

Here are the top nine oil and gas operators who exceeded their gas production targets in 2020.

  • BP Berau
  • Pertamina Hulu Mahakam
  • Eni Muara Bakau BV
  • JOB Pertamina – Medco Tomori Sulawesi
  • Premier Oil Indonesia
  • Petrochina International Jabung
  • Medco E & P Natuna
  • Kangean Energi Indonesia
  • Pearl Oil (Sebuku)

EXPLORATION AND PRODUCTION TARGETS FOR 2021

Being optimistic that Indonesia will meet the target of 1 million BOPD and 12 BSCFD of gas by 2030, SKK Migas is committed to keeping oil and gas production high in 2021. Here are its ambitious targets for oil and gas activities in 2021:

  • Daily oil production – 705,000 BOPD. This is the same target as in 2020.
  • The number of exploration wells – 43. This is a significant increase from 28, the actual number of exploration wells drilled in 2020.
  • The number of development wells – 616. This target is much higher compared with the 240 development wells drilled in 2020.
  • Number of workovers – 615
  • Number of well services – 26,431
  • 2-D seismic survey – 3569 Km
  • 3-D seismic survey – 1549 Km2

The Indonesian oil industry performed well in 2020. Mr. Dwi Soetjipto, the head of SKK Migas said: “The year 2020 was a difficult year for many oil operators due to the Covid 19 pandemic and the low oil prices. Nevertheless, the oil industry of Indonesia was able to meet several targets set by the government. Hopefully, this will help the country’s economy.”

This blog article is adapted from “Kinerja Hulu Migas Gemilang Sepanjang 2020” published by SKK Migas on 4 January 2021.

This article is adapted from SKK Migas news by Jamin Djuang – Chief Learning Officer of LDI Training.