Interview: Pertamina wants to be No. 1 oil, gas producer in Indonesia in 2011
Thursday, November 5 2009 - 04:16 AM WIB
Question: Pertamina is targeting to become No. 1 oil and gas producer in Indonesia by 2011. Could you elaborate?
Answer: Oil output target of Pertamina E&P for 2009 amounts to 125.5 mille (thousand) barrels per day (mbpd ). From January through September, the realized output is 125.8 mbpd. We officially reported the figures during the managerial meeting of PT Pertamina (Persero). As a matter of fact, the production averaged 132 mbpd. Since there was a 3,500 bpd decline in condensate production at Kambuna TAC, the average level dropped to 125.8 mbpd. Last year, our output stood at 116.6 mbpd, while next year we are targeted to produce 128 mbpd.
How?s about gas production?
Our gas production target for this year amounts to 1,123 mmcfd. Last year, (our gas production reached) 1,003 mmcfd. The realized gas production has thus far reached 1,080 mmcfd, around 98.4 percent of the yearly target. This is mainly because we have not found new gas, but only maintain the existing gas. We know gas reserves continue to decline. Our main production centers are located in Pagar Dewa and Subang.
Which fields mainly produce the oil and gas?
The main producing block is Subang, West Java with an output of 80 something mmcfd Next, the L Parigi field, also in West Java, whose production level is maintained at 70-80 mmcfd. Next, Musi and Pagardewa blocks in South Sumatra with a total output of 450-460 mmcfd.
The biggest oil field
In the Java region. First, the Sukowati field in Mudi block, with an output of 40 mbpd. Mudi block is operated by Pertamina-PetroChina JOB. Eighty percent of the Sukowati structure is situated in Pertamina E&P area, thus we are entitled to 80 percent of the output. The (remaining 20 percent) initially belonged to ExxonMobil. It later divested it as part of the bargain for Cepu block. Next, the Tambun field in Bekasi with an output of 12-13 mbpd and the Limau field with an output of 12 mbpd. (The production of) Tambun will be ramped up to 15 mbpd, mainly from the Pondok Tengah field which is now in the phase of construction.
So, how much is Pertamina E&P?s production target for 2011?
Equivalently, Pertamina?s (Persero) production target for 2011 is 570 mille (thousand) barrels oil equivalent per day (mboepd). Current output is 185 mboepd, to which Pertamina E&P contributes 130 mboepd.
Let me explain. Pertamina?s vision to become number one oil and gas producer in Indonesia by 2011 is achievable on several conditions, including that it develop working areas outside the existing ones.
For instance, when the TAC held by Medco (Energi International) recently expired, we took it over and develop it by ourselves. Poleng TAC and West Madura PSC will follow suit.
Meaning it can?t be achieved, relying only on production from the existing fields?
Correct. The target can only be achieved through both organic and non-organic growth.
In order to become the largest gas producer in 2011, we have to surpass the production of Total Indonesie, which is now the prime gas producer. Equivalently, Total Indonesie?s gas production is reaching 562 mboepd this year. The output is expected to increase to 561 mboepd next year, before declining to 540 mboepd in 2011.
Meanwhile, the main oil producer is Chevron. In 2008, Chevron?s production stood at 413 mboepd and is reaching 384 mboepd this year. In 2010, it will produce 357 mboepd and, in 2011, 337 mboepd. We got the data from various sources.
In comparison, the production targets of PT Pertamina E&P through 2011 are as follows. In 2008, our output stood at 290 mboepd. This year, we have targeted between 390 and 400 mboepd. For next year, we hope to produce 530 something mboepd and 570 something mboepd in 2011. That is our ultimate goal. Please note the production growth should be supported by both organic and non-organic growth.
We also made initiatives both in production and exploration to increase output. Internally, we encourage transformation in all lines. We drive the performance of each line, each employee.
So, with regards adding working areas, the non-organic working areas, we shall mostly acquire production working areas whose contracts are going to expire. This will increase our output instantly.
We thus want a long-term production growth. During the recent National Summit, we propose that the government issue a regulation obliging production sharing contractors wishing to extend their contracts to first offer (part of their stake) to us or (other) national oil companies. We shall evaluate whether we need it or not. As the upstream division of Pertamina, we expect the task of managing the blocks.
Is there a plan to acquire a production block in the near future?
There is an area which we have proposed the corporate management to acquire. Its production is not big. However, if it is developed using our facilities, it will be profitable because it is located close to our area. We shall be able to increase its output. It is located in Kalimantan. But, we can?t unveil its name.
Which areas are now the backbones?
Now, our backbone is Limau field in South Sumatra. Previously, it produced 12 mboepd. Now, the output has increased to 15 mboepd. We hope it to further increase to 20 something mboepd from 2010 through 2011. Now, Sumatra region?s production stands at 22 mboepd. Next, Tambun field in Bekasi with an output of 12-13 mboepd. Meanwhile, Pondok Tengah field, near Tambun, is now in the phase of construction and will be handed over to the operation-production division. We project Tambun to be able to produce 15 mboepd.
In Java, the Gundih field is projected to come onstream in 2011 or early 2012 with an estimated production of 470 bpd of oil and 49 mmcfd of gas. Next is Tanjung field in South Kalimantan which is implementing an enhanced oil recovery (EOR) project using surfactants. Field test is in progress. The production of Tanjung now stands at 5-6 mboepd. The EOR project is expected to increase the output by 30 percent.
How much is the capital expenditure that you prepare?
This year, we are to spend almost Rp 19 trillion (US$=Rp 9,580). In 2010, investment alone will reach Rp 12 trillion in addition to operational costs of Rp 11 trillion. For 2011, we shall allocate Rp 10.6 trillion for investment and Rp 8.9 trilion to cover operational expenses. Thus, the amount will decline compared to the previous year?s. This is because there are a lot of maintenance projects that we shall carry out in 2010.
How about exploration activities?
Our (exploration) drilling activities increase every year. This year, we conduct 30 exploration drillings. In 2008, we made 29 drillings. For 2010, we plan 29 exploration drillings, aside from 12 drilling projects aimed to speed up exploration to find additional reserves and for production. Our focus in 2010 is to find or explore wildcat wells but on delineation wells. This is to appraise reserves in a bid to categorize reserves and map the locations of reserves more accurately. Our guys that handle exploration has carried out a re-engineering program and formulated a new concept. For instance, next year (we shall) carry out re-entry drilling program etc.
What is your discovery rate this year?
Our discovery rate is on target. Of the 20 exploration wells (that we have explored this year), there are five which we consider uneconomical.
That means you discovered 15 wells?
Correct. But, that?s well basis. There are wells which contain 5 mmcfd of gas or 9.
The success ratio is high though
The ratio is of course high. Of the 20 exploration wells, four are in progress, five are dry holes, 11 are discovery wells. But, we don?t want to be too optimistic. We have yet to calculate their well basis. We would rather be conservative. We shall publicize what is certain. We used to have a bad experience with Pondok Tengah.
We also carry out seismic program. Our achievement is 120 percent of the target. Our target for 2 D seismic for this year is 1,232 km. Until the end of the year, we expect to complete 1,990 km. With regards 3D seismic program, we project to finish 1,098 sq km of the targeted 1,224 sq km, due to licensing obstacles on the field.
For exploration drilling next years, which areas will you focus on?
Java and Sumatra. In Kalimantan, we only plan to make three or four drillings, that is in Sangatta. In Papua, one well.
Is KSO (joint operation) part of Pertamina E&P?s program?
The KSO works this way. For instance, we saw a main focus area. In the beginning, Pertamina E&P wanted to handle it, but it is now handled by PT Pertamina Hulu Energy (PHE). It?s us who proposed it to be handled by Hulu.
What about TAC (Technical Assistance Contract)?
The original idea of TAC was that we invite third parties which have technology, capital to assist us in developing certain fields. Now, there are 31 TAC (working areas). We categorize TAC operations into three. First, the green color, indicating the TAC holders meet their commitment. They usually have good production. Secondly, the yellow color, meaning the TAC holders meet their commitment inconsistently. The red color means the TAC holders have failed to meet their commitment for three years. Usually, we immediately terminate their contracts.
Are there fields scheduled to come onstream over the next three years?
The Melandong complex in Kerawang-Bekasi, West Java, which has Karang Enggal, Karang Tunggal fields. (They are scheduled to come onstream) by approximately end-2010 or early 2011. By our conservative estimation, their oil production may reach 858 bpd. The crude is of light type, similar to Tambun?s. We shall conduct clustering there and, after that, propose plan of development (PoD) to BP Migas.
Meanwhile, we shall also get gas output from the Java Gas Development Project (Proyek Pembangunan Gas Jawa or PPGJ). It is now in the process of getting EPC (Engineering, Procurement and Construction) contractor. We are going to put the project into tender soon.
Gas from Gundih?
Gas from Gundih will be diverted to Tambak Lorok, West Java (The Tambak Lorok power plant owned by state owned electricity firm PT Perusahaan Listrik Negara (PLN). A supply commitment has been signed with a production volume of 60 mmcfd, a contract period of five years starting from 2012.
Suci Block?
Suci in East Java. That is a KSO area. There isn?t yet any development. Our KSO partner is Indelberg. The risk is high over there.
Suban field?
Regarding West Suban, intensive discussion with ConocoPhillips is now in progress. We have to further assess the technical and economic aspects (of the field). I expect it (the discussion) to be finished this year. The problem is the differences in calculating reserves. With regards gas price, there isn?t any disagreement between Pertamina and Conoco as far as existing contracts are concerned. However, we should be consulted in case there are new contracts. I target to finish it (the discussion) this year.
Will ONWJ be handed over to PHE?
If it (a field) is a partnership, meaning there are other parties there, it will be handed over to PHE. If the field is wholly owned by Pertamina, it will be handled by Pertamina E&P. With regards JOB, for instance JOB with PetroChina, Pertamina remains the operator in a partnership with PetroChina. ( end )