Cooper awarded Indonesian oil fields

Cooper Energy Ltd (Australia) has been awarded a contract by state oil and gas company PT Pertamina to operate and develop the Sukananti, Tangai, and Bunian oil fields (Sukananti KSO) in South Sumatra.
The Sukananti KSO is located in South Sumatra, Indonesia, on trend with the Limau and Tanjung oil fields. The Bunian oil field is currently producing at 60 barrels of oil per day through a single well. The Tengai oil field was producing through four wells and the Sukananti oil field was producing through a single well but these are now shut-in, awaiting wellbore remediation and workover.
The three oil fields in the Sukananti KSO have produced 1.08 million barrels of oil to date. Cooper is looking forward to more fully developing the oil fields and recovering an additional 1 million barrels (P50) of oil.
Cooper's program consits of a signature bonus of US$861,888m 24 Km2 of 3D seismic, a new development well, 3 well workovers and infrastructure updates with total cost over three years of around US$6.8 million. Cooper's JV partner (10% interest) in the project is PT Mega Adhyaksa Pratama.

READ MORE!!!

Pertamina-PetroChina Cuts Output To Meet Gas Flare Rule

The oil production of the joint operating body (JOB) Pertamina-PetroChina East Java has been reduced by 3,000 barrels of oil per day in order to meet the gas flare target of a maximum of 14 million cubic feet per day, in line with the Law on Environment, said Chairman of the upstream oil and gas regulatory body BPMigas Raden Priyono Monday.

He however did not disclose the current production level of the JOB. But, on February 24, President Director of PT Pertamina EP Cepu, Haposan Napitupulu said as of the date, the JOB Pertamina-PetroChina has slashed oil production to 41,000 bopd from its capacity (normal production) of 48,500 bpd.

The oil produciton of the Kangean field has also been reduced by up to 2,500 bpd as it only produced water. Oil production of the Kodeco oil field has also been reduced by 4,000 bpd.

Pertamina also said it is expanding its overseas market for its downstream oil products, including aviation fuel (Avtur) and oil fuel. The company is planning to open gas stations in Malaysia and Australia, said Pertamina Marketing and Commercial Director, Djaelani Sutomo.

Priyono also said that the average oil production in the first two months of this year has reached 951,000 bpd, far below the 2010 State Budget assumption of 965,000 bpd. Average production in February alone was quite encouraging, at 959,000 bpd, just below the State Budget target. (Ferdy Hasiman)

READ MORE!!!

PGN-Pertamina JV

Two state-owned companies, PT Perusahaan Gas Negara (PGAS) Tbk and PT Pertamina, have finally signed the JV agreement for LNG floating storage and regasification terminal (FRST) to be built in West Java.

The JV agreement was signed today by PGAS CEO Hendi Prio Santoso and Pertamina CEO Karen Agustiawan, witnessed by SOEs minister Mustafa Abubakar and energy minister Darwin Zahedy Saleh.

According to the agreement, Pertamina controls 60% shares in the JV, while PGAS controls the balance. Pertamina will have its people as CEO and Director for operations of the JV, plus one commissioner, while PGAS will be represented by finance and administration director plus one commissioner.

LNG for the facility will be sourced from East Kalimantan for a combined 11.75 million tons in 11 years. The gas itself will be supplied to state-owned power producer PT Perusahaan Listrik Negara (PLN). The JV will start construction of the FRST this year.

READ MORE!!!

Elnusa seeks Rp4.46 trillion revenue

Oil and gas services company PT Elnusa (ELSA) Tbk is working on geoscience service contracts worth US$47.9 million, most of which will be accomplished this year. How about the new contracts? Well, the company has only secured US$2.8 million contract so far.

Elnusa told IDX this morning that geoscience projects in Sumatra and Java will mainly be accomplished this year, including the 3D land seismic in South Sumatra (US$4.9 million) and 3D seismic in Jambi (US$5.4 million). The largest, land seismic project in Java, worth US$34.8 million will be accomplished this month.

Until third quarter 2009, Elnusa reported revenue of Rp2.49 trillion, increased 51%, from the same period in 2008, where geoscience unit contributed Rp960 billion or about 56% of total revenue in the upstream oil and gas services business. Elnusa reported EBITDA of Rp398.92 billion in Jan-Sep 2009, surged 92% from the same period of 2008.

ELSA is targeting Rp4.46 trillion of revenue this year. The company expects geoscience services would contribute Rp1.44 trillion. Elnusa currently has market capitalization of Rp2.37 trillion. Pertamina is controlling shareholder of this company, followed by Tri Daya Esta. Recapital Advisors has yet to close the acquisition of Tri Daya Esta's 37% shares in this company.

READ MORE!!!

Pertamina CFO to be replaced

Government will replace Pertamina's finance director Frederick T. Siahaan and move him to new post as director for business development and risk management. Another important replacement will be on marketing director Achmad Faisal.

People at the ministry of state-owned enterprises said Frederick will be replaced by Evita Tagor, who is currently deputy for financing and risk management at the state-owned oil and gas company. Achmad Faisal, meanwhile, will be replaced by Hanung Budya, who is currently deputy marketing director. Bagus Sudaryanto and Triharyo Indrawan Soesilo will also be appointed director of upstream and processing respectively. Triharyo is currently president director of PT Rekayasa Industri, a subsidiary of state-owned fertilizer company PT Pupuk Sriwijaya.

New political landscape, new cabinet, new ministers, and as usual, new members of board of directors and commissioners at state-owned companies.  

READ MORE!!!

Widodo AS, new chairman of Pertamina?

Widodo AS, former military commander and coordinating minister for politic, security, law, and human rights, is tipped as candidate for president commissioner of state-owned oil and gas company PT Pertamina to replace Sutanto, who is now the head of National Intelligence Agency (BIN).

Widodo was cabinet member in 2004-2009. He is known as one of trusted aides of President SBY. Other name mentioned as candidate for the post is Sugiharto, former state-owned enterprises minister, who has reportedly been promised an ambassador job after he was kicked out from the cabinet in 2007.

The president commissioner position has been vacant since Sutanto's appointment as cabinet member. Sutanto replaced Endriartono Soetarto (also a former military commander) in 2008. In the board of directors, Karen Agustiawan, will be retained as CEO, while other board members will be replaced.

READ MORE!!!

Talisman acquires Hess interests in Jambi Merang PSC

Talisman Cooperatif U.A, a subsidiary of Canadian oil and gas company Talisman Energy Inc, acquires all of Hess Corporations' participating interest of 25% in Jambi-Merang block in South Sumatra Indonesia. Hess is the operator of the block in cooperation with PT Pertamina Hulu Energi, a subsidiary of state-owned oil and gas company PT Pertamina.

"This acquisition strengthen our position in South Sumatra area," said Ron Aston, vice president and general manager of Talisman Energy Inc as quoted by Kontan Online today.

Jambi Merang block is located next to Corridor Block where Talisman has 36% participating interest. Pertamina is the controlling shareholder in Jambi Merang with 50% shares, while the remaining 25% shares controlled by PT Pacific Oil and Gas. 

Hess Corporation also owns 75% participating in the Ujung Pangkah project and 23% in Natuna Block A PSC.

Oil slips below $79 per barrel today amid stronger US dollar.   

READ MORE!!!

Karen will stay, Omar?

State-owned enterprises minister Mustafa Abubakar confirmed on Tuesday that government will not replace Karen Agustiawan as the CEO of giant oil and gas company PT Pertamina. But it's almost certain that there will be no more vice president director position. So, how about Omar S. Anwar, who was appointed vice president director in February 2009?

"She will not be replaced. I want to end the speculation (about replacing Karen who was appointed CEO in February 2009)," Mustafa said.

How about Omar? "Let's see. But it's confirmed that there will be no more vice president director post for Pertamina," Mustafa said. Omar left PT Rio Tinto Indonesia to join Pertamina early last year. He became CEO of Rio Tinto after he left state bank Mandiri. He was consumer banking director at the largest bank.

READ MORE!!!

More Hamworthy systems for Pertamina ships

Hamworthy is supplying cargo systems for six ships being built in China for state-owned oil and gas company Pertamina, consisted of five products carriers and one LPG carrier. 

At the end of April Hamworthy signed a contract for five shipsets of cargo pumproom systems and engineroom pumps. The equipment is for five 30,000 dwt products carriers being built for delivery in 2010-2012 to Pertamina by Zhejiang Chenye Shipbuilding Co Ltd, newly established on the island of Daishan near Shanghai.

“Pertamina has supported us in the past decade with equipment orders for 25 tankers of various sizes built in Indonesia, where the previous two are under construction by PT Dok in Surabaya,” said Terje Bjornemo, Hamworthy’s global sales director for pumproom systems. 

READ MORE!!!

LNG Receiving Terminals

Two state-owned companies, PT Perusahaan Gas Negara (PGAS) Tbk and Pertamina, decided not to join forces in the construction of two LNG receiving terminals, Detik.com reported. 

Pertamina CEO Karen Agustiawan said Pertamina will build the West Java LNG Terminal, while PGN will build the North Sumatra terminal. Initially, both companies agreed, based on the heads of agreement signed in April 17, 2009, to establish a consortium to build the LNG terminals. In fact, state-owned electricity company PT Perusahaan Listrik Negara (PLN) also wanted to participate in the consortium.

Agustiawan said the West Java terminal will have installed capacity of 200-400 MMSCFD (equals to up to 3 million tons per year), while in North Sumatra with 100-150 MMSCFD. The West Java Terminal is designed to support two combined cycle power plants (Tanjung Priok and Muara Karang).

In East Java, PT Indogas Kriya Dwiguna, a subsidiary of PT Prime Petroservices, has also launched a plan to build LNG receiving terminals in Pesanggaran and Gilimanuk. 

READ MORE!!!

Pertamina pulled out from Iraq oil

State-owned oil and gas company PT Pertamina said it pulled out in the last minute of competitive bidding to manage oilfield in Iraq due to the unfavorable service contract scheme, Detik.com reported this morning.

Detik quoted Dwi Martono, director PT Pertamina Hulu Energy, a subsidiary of Pertamina, saying the service contract scheme is not feasible for the company to proceed. Pertamina is among 31 companies competing to operate six oil blocks and two gas fields in Iraq. 

READ MORE!!!

Exxon & farm out of Mandar & Surumana

Bisnis Indonesia reported today that ExxonMobil might farm out 20% participating interest in two blocks in Sulawesi---Mandar & Surumana---to Malaysia's Petronas Carigali. State-owned oil and gas company Pertamina also exercises the possibility to enter the race.  

ExxonMobil currently controls 100% participating interest in the blocks, off west Sulawesi. Exxon secured the Surumana PSC in September 2006, while Mandar in March 2007. BPMigas deputy chairman Ahmad Luthfi said Petronas and ExxonMobil are in intensive talks for the farm out deal.

Exxon failed to get significant reserves from the Rangkong-1 drilling well (dryhole), but expressed its commitment to proceed with the drilling of two other wells. Results from the second well drilled, Sultan, has yet to be known.

Petronas and ExxonMobil are long-time partners. Early this month, both companies signed production sharing contracts for further development of seven oil fields offshore Peninsular Malaysia namely Seligi, Guntong, Tapis, Semangkok, Irong Barat, Tabu, and Palas.

Exxon is also a partner for Pertamina in Cepu Block and Natuna D-Alpha. But the future of collaboration between the two companies in D-Alpha is pending government decision on the state-owned company's main partner. Exxon, Petronas, Shell, PTT, and StatOil are among oil majors mentioned as potential partners for Pertamina. 

READ MORE!!!

Pertamina got Offshore North West Java

State-owned oil and gas company PT Pertamina wins the competitive bidding to acquire 46% participating interest in the Offshore North West Java PSC from BP. 

The signing of SPA between BP and Pertamina is scheduled this afternoon in Jakarta. BP is the largest shareholder in the PSC, followed by CNOOC (36.72%), Inpex (7.25%), and Itochu Oil (2.58%). CNOOC was considered front runner in the auction.

ONWJ produces 24,000 bpd of oil and 220 mmscfd of gas. The block is key supplier for gas-fired power plants in Jakarta.

Pertamina agreed to pay US$280 million for 46% shares in ONWJ, the biggest upstream acquisition so far for Pertamina. Pertamina CEO Karen Agustiawan said the company will finance the acquisition from internal generated funds. "We have no plan to have other investors, we want to manage the 46% ourself," she said.

The ONWJ concession stretches from Cirebon in the east to the Seribu Islands in the west. The ONWJ facilities include 670 production wells, 170 platforms, over 40 processing and service facilities, along with approximately 1,600 km of sub-sea pipelines.

READ MORE!!!

PGN updates

As predicted, state-owned oil & gas company PT Pertamina has demanded renegotiation with PGN due to major delay of South Sumatra West Java gas pipeline. Financial impact for Pertamina is huge because the company should service USD270 million loan to JBIC. In contrast to PGN management's explanation that the delay is three months, Pertamina claims the delay is actually nine months.

"The initial schedule for operation was June 2006, but now PGN says March 2007," Rony Gunawan, Pertamina executive said.
PGN rejected the demand for price negotiation but willing to pay compensation (fines & take/pay clause). Pertamina plans to supply 250 MMSCFD. Slightly lower compensation would go to ConocoPhillips which supplies 230 MMSCFD as no fines applied.
The biggest chunk of the compensation will be for PGN's unability to absorb minimum 80% of gas supply under the take/pay clause. Under the contract with gas suppliers, PGN should absorb at least 150 MMSCFD in the first year of SSWJ pipeline. So, 80% means 120 MMSCFD. PGN revised its plan that the first three months, the company could only absorb 30 MMSCFD.
I think PGN should explain in details all the compensations to Pertamina & ConocoPhillips, financially. PGN did explain the issue in analyst meeting early this week that the low absorption this year would be compensated with bigger gas take next year (make-up gas). But when asked whether PGN should pay, the management said yes, but in 2008.
Meanwhile, Bapepam has started insider trading investigation over PGN shares that led the 40% crash last week.

READ MORE!!!

Bimantara divests Trans Javagas Pipeline

PT Bimantara Citra Tbk has divested all its shares in PT Trans Javagas Pipeline (TJP) to PT Kapital Usaha Sempurna, an unknown entity at undisclosed price.

TJP was established by Bimantara (49%), Tranaco Utama (28%), Adhiraksa Tama (5%), Pertamina Saving & Investment (10%), Bank Mandiri Pension Fund (3%), and PLN Pension Fund (5%).
TJP built the controversial 430 km gas pipeline in 1992 with USD440 million investment as a BOT project. Under the contract with Pertamina, the pipeline should be transfered to Pertamina by 2014.

READ MORE!!!

SBY vs JK in the brawl over SOEs

Below is the list of brawls between SBY & JK over important issues at state-owned enterprises, including the management selection (member of the board of directors plus commissioners). It's almost similar with their competition in overseas trips (state visits). It's everywhere! Anybody has the original version of SBY & JK memorandum of understanding on how they would share the power when they decided to join forces in 2004 election?

The recent 'mini' reshuffle at the state-owned oil and gas company PT Pertamina could well explain the brawl. "It's clear that the former chairman of board of commissioner Martiono Hadianto couldn't get along with board of directors. Internally, we could sense that," one Pertamina executive told me this morning.
"The replacement is not merely a management issue, it's a political issue. Everybody knows Martiono was seen as VP's man, while his successor has close relationship with the president," said one executive at SOE who happens to be proposed by MSOE Sugiharto as commissioner at Pertamina but failed to get approval from The Final Evaluation Team (TPA, which selects executives for SOEs).
"Now the balance at Pertamina is two VP's men and two president's men, another one represents SOE Ministry who happens to be close confidante of Sugiharto," executive at the MSOE said.
A week before that, major shakeup occured at another giant SOE, PT Perusahaan Gas Negara (PGN) Tbk. This time, Sutikno named as the new CEO, replacing WMP Simanjuntak (appointed president commissioner).
"Some says Sutikno got the position thanks to strong lobby from PAN's chairman Sutrisno Bachir. But don't expect they'll confirm that. Sutikno is known for his close relationship with Amien Rais, key patron leader of PAN. So, this is a political bargaining as well," another SOE executive said.
But where is the brawl?
"Actually, VP proposed other candidate for PGN but TPA picked Sutikno. As a result, there is on-going battle for other posts still vacant," the executive said.
The ugliest brawl is actually at PT Tambang Batubara Bukit Asam Tbk, the state-owned coal producer. TPA has yet to decide the executives and leaving the company in the hands of board of commissioners for almost one month now.
Similar situations have been emerged at other giant SOEs like PT Telkom Tbk and PT PLN. Look at how the board of commissioner of Telkom led by Tanri Abeng (key ally of VP) sent a letter to Sugiharto in late August asking for Arwin's replacement.

READ MORE!!!

Former military commander, new Pertamina chairman

Government appoints former military commander general (ret) Endriartono as the new president commissioner for the state-owned oil and gas company PT Pertamina replacing Martiono Hadianto. President SBY scored another victory over Vice President Jusuf Kalla? Besides Endriartono, another new member of Pertamina's board of commissioner is Irnanda Laksanawan, currently officer at the state-owned enterprises minister. Umar Said, Muhammad Abduh, and Maizar Rachman (former OPEC governor) are maintained as other members. No detail explanation available on why Martiono is replaced. Read full report on Endriartono & Irnanda's profiles.

READ MORE!!!

Gas: Export vs domestic pressures

President SBY should make an important decision early next week which may divide further the cabinet. He should decide whether to extend LNG export of 12 million tones/year to Japan or downsize it.

Japan is the largest LNG buyer which absorbs almost 68% of Indonesia's total LNG export. There are contracts to supply 12 million tones/year to Japan that expires 2010. The cabinet is clearly divided on this. Industry Minister Fahmi Idris echoed VP Jusuf Kalla asking for significant reduction in LNG export for the sake of domestic customers. Mr Idris even called a drastic cut of 50%.
Energy Minister Purnomo Yusgiantoro, as usual, is showing unclear position. One time he said that government will cut LNG export for the sake of domestic customers, but then he would say, we could still export LNG as long as we push the development of other gas fields in other areas.
Indonesian Chamber of Commerce & Trade had also urged government to ask more concessions from Japan should the LNG export maintained at the current level.
Pertamina president Ari Soemarno stated this week that based on existing proven reserves in East Kalimantan, Indonesia could only extend LNG export contract to Japan at 4 million t/y the most.

READ MORE!!!

Cepu-like scenario in Natuna D-Alpha?

Regional administrations in Central & East Java secured 10% participating interest in Cepu oil and gas project. Today, some newspapers quoted Riau Islands governor Ismeth Abdullah saying his administration would ask the same in the Natuna D-Alpha project to be renegotiated between Indonesia government & ExxonMobil/Pertamina. That would make the process even more interesting to watch.

READ MORE!!!

Cost recovery claims & US$2.5bn state loss

The Supreme Audit Agency (BPK) found potential loss to the state of US$2.5 billion of cost recovery claimed by five oil and gas contractors, Tempointeraktif.com reported.

BPK has just audited five of the contractors. They are Chevron Pacific Indonesia, ConocoPhilips Grissik, PetroChina Jabung, Medco Rimau and Pertamina-BSP. BPK blamed on Upstream Oil and Gas Regulatory Body (BPMigas) for the potential losses as the agency is seen non decisive enough. BPK also asked government to review the production sharing contracts (PSCs) to have them clearly state what costs could be recovered.

Details are as follows:
Charges on interest recovery:
- Chevron: USD4.95 million
- Conoco: USD170.4 million
- PetroChina: USD23.98 million
Third party contracts:
- GSEA contract between Conoco & Chevron: USD5.46 million
- Electricity supply contract between BOB Pertamina & Chevron: USD20.04 million
- Electricity supply contract between Chevron & MCTN: USD210 million & USD1.23 billion
- Duri oil-gas exchange between Chevron & Conoco: USD4.2 million

OTHERS:
- Collection station modification at Chevron: USD33.979 million
- Investment credit charges for gas operation at Conoco: USD379.5 million (no legal grounds)
- First Tranche Petroleum at Conoco: USD442.19 million during 1997-99 & 2000-2004 (no legal grounds)

Unfortunately none of the companies audited clarified the findings so far. Considering the amount that big, if they're true, so much at stake for these oil giants, especially Chevron & Conoco, both listed in the world's stock exchanges. The scope of audit, I think, has been limited to certain operation of these giants and that would potentially lead to another major findings. It's interesting to see what will be their responds.
BPMigas, as reported by Tempointeraktif.com, simply said it would follow-up the findings and cross-check them with the contracts.
To my surprise, even BPMigas admitted, donations from these oil/gas contractors made to tsunami victims could be charged as cost recovery item as long as it's stated in the contract. Such donation could be considered the company's corporate responsibility & community development program and it's reimbursed.
To me, it isn't fair at all. These companies got so much publication when they gave the donation, perceived as good citizens, and have led people to think how generous they are while actually it's the state/people who pay for it through cost recovery scheme.

READ MORE!!!