PERTAMINA TAKE OVER ROKAN BLOCK, POTENTIAL STATE INCOME RP825 TRILLION

JAKARTA - After successfully restoring the Mahakam Block to PT Pertamina (Persero), the government now provides 100% of oil and gas working area with the largest oil production in the country, Rokan Block, to the state-owned company.

The management of the Block Block became the headline theme for Wednesday's edition of Bisnis Indonesia (1/8/2018). Here's the report.

The government decided to provide Rokan Block management to PT Pertamina (Persero) starting August 2021 after the proposal was better than the existing contractor PT Chevron Pacific Indonesia.

Pertamina is given the right to manage the Rokan Work Area (WK) for 20 years (August 2021-August 2041).

Deputy Minister of Energy and Mineral Resources (ESDM) Arcandra Tahar said this decision was taken based on the evaluation of the Rokan Block management proposal proposed by Pertamina and operators exist PT Chevron Pacific Indonesia.

"After seeing the proposal submitted on Tuesday [Tuesday] at 5 pm, the government through the Minister of Energy and Mineral Resources stipulates the management of the Rokan Block starting [August] 2021, over the next 20 years, to Pertamina," he said in a press conference Tuesday / 7/2018).

Against the block that currently has an average crude oil output of around 200,000 barrels per day (bpd), Arcandra said Pertamina proposed a signature bonus of US $ 784 million or around Rp11.3 trillion.

Pertamina also offers a definite work commitment on the oil and gas block worth US $ 500 million or Rp. 7.2 trillion. The potential revenue of the country in the next 20 years, he added, worth US $ 57 billion or around Rp825 trillion.

The potential of this state revenue is expected to give goodness to the whole of Indonesia. "The offer from Chevron is far below the offer submitted by Pertamina," he said without disclosing detailed details.

The government affirmed that the management of the Rokan Block to Pertamina is not based on political pressure. Arcandra said, the decision to remain silent from the results of the comparison of the commercial side of Pertamina's proposal and the existing operators of Chevron Pacific Indonesia.

"We compare the commercial side. We know that anyone managing the Block Block or termination block must be able to provide more than the previous contract, "he said.

The commercial side is seen from signature bonuses, definite work commitments, country potential, and ministerial wisdom. This policy is because the contract scheme uses gross split.

The government, Arcandra said, approved Pertamina's proposal to use ministerial policy on the 8% profit sharing. The government also stressed that the decision to manage the Block Block submitted to Pertamina would not affect the completion of the deep sea oil and gas project or Indonesia Deepwater Development (IDD).

Arcandra added that the government will evaluate the sustainability of each working area (WK). Thus, the settlement related to IDD will still be seen further. "I think we see WK per WK in this case Rokan For IDD, after this we will evaluate it according to the time we agreed together for how we evaluate IDD."

The IDD project is currently being developed by PT Chevron Pacific Indonesia which is also an existing contractor of the Rokan Block. Until now, the government is still waiting for a new IDD proposal after the release of the Makassar Strait from the project.

For your information, almost every year the realization of ready-use production (lifting) from WK Rokan is superior to other WK.

However, based on data from the Special Unit for Upstream Oil and Gas Business (SKK Migas), the realization of oil and gas lifting blocks in the first half of 2018 has been taken over by Cepu Block.

SHARE DOWN

On the other hand, the space for action to release share or share ownership still exists even though the government gives 100% management to Pertamina.

Arcandra said the provisions related to the division of the downs will be in the terms and conditions (T & C) that have been agreed and set forth in the document.

"There will be a sentence there about the condition of the stock going down. Stipulated by Pertamina as the manager of the Block Block, there is already an agreed T & C. Only stated in the document that can be signed in the next few days," said Arcandra.

Amien Sunaryadi, Head of Special Working Unit for Upstream Oil and Gas Business Activities (SKK Migas), said that by signing a production sharing contract, the next focus is Pertamina's cooperation with Chevron as its existing contractor.

"To carry out transitional activities until 2021 to maintain production levels so as not to fall," Amien said.

Plt. Pertamina President Director Nicke Widyawati claimed that the proposed Pertamina proposal related to the management of the Rokan Work Area was better than Chevron.

He said in the proposal that his party not only calculate the economic management of the block which will end in 2021, but also take into account the long-term impact of the downstream side.

He believes that is what makes Pertamina able to win the Rokan Block. According to him, the three aspects that become assessment parameters, such as signature bonuses, definite commitments, and split calculations offered by Pertamina are also superior.

"So I mentioned that 100% went to our refinery. We compared the combined upstream downstream regardless of the portion the government would go to our refinery as well. This also reduced imports," he said. Nicke said Pertamina would use outside funding sources for investment. A number of banks, he said, have even given financing commitments. On the other hand, Pertamina's management is also optimistic that it can increase production to 500,000 barrels per day by drilling 7,000 new wells.

Meanwhile, Pertamina's Upstream Director Syamsu Alam added that in the initial management, the company would focus on areas that have not been managed by the current contractor, Chevron.

"If it works better, it is easy to withstand the decline, so that production of 2021 in the future will not drop much, hopefully we can increase it, especially if the improved oil recovery program works well," he said.

Meanwhile, Senior Vice President of Senior Gonverment and Public Affairs of Chevron, Yanto Sianipar, was not prepared to provide further explanation regarding the government's decision on the Rokan Block.