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This Year’s Upstream Oil and Gas Investment Target Under Threat

This year’s upstream oil and gas investment target is under threat. Per July 2018, actual upstream oil and gas investment was just US$ 6.2 billion, against a target of US$ 14.2 billion. Investment in the sector has decreased consistently since 2014. That year, upstream oil and gas investment reached US$ 21.7 billion, before dropping to US$ 17.9 billion the following year. In 2016, the figure was around US$ 12.7 billion. Last year, it fell to a low of just US$ 11 billion.
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Nicke Officially Named Pertamina’s President Director

The Ministry of State Enterprises has appointed Nicke Widyawati President Director of Pertamina. The position has been vacant for four months since the dismissal of Elia Massa Manik. Nicke was appointed based on Resolution of a General Meeting of Shareholders SK 232/MBU/08/2018, dated 29 August 2018. The resolution sets out the transfer of duties, dismissal and appointment of members of the board of directors of Pertamina. Nicke was recommended as the most experienced candidate following four months as Acting President Director. Nicke has been in the position since Elia Massa Manik left on 20 April 2018. Prior to joining Pertamina, this Bandung Institute of Technology graduate was Director of Corporate Planning at PLN. Nicke has also held the posts of President Director of Mega Eltra and Business Director and Vice President Corporate Strategy Unit (CSU) at Rekayasa Industri (Rekind).
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Chevron Appoints New Boss for Indonesia and Philippines

Chevron IndoAsia Business Unit (IBU) has appointed Kevin Lyon as its new Managing Director, replacing Chuck Taylor who is retiring after 38 years in the business. Lyon will take over from Chuck on 1 October. 52-year-old Lyon will oversee the management of Chevron’s exploration and production activities in Indonesia and the Philippines. According to the official Chevron website (29/8), in his 30-year career Kevin has held a number of technical and management positions in Bangladesh, Indonesia, Nigeria, the Netherlands, Philippines, and United States. Prior to taking up his current position as IBU Special Advisor, Kevin was Country Manager and President Chevron Bangladesh.
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Approval of Tanjung Enim PoD Expected Next Month

In April, NuEnergy submitted a plan of development (PoD) for Tanjung Enim to the Upstream Oil and Gas Regulatory Special Task Force (SKK Migas). The Ministry of Energy and Mineral Resources is now finalising the first PoD for this non-conventional block. If everything goes to plan, the PoD will be approved in the near future. Representing the Minister of Energy, the Director General of Oil and Gas visited the region last month for consultations. If the PoD is approved, it will be a turning point in the history of coal bed methane gas production, marking the future production of 54 CMB blocks. Tanjung Enim has the capacity to produce around 97.42 bscf for 15 years. The estimated date for the start of operations is 2020, and the gas should begin to flow the following year.
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Crude Imports Could Slide More than 50 Percent

If all oil contractors sold the oil they produce to Pertamina, the company could get additional supply of 325 thousand barrels per day (bpd). However, according to the Director General of Oil and Gas at the Ministry of Energy and Mineral Resources, Djoko Siswanto, Pertamina will only get an additional 225 thousand bpd. The difference in the figures aside, increasing the oil supply to Pertamina will have an impact on imports. Currently, the state owned oil and gas giant is importing 400 thousand barrels of crude per day. As well as reducing imports, a ban on export would boost Pertamina’s finances. The company would reduce its spot imports. Pertamina is currently working out the details of this oil purchase plan with the respective production sharing contractors (PSCs).
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B20 Draws Closer, But Only Two Firms Have Signed Contracts 

The policy requiring that refined fuel oil have a 20 percent vegetable oil mix known as B20 will come into effect on 1 September. But as of yesterday, only two fuel distributors had signed contracts with fatty acid methyl ester (FAME) suppliers. According to Decision of the Minister of Energy and Mineral Resources No. 1936 K/10/MEM/2018, eleven fuel distributors should have signed contracts. One of the companies that has signed contracts is ExxonMobil Lubricant Indonesia, which has signed contracts with Cemerlang Energi Perkasa, LDC Indonesia and Sinarmas Bio Energy. Under these contracts, ExxonMobil gets a supply of 73,050 kilolitres of FAME from the three oil palm companies. The other firm that has signed contracts is Petro Andalan Nusantara. The company has contracts with Wilmar Bioenergi Indonesia, Wilmar Nabati Indonesia and Multi Nabati Sulawesi, for a total of 60,000 kilolitres of FAME. The nine other firms that have yet to sign contracts have heads of agreement (HoA).
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AKR Claims to Have Reported August Fuel Price Hike

AKR reported price increases for its RON 92 and RON 95 fuels this month to the government. The price hikes come on the back of the continued rise in world oil prices and a sluggish rupiah exchange rate. For distribution of refined fuel oils, AKR has formed a joint venture with BP, with paid up capital of US$ 24 million. The joint venture, which is called Aneka Petroindo Raya, is currently working on the construction of several fuel stations. The plan is to complete the construction of 30 filling stations by 2019 across Java and Sumatra. AKR sees big opportunities in the non-subsidised refined fuel segment, which includes RON 90, RON 92, RON 95 and diesel fuels. Development of infrastructure in recent years, including new toll roads, is expected to drive demand for non-subsidised fuel in the transportation sector.
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Growing Its Upstream Oil and Gas Business, Wintermar Secures Rp 1.1. Trillion Contracts

Per 31 July, Wintermar Offshore Marine had secured contracts worth US$ 77 million or around Rp 1.1 trillion, up from US$ 69 million the previous month. The majority of these contracts are in the upstream oil and gas business. Some are projects that were postponed in the first half of the year that came on line in the second half. However, Wintermar refused to give any details of its contracts target. These new contracts include oil tanker business in the Natuna Sea and renewal of contracts for projects in the Cepu block, Central Java. Shipping firm Wintermar is partner to many major multinational oil and gas firms. As of the first half of this year, the company had a fleet of 65 offshore vessels, but in during the same period, utilisation of operating vessels was just 64 percent.
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RI’s Push to Nationalize Assets Could Chill Foreign Investment
As reported by The Jakarta Post, Indonesia is pushing to nationalize more of its oil and gas assets as it tries to reduce imports and boost government revenue amid emerging market turbulence that has staggered Southeast Asia’s biggest economy. Since 2015, whenever product-sharing contracts with international companies expired, the government increased state-owned Pertamina’s stakes in the related oil and gas fields. The goal is to accelerate a four-year-old plan that aims to send domestic crude oil to Indonesian refineries for local use.

But experts say that the move is risky because it discourages investors and global energy companies whose expertise is crucial in maintaining Indonesia’s output.“Getting rid of the international oil companies’ involvement means Pertamina will be losing valuable technical and operational know-how,” said Den Syahril, a senior oil analyst at consultancy FGE, adding that it could result in “lower productivity at its fields”.
OPEC to Discuss Compensating For Iranian Supply Drop After U.S. Sanctions
OPEC will discuss in December whether producers can compensate for a sudden drop in Iranian oil supply after U.S sanctions against Tehran start in November, the head of Iraq’s state-oil marketer SOMO, Alaa al-Yasiri, told Reuters on Wednesday.  Yasiri said a sudden drop in Iran oil exports will have a negative impact on prices and market fundamentals. “A sudden drop in Iranian crude shipments from the market will cause big shortages and a negative impact on oil prices,” he said, referring to a possible increase in prices. “It’s very difficult to predict what’s going to happen in next OPEC meeting but producers must find ways to make up for Iranian crude that the market will lose. The major issue during next OPEC meeting will be are producers really ready to pump more oil to compensate Iran’s share,” he added.
Brazil Regulator Approves Shell, Total, BP, Others For Pre-salt Oil Bids
Brazil’s oil industry regulator ANP said on Wednesday it has approved six energy companies to bid for four pre-salt blocks in the Campos and Santos Basins to be auctioned on Sept. 28. The companies approved to bid are Shell, Total, BP, Germany’s DEA, QPI from Qatar and Chinese-owned CNODC Brasil Petróleo e Gás Ltda. The fifth pre-salt round is the last chance for oil companies to lock in stakes in Brazil’s coveted offshore oil deposits before the country’s October presidential elections, the uncertain outcome of which could change the rules for future auctions.
Oil Rises to Multi-week Highs on U.S. Stock Draw, Falling Iran Exports
Oil prices rose more than 1 percent on Wednesday, with Brent at its highest in seven weeks and U.S. crude touching a three-week peak, supported by a drawdown in U.S. crude and gasoline stocks and reduced Iranian crude shipments as U.S. sanctions deter buyers. Brent crude LCOc1 jumped $1.19, or 1.6 percent, to settle at $77.14, after touching $77.41, its highest since July 11. U.S. oil CLc1 settled 98 cents, or 1.4 percent higher at $69.51 a barrel, after touching $69.75, its highest since Aug. 7. U.S. crude inventories USOILC=ECI fell 2.6 million barrels last week, the Energy Information Administration (EIA) said, exceeding the 686,000-barrel draw forecast by analysts polled by Reuters.
Pertamina Supply LNG for Industry in Dumai
PT Pertamina (Persero) through its affiliated business PT Pertagas Niaga will supply Liquefied Natural Gas (LNG) to PT Energi Sejahtera Mas (ESM), one of the Oleochemical industries in Lubuk Gaung District, Dumai City on Tuesday (28/8). This LNG supply for ESM marked the first time industry in Dumai uses LNG as an energy source. Pertagas Niaga President Director Linda Sunarti said LNG supply comes from Filling Station in Arun, Lhokseumawe, which is then delivered using LNG isotank trucks. This LNG will be converted back into gas through a regasification process in Dumai to produce gas energy with a volume of 1.2 MMSCF/day.
Jokowi's Energy Policy Considered Pro People
A number of policies in the energy sector issued in the era of Joko Widodo (Jokowi) are considered to be in favor of the interests of the people and support the growth of state-owned enterprises (BUMN). "In my opinion, government policy is already good. Although there are a lot of populist policies, but all for the benefits of the people," said Executive Director of Energy Watch Mamit Setiawan in a discussion event entitled "Reviewing the Energy Policy of the Jokowi Government” as cited by Investor Daily.

Also present as speakers were PT Pertamina Vice President of Corporate Communication Adiatma Sardijito, Member of the House of Representatives Commission VII Maman Abdurrahman, and Head of Planning Bureau at the Minister of Energy and Mineral Resources Harya Adityawarman.
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Katadata · Rukan Permata Senayan D-31 · Jalan Tentara Pelajar · Jakarta 12210 · Indonesia

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