pertamina ep profile

EP COMPANY PROFILE

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EP COMPANY PROFILE

When PT Pertamina EP began its transformation journey in 2006, Indonesia’s

economic situation was remarkably motivating. The year was decorated with

various records of success, yet also painted with numerous challenges that made

us more experienced in managing the company.

At early 2006, the country still experienced a carry-over economic burden from the

previous year due to oil price increase, which in turn resulted in higher prices.

All the while, non-fundamental factors such as geopolitics and market speculation

conspired in soaring global oil price trend. Thus, oil and gas industry has continued

to appear very prospeting and optimistic in nature.

It was within such situation that Pertamina EP sets its transformation pace in motion.

The transformation program was designed to resolve technical problems and

simultaneously answer the socially situational pressures.

With average production growth of 6-7 percent in the past three years, we have

high optimism to continue growing and answering both government and people’s

challenges to escalate our national oil and gas production.

messagefrommanagement

Tri Siwindono(President Director)

forewordPT PERTAMINA EP or PEP is one of the

most prominent oil and gas producers

in Indonesia, will strive to put its best

efforts in undertaking the nation’s duty

to fulfilling the needs of Indonesia’s

community at large.

With endless waves of passionate

enthusiasm, PEP commits

to constantly increase its

exploration and production

undertakings through

proper implementation

of Good Corporate

Governance to

achieve the

desired-end-state,

‘PEP WORLD

CLASS’.

PEP COMPANY PROFILE 02

EP COMPANY PROFILE

visionIn becoming the foremost oil and gas producer, PT PERTAMINA EP (PEP) has split its

visionary aspirations into a three-year strategic planning period, each of which is aiming

to become: ”Respectable Cost Cost-Effective and Efficient Oil & Gas Producer”

(for 2006-2008), ”Number 1 Oil & Gas Producer in Indonesia” (2009-2011) and

”PEP World Class” (2012-2014).

missionWhile reaching the set objective, PEP consistently strives to run the oil and gas business

efficiently, effectively, and within a safe and healthy environment, thus increasing value

for the stakeholders.

corevalues

It has been PEP commitment to constantly foster standard ethical behavior and

to implement professional business ethics throughout internal and external interactions.

Such behavioral sandards, that we call core corporate values, have been perceived

as fundamental as well as strong groundwork of a continuous relationship with

the stakeholders. The values consist of focus, integrity, visionary, excellence,

mutual respect, good corporate governance, optimization, personal quality,

empowerment, peerless shareholder value and proper HSE.

Highly respecting the corporate ethical values throughout our behavior.

04PEP COMPANY PROFILE

EP COMPANY PROFILE

ourmilestone

10 december

1957Establishment

of PT Perusahan Minyak Nasional

(PERMINA).

20 Augus t

1968PERMINA

merged with PERTAMIN into

PERTAMINA.

yea r o f

2001Government

issued Oil and Gas Law No. 22

Year 2001.

17 September

2003The signing of Coorperation

Contract between PT PERTAMINA

(Persero) and BP MIGAS on all

Oil and Gas Mining Authority Zone.

13 September

2005The establishment

of Pertamina EP.

17 September

2005The Signing of

Coorperation Contract that established PERTAMINA EP

working areas

06

Business wise, the voyage of Pertamina EP

is interrelated with its mother company,

PT Pertamina (Persero). In harmony with global

and national oil and gas industry dynamics,

PT Pertamina (Persero) has undergone several

changes in name and status. It started with

the establishment of PERMINA in 1957,

which \turned into PERTAMINA after merging

with PERTAMIN in 1968. In 1971, the government

issued Law No. 8 that positioned PERTAMINA

as state-owned oil and gas company.

As oil and gas environment continues to shift,

the government responded by issuing Oil and

Gas Law No. 22 Year 2001 which altered the

status of PERTAMINA into a State-Owned

Enterprise, which renamed PT Pertamina

(Persero), with separate Directorates for the

upstream and downstream businesses.

The law also urged PT Pertamina (Persero)

to establish separate business subsidiaries

so that the business of exploration, exploitation

and production of oil and gas become

more managable.

It was on such ground that Pertamina EP was

established on 13 September 2005. Then on

17 September 2005 PT Pertamina (Persero)

signed a Production Sharing Contract (PSC)

with BPMIGAS, governing all oil and gas mining

areas accordingly. Eventually, majority of those

areas became Pertamina EP’s working areas,

including those previously managed by

PT Pertamina (Persero) through Technical

Assistance Contract (TAC) and Joint

Operating Body Enhanced Oil Recovery

(JOB EOR).

PEP COMPANY PROFILE

EP COMPANY PROFILE

businessfocusPEP strives to transcend maximum efforts and synergy throughout all levels of the organizationin order to achieve excellent outcomeat the end of the day.

PT Pertamina EP (PEP) is an operating subsidiary

business unit that focuses on managing the

upstream oil and gas production through a

more manageable exploration and exploitation

activities. Adding to that, PEP has been

undertaking other supporting businesses, which

have been intended to back up the main business

directly or indirectly.

Soon after its establishment on 13 September

2005, PEP has been dedicating to undergo

its core business with strong commitment,

to work hard and be productive, have motivated

PEP in elevating Indonesia’s position as a net

oil importer. Consequently, PEP has strived to

constantly increase the oil and gas production

capacity, to which its daily capacity of production

indicate

120 thousand

of barrels oil per day (BOPD)

and 1,000 million standard cubic

feet per day (MMSCFD) of gas.

Supported with the above capacity of oil

production, PEP feels confident to reach

the raw oil production targeted by the

government for export. Meanwhile,

PEP’s gas production is fully produced

to support domestic industry needs, as part

of PEP’s contribution to add to Indonesia’s

competitive advantages within the industry.

08

corebusiness

PEP COMPANY PROFILE

EP COMPANY PROFILE

year 2005 year 2006 year 2007 year 2008

oil

legend:

gas

1030

900 98

0

785

1100

870

1120

1007

0

200

400

600

800

1000

1200

In accordance with the Technical Assistance

Contract (TAC) and Joint Operating Body

Enhanced Oil Recovery (JOB EOR), PEP’s

working areas, respectively; all stretched

from Sabang to Merauke as marked on the

following operation map:

The following illustrates PEP’s production of oil and gas:

The following illustrates PEP’s top 10 oil and gas producer:

0 500 1000 1500 2000 2500 3000

2554.32 Total

Pertamina

ConocoPhillips Ltd.

ExxonMobil Oil Indonesia

Vico

PetroChina Int. Ind. Ltd.

Chevron Indonesia Company

CNOOC (SE) B.V.

Premier Oil

Medco E & P Indonesia

1070.77

1031.99

747.88

494.06

287.24

285.99

Top 10 Gas Producer

170.61

150.91

123.53

Top 10 Oil Producer

0 100 200 300 400 500

490.879 Chevron Pacific Indonesia

Pertamina + JOB + TAC

ConocoPhillips Ltd.

Total

PetroChina Int. Ind. Ltd.

CNOOC (SES) B.V.

Medco E & P Indonesia

Chevron Indonesia Company

BOB Bumi Siak Pusako Pertamina Hulu

BP Indonesia

118.91

83.119

76.854

48.441

45.673

41.898

38.863

28.941

23.627

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EP COMPANY PROFILE

NORTHERN SUMATRA

BLOCK LIRIK

BLOCK JAMBI

EASTERN JAVA

WESTERN JAVA

BLOCK TARAKAN BUNYU

BLOCK MATINDOK

BLOCK SORONG

BLOCK TIMOFORO

BLOCK KAMUNDAN & WIRIAGAR

BLOCK SANGATTA

BLOCK SANGA SANGA

BLOCK TANJUNG

BLOCK UDANG

CENTRAL SUMATRA

SOUTHERN SUMATRA

10

At this stage, PEP owns four main

backbone fields for their high

production capacity.

As a consequence, any impacts

resulted from those fields will

eventually affect the whole PEP

production. The four working

fields are Tambun, Limau,

Sukowati and Poleng.

Capacity wise, total production

of Tambun field is 14,000 BOPD,

Limau field is 8,000 BOPD;

Sukowati field is 19,000 BOPD,

and Poleng field is 8,500 BOPD.

In total, all the four main fields

contribute 49,500 BOPD or

40 percent of the targeted

125,000 BOPD.

PEP COMPANY PROFILE

Lirik

Jambi

Limau

Benakat

Tanjung

Sangasanga & Tarakan

01

02

03

04

05

06

UBEP

Perlak

NAD Area

West Sakakemang

East Sakakemang

Kluang Siarak Area

Suban

Southern Sumatera Area

Udang

01

02

03

04

05

06

07

08

SUMATRA

Sanga-sanga

Sangatta

Bunyu

Matindok

Sele

Klamono

Timoforo Area

Wiriagar

Kemundan

01

02

03

04

05

06

07

08

09

EASTERN INDONESIA

Lapisan L. Parigi

X-Ray

Jabati Area

Western Java

01

02

03

04

JAVA

EP COMPANY PROFILE

Today, PEP is the second biggest oil and gas

producer in Indonesia, with its total oil and

gas production has reached 400,000 barrel oil

equivalent per day (MBOEPD).

While on the reserve side, PEP holds

the largest oil and gas reserve in

Indonesia, totaling at 6,171

MMBOE, also the third

largest in Asia Pacific.

PEP aims to be the number one oil and gas producer in Indonesia in 2011, by optimizing its largest oil and gas reserve.

marketposition

Various strategic

programs have been

developed to support the

company’s growth. One of those

is 7 Focus Point, which has been

strategically implemented since 2008.

Firstly is to focus on securing production of

the main fields, considered as the backbone of

all PEP production activities. Next is to focus on

optimalization of production by way of improving

infrastructure and supporting facilities of the

existing fields, aiming at enhancing production

level of those fields.

strategy

The third focus is to reactivate old wells on the

production fields, while reactivation of old fields

comes as the fourth focus. The reactivation

initiatives seem potentially promising to adapt

while adjusting with the fluctuative increase

of the oil price.

Focusing on extracting and filtering of condensate

gas transmission pipes, intensifying Enhanced

Oil Recovery (EOR), and Put on Production (POP)

for exploration wells come as the fifth, sixth and

seventh focus, respectively.

Another strategic program includes acquisition

of 3D seismic data that aims to obtain a more

accurate 3D seismic data needed for the

development of production field and EOR

application; all 3D seismic programs have

located ± 2,700 km2 areas.

Meanwhile, other strategic programs include:

accelaration of KSO cooperation; speeding up

unitization; resource intensification, accelerating

resource verification; and other daily operational-

related initiatives.

PEP is the only one amongst five major Cooperation Contractors who is confident to attain 2008 oil and gas production target set by the government.

EP COMPANY PROFILE 12PEP COMPANY PROFILE

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EP COMPANY PROFILE 14

transformation phase, namely Talent Management

and Succession Planning.

Talent Management is a founding guidance for

potential employees or those with extra skills

to be developed as the company’s key players.

This guidance is a tool for company leaders in

developing and selecting officials to take up

key positions. Since it is based on meritocracy

therefore all employees have equal

opportunities for self-development.

Succession Planning, is a tool for planning,

preparing of employees’ career path and

development, as well as cadre monitoring

and evaluation. Cadre development has

begun since entry level and will be monitored

on a constant basis.

Therefore, rigorous, sustainable, and comprehensive programs aimed at developing professionalism among our employees, have been continuously implemented throughout our growth.

corporatestrengthsProduction has reached 80% of the ultimate primary recovery level and the estimated oil reserves totaling at 5 billion barrels of oil (BBO).

Employees of Pertamina EP (PEP) are

professionals who are selected through a

strict and accurate process. In addition, their

capabilities are continuously enhanced to shape

them into enthusiastic people who posses a

lasting and competitive uniqueness, professional

interpreneurship spirit and of high moral.

These moralities are essential since PEP

workers are fighters/warriors who persistently

ourpeople

relied upon as the country’s revenue generator.

That’s the reason why human resource

(HR) improvement has become

a constant necessity.

HR development of PEP emphasizes on increasing

personal quality and empowerment by meeting

the World Class People standards. Our journey

to build world class employees began with

some initial projects carried out during early

PEP COMPANY PROFILE

EP COMPANY PROFILE

To manage its oil and gas working areas,

PEP conducts own operation and partnership

cooperation in form of Joint Operating Body

Enhanced Oil Recovey (JOB EOR) and Technical

Assistance Contract (TAC).

operations

Throughout its operations as a subsidiary of PT PERTAMINA (PERSERO), PEP total oil production has contibuted majorly to the national’s oil reserve.

differentiation

With 140,000 km2 of working area, PEP is a

Contractor of Cooperation Contract operating

on the most widespread area in Indonesia.

This also means that PEP owns 20 percent

shares of national oil reserve and 10 percent

of national gas reserve. These potentials will

eventually turn Pertamina into the largest oil

and gas producer in Indonesia.

Meanwhile, production is projected to increase

to 684 MBOEPD in year 2014, double from the

2007 production of 350 MBOEPD.

Pertamina EP divides its working areas into three

regions, Sumatera, Java and Eastern Indonesia

Region. The head office manages the entire

JOB EOR and TAC operations, while each

region manages their own operation.

The operation of three regions is divided into

12 Field Areas namely Rantau, Pangkalan Susu,

Lirik, Jambi, Prabumulih and Pendopo

in Sumatera Region, Subang, Jatibarang and

Cepu in Java Region and Sangatta, Bunyu

and Papua in Eastern Indonesia Region.

Beside managing the previously mentioned

working areas, PEP also manages its working

areas through projects, namely gas development

project of Pagar Dewa in Sumatera, Gundih in

Central Java and Matindok in Sulawesi.

EP COMPANY PROFILE

corporatecommitmentPEP is committed to striving for the best in all its business activities, including HSE performance.

Proper implementation of Good Corporate

Governance (GCG) aims to strengthen corporate

image as well as performance, while maximizing

the shareholder’s values at the same time. Within

PEP, GCG implementation has five aims.

goodcorporategovernance

Firstly, it aims to maximize the corporate values

by aggressively applying the principles of

transparency, independency, accountability,

integrity and adequacy throughout all corporate

conducts. Ensuring a professional and

independent corporate management practices

comes as the second aim. The third is developing

a specific decision making system by all

Business Units based on high ethical codes

and strict compliance to the set regulations and

business codes. Realizing the Corporate Social

Responsibility program to the stakeholders and

escalating a conducive national investment

climate, particularly in energy and petrochemical

areas are the fourth and fifth aim.

Throughout all conducts, PEP holds Good

Corporate Governance principles such as

Transparency, which is open and honest in all

decision making process, while assuring that

any financial related information is relevant and

accurate. Principle of Independency states

that employees must avoid situations which

could cause conflicts and pressures, internally

or externally, that are not in accordance with

prevailing rules and regulations, as well as

healthy corporation principles.

Clarity in describing each business unit’s

functions, duties and responsibilities in order

to manage the company more effectively

is principle of Accountability that PEP holds

strongly. Principle of Responsibility implies

appropriateness of company’s management

practices to prevailing rules, in a way that

also complies with healthy corporation

principles. And lastly, principle of Fairness

understood as being fair and equal treatment

in meeting the stakeholders’ rights as

the stated by the prescribed rules

and regulations.

We believe that proper good governance implementation is the foundation of our movement, with the spirit of integrity and rightness, to being the foremost national oil and gas producer of a world-class state of mind.


EP COMPANY PROFILE 20

Moreover, preserving the green nature of the surrounding environment has also been our main endeavor in creating a healthy and clear atmosphere.

healthsafetyenvironment

At PERTAMINA EP (PEP), Health, Safety,

and Environment (HSE) initiatives have been

undertaken to ensure adequate management

performance and practices. HSE practices ensure

that risks to both people and the environment

are addressed, as well as enhancing social

growth of the surrounding community.

Going world class, PEP realizes that HSE

implementation is inseparable from all business

aspects. In due course, PEP strives to sustainably

improve its understanding of the HSE culture,

so that the HSE initiative can be merged into

the primary corporate culture through integrated

HSE Management System that is integral and

will synchronize all business operations.

More importantly, the system will bring about a

more safe, excellent, efficient and environmental

concern operations.

A set of HSE Management System emphasizes

on 13 major elements has been made effective

by PEP to affirm that it is the duty and

responsibility of everyone in the company.

Therefore, proper HSE implementation

throughout all layers is a compulsory action

for PEP to reach ‘HSE Operating Excellence’.

The 13 elements include ideal leadership and

integrity; awareness, training, competency;

partnership management, design, construction

and commissioning; operation and after operation

management; inspection and maintenance;

security management (materials and products);

management of change; communication; crisis

and emergency handling; incident investigation;

documentation; and evaluation and audit.

PEP commits to bring about respectable HSE

practices in accordance to the applied regulations

and HSE standards. The objective is to minimize

incidents, actively anticipate the negative impact

resulted, and improve the company’s image.

However, proper implementation of HSE

Management System throughout PEP and

partners’ operations is one of the developed

five strategies. Other strategies include special

HSE workshop for workers, making HSE

practices inseparable from the corporate culture,

integration of the required technology with PEP’s

operations, and strengthening the corporate

image throughout all aspects of HSE.

PEP COMPANY PROFILE

EP COMPANY PROFILE

Intense interactions with the local people and regular community development initiatives have initially been PEP’s moral obligation ever since our early establishment. PEP realizes that the support and involvement of the local community play an important role throughout our business sustainability and hence our growth.

As part of the community, PT PERTAMINA

EP (PEP) is committed to actively express

its social responsibility and to create an

environmental friendly operations. Likewise,

PEP believes that positive social perception

is good for business, providing a secure,

inspiring and dynamic atmosphere.

Realizing its responsibility to the community,

PEP knows that community development

is a moral obligation, a way of showing

concern and earning trust.

Hence, PEP feels

obliged to share

its economic, social, and cultural

perspectives through Corporate Social

Responsibility (CSR) program. Besides,

PEP also considers the CSR program

as part of its business investment

initiatives for growth, ensuring

future business.

It is PEP commitment to empower the

local community and protect the areas

of its operations to develop a conducive

community relationship and to take

responsive action in handling after-mining

impact. As a result, the CSR activities

are realized through a number of programs

focusing on religious, health, education

and economy related issues.

corporatesocialresponsibility


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