presentation outline - ccop · 26. eddy m. suharyadi bph migas 27. sri wahyu purwanto bph migas 28....

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PPM Project of the Indonesia Case StudyPPM Project of the Indonesia Case Study

5th Seminar of the PPM Project

The petroleum policy and management projectThe petroleum policy and management projectof the Indonesia case study of the Indonesia case study

Bangkok, 26Bangkok, 26--29 July 200629 July 2006


Presentation outline

Introduction and the implementation of the Indonesia PPM Case Study

Geology of the Kutai Basin and Hydrocarbon Resource Assessment

Economic Analysis, Licensing, and Fiscal Condition

Results and Recommendations


The mature The mature KutaiKutai Basin, East KalimantanBasin, East Kalimantan


National Coordinator

National Project Coordinator Commitee

MIGAS BP MIGAS PUSDIKLAT MIGAS PERTAMINA Oil Coy’s

Project Coordinator

PROJECT ORGANIZATION OF THE CASE STUDYPROJECT ORGANIZATION OF THE CASE STUDY

CCOP / TS

PR of Indonesia to CCOP

PPPTMGB “LEMIGAS”

2


National CoordinatorsNational Coordinators:Sasongko HadipandoyoSasongko Hadipandoyo LEMIGASLEMIGASBambang WicaksonoBambang Wicaksono LEMIGASLEMIGAS

Core Members: Core Members: 1.1. BarlianBarlian YulihantoYulihanto LEMIGASLEMIGAS2.2. AgusAgus GunturGuntur LEMIGASLEMIGAS3.3. SilambiSilambi PalambaPalamba LEMIGASLEMIGAS4.4. Jonathan Jonathan SetyokoSetyoko LEMIGASLEMIGAS5.5. AchmadAchmad NurdjajadiNurdjajadi LEMIGASLEMIGAS6.6. SuprijantoSuprijanto LEMIGASLEMIGAS7.7. DoddyDoddy PribadiPribadi DG DG MigasMigas8.8. BayuBayu WahyudionoWahyudiono DG DG MigasMigas9.9. Abdullah Abdullah SodikSodik BPMIGASBPMIGAS10.10. DjokoDjoko SumalyoSumalyo BPMIGASBPMIGAS11.11. SutoyoSutoyo PusdiklatPusdiklat MigasMigas12.12. YohannesYohannes P. P. KoesoemoKoesoemo PusdiklatPusdiklat MigasMigas

CASE STUDY TEAM (CORE TEAM)CASE STUDY TEAM (CORE TEAM)


Supporting Members: Supporting Members:

1.1. RidaRida MulyanaMulyana LEMIGASLEMIGAS2.2. TunggalTunggal LEMIGASLEMIGAS3.3. Yusep C. KartiwaYusep C. Kartiwa LEMIGASLEMIGAS4.4. Andi RuswandiAndi Ruswandi LEMIGASLEMIGAS5.5. SundoroSundoro LEMIGASLEMIGAS6.6. SuprayitnoSuprayitno MunadiMunadi LEMIGASLEMIGAS7.7. Bambang Bambang WiyantoWiyanto LEMIGASLEMIGAS8.8. Sri Sri WijayaWijaya LEMIGASLEMIGAS9.9. IsnawatiIsnawati LEMIGASLEMIGAS10.10. AnjarAnjar SumarsonoSumarsono LEMIGASLEMIGAS11.11. FinaFina RiandraRiandra LEMIGASLEMIGAS12.12. Bambang Bambang WidarsonoWidarsono LEMIGASLEMIGAS13.13. SugihardjoSugihardjo LEMIGASLEMIGAS14.14. LettyLetty BriolettyBrioletty LEMIGASLEMIGAS15.15. NurkameliaNurkamelia LEMIGASLEMIGAS

CASE STUDY TEAM (Supporting team)CASE STUDY TEAM (Supporting team)


16.16. SigitSigit PudiartoPudiarto LEMIGASLEMIGAS17.17. SupriyatnoSupriyatno LEMIGASLEMIGAS18.18. SeptiSepti AnggraeniAnggraeni LEMIGASLEMIGAS19.19. SupriadiSupriadi LEMIGASLEMIGAS20.20. Diana Diana DwiyanartiDwiyanarti LEMIGASLEMIGAS21.21. HermansyahHermansyah LEMIGASLEMIGAS22.22. LaodeLaode SulaimanSulaiman LEMIGASLEMIGAS23.23. Bob YulianBob Yulian BPMIGASBPMIGAS24.24. SulistyaSulistya HastutiHastuti BPMIGASBPMIGAS25.25. Eddy Eddy HermantoHermanto BPMIGASBPMIGAS26.26. Eddy M. Eddy M. SuharyadiSuharyadi BPH MIGASBPH MIGAS27.27. Sri Sri WahyuWahyu PurwantoPurwanto BPH MIGASBPH MIGAS28.28. HazuardiHazuardi PusdiklatPusdiklat MigasMigas29.29. AsyikAsyik KurniawanKurniawan PusdiklatPusdiklat MigasMigas30.30. Teguh Teguh WibowoWibowo PERTAMINAPERTAMINA

CASE STUDY TEAM (Supporting team)CASE STUDY TEAM (Supporting team)

Supporting Members: Supporting Members:


Participations to other Case StudiesParticipations to other Case Studies

INSTITUTION CAM CHN PHI PPM TOTAL

LEMIGAS 4 7 4 3 18

3

6

3

5

TOTAL 12 10 5 8 35

DG MIGAS - 1 2

BPMIGAS 1 3 - 2

BPH MIGAS 3 - - -

PUSDIKLATMIGAS 4 - - 1

3


Participants of the Indonesia PPM eventsParticipants of the Indonesia PPM events

WS-1 WS-2 WS-3 WS-4 EV-1 EV-2 TotalRESOURCE PERSON 8 7 7 7 1 1 31

101393117210

THAILAND 2 2 2 2 - 1 97142323069

CAMBODIA 2 2 2 2 1 1CHINA 3 3 3 2 1 1INDONESIA 13 14 22 19 15 10KOREA 1 5 2 2 - 1MALAYSIA - 2 2 2 - 1PNG 1 1 - - - -PHILIPPINES 2 2 2 2 1 1

VIETNAM - 2 2 2 - 1CCOP/TS 3 3 2 2 2 2ORGANIZER 3 4 8 3 2 3TOTAL 38 47 54 45 23 23TOTAL Member Countries 11 19 15 14 3 7


Project activitiesProject activities

PPM-CCOP SEMINARS

EXPERT VISITS

WORKSHOPS


Visit Venue Date Topic

Expert Visit I Jakarta 6-9 Dec 2004 • Short Course on Economic Modeliny for Oil and Gas Fields and Prospects

Expert Visit II Carita 13-14 Dec 2005 • Short Course on Deepwater Technology

Implementation of the Expert VisitsImplementation of the Expert Visits


Course on Economic Modeling for Oil and Course on Economic Modeling for Oil and Gas Fields and ProspectsGas Fields and Prospects

Expert Visit 1Expert Visit 1

Aim of the CourseAim of the CourseFurther understanding on the economic modeling of Further understanding on the economic modeling of petroleum projects, both prospects and developed oil petroleum projects, both prospects and developed oil fields.fields.

More practice on the use of More practice on the use of GeoXGeoX software, in the software, in the FullCycleFullCycle analysis, and applying the Fiscal System.analysis, and applying the Fiscal System.

Number of ParticipantsNumber of Participants :: 18 persons18 personsVenueVenue :: LEMIGAS Office, JakartaLEMIGAS Office, JakartaDateDate : : 66--9 December 20049 December 2004

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PPM Project of the Indonesia Case StudyPPM Project of the Indonesia Case Study PPM Project of the Indonesia Case StudyPPM Project of the Indonesia Case Study


Expert Visit 2Expert Visit 2

Aim of the CourseAim of the Course

Number of ParticipantsNumber of Participants :: 18 persons18 personsVenueVenue :: CaritaCarita Beach, West JavaBeach, West JavaDateDate : : 1313--14 December 200514 December 2005

Introducing the history and trends of the deepwater Introducing the history and trends of the deepwater development and the key of deepwater technology issues.development and the key of deepwater technology issues.Get an overview about Get an overview about SubseaSubsea Production Systems and Production Systems and the the PlatformlessPlatformless Developments, Offshore Drilling, Developments, Offshore Drilling, Deepwater Drilling and CompletionDeepwater Drilling and CompletionAnother overview about the Deepwater Industry Structure, Another overview about the Deepwater Industry Structure, and the Authority and Management issues.and the Authority and Management issues.

Short Course on Deepwater TechnologyShort Course on Deepwater Technology


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Workshop Venue Date Topic

Workshop I Yogyakarta - Cepu

21-26 Jul 2003 • General overview of the Kutai Basin Case Study

• Petroleum activities in the Kutai Basin

Workshop II Bandung 8-13 Mar 2004 • POD, part 1• Fiscal System• Economical Analysis

using GeoX softwareWorkshop III Surabaya 18-22 Jul 2005 • POD, part 2

• Marginal Field

Workshop IV Jakarta 13-17 Jun 2006 • IOR/EOR• The Role of Govt to

Attract New Investment

Implementation of the WorkshopsImplementation of the Workshops


General overview of the General overview of the KutaiKutai Basin Case Study and Basin Case Study and Petroleum activities in the Petroleum activities in the KutaiKutai BasinBasin

Workshop IWorkshop I

Workshop ContentsWorkshop Contents

Number of ParticipantsNumber of Participants :: 38 persons38 personsVenueVenue :: Yogyakarta Yogyakarta -- CepuCepuDateDate : : 2121--26 July 200326 July 2003

Introduction to local basin geology and petroleum historyIndustry presentations on field developmentsResource assesment, prospect and play analysisCCOP guidelines on Resource Classification and RiskingGeoX training and group excersises

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7


POD, Fiscal System, and Economical Analysis using POD, Fiscal System, and Economical Analysis using GeoXGeoX

Workshop IIWorkshop II

Number of ParticipantsNumber of Participants :: 47 persons47 personsVenueVenue :: BandungBandungDateDate : : 88--13 13 MaretMaret 20042004

Field developmentsFiscal SystemPetroleum economicsEconomical analysis using GeoX/gFullCycle on real data



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POD (part 2)POD (part 2)Marginal FieldMarginal Field

Workshop IIIWorkshop III

Number of ParticipantsNumber of Participants :: 54 persons54 personsVenueVenue :: SurabayaSurabayaDateDate : : 1818--22 July 200522 July 2005

POD (2): Aspect of the Government PolicyMarginal Field:

Is Indonesia running out of oil?Tools to manage the challengesIncentives

Field developments and Technical solutions



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Workshop IVWorkshop IV

Number of ParticipantsNumber of Participants :: 45 persons45 personsVenueVenue :: JakartaJakartaDateDate : : 1313--17 June 200617 June 2006

IOR/EOR Technologies:Challenges to increase productionTechnologies: LEMIGAS – VSIT – Chevron –MC - Norway

The Government Role to attract new investment in a mature basins : Migas – MC - Norway


IOR/EOR Technology and The Role of Government to IOR/EOR Technology and The Role of Government to Attract New Investment in a Mature BasinAttract New Investment in a Mature Basin

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11



Geology of the Geology of the KutaiKutai Basin and Basin and Hydrocarbon Resource AssessmentHydrocarbon Resource Assessment

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Geology of the Geology of the KutaiKutai BasinBasinandand

Hydrocarbon Resource AssessmentHydrocarbon Resource Assessment

LEMIGAS


• INTRODUCTION

• GEOLOGY OF KUTEI BASIN

• PETROLEUM SYSTEM

• RESOURCES ASSESMENT

• SUMMARY

OUTLINESLEMIGAS


KUTAI BASINKUTAI BASIN

Sediment thickness up to 14 Sediment thickness up to 14 km in the deepest partkm in the deepest part

The largest and the deepest The largest and the deepest Tertiary basin in western Tertiary basin in western Indonesia. Known as one of Indonesia. Known as one of prolific oil & gas bearing basin in prolific oil & gas bearing basin in IndonesiaIndonesia

Exploration history began in Exploration history began in the late 19the late 19thth century, followed century, followed by discovery of by discovery of SangaSanga--SangaSanga in in 1897, Balikpapan in 1898, 1897, Balikpapan in 1898, SemberahSemberah--PelarangPelarang in 1906, in 1906, and and SambojaSamboja in 1908. The latest in 1908. The latest discovery is West Seno in 2001discovery is West Seno in 2001

Occupies 165,000 sq. km in Occupies 165,000 sq. km in the offshore and onshore the offshore and onshore area of East Kalimantanarea of East Kalimantan

INTRODUCTIONLEMIGAS


TECTONIC SETTINGTECTONIC SETTING

The main structural geology The main structural geology feature is feature is SamarindaSamarindaanticlinoriumanticlinorium

The Northern part of the basin The Northern part of the basin are bounded by NWare bounded by NW--SE trending SE trending MangkaliatMangkaliat Fault Zone and Fault Zone and AdangAdang--PaternosferPaternosfer fault in the southern fault in the southern partpart

GEOLOGY OF KUTAI BASINLEMIGAS

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STRATIGRAPHYSTRATIGRAPHY

General General StratigraphicStratigraphic Column of Column of KutaiKutai BasinBasin

The oldest sedimentary The oldest sedimentary rocks is rocks is TanjungTanjung Group Group that deposited during that deposited during Middle to Late Middle to Late EosenEosen in in non marine to shallow non marine to shallow marine environmentsmarine environments

Most of the sediment Most of the sediment were deposited in were deposited in deltaic deltaic enviromentenviroment, , especially in the late especially in the late Tertiary TimeTertiary Time

GEOLOGY OF KUTAI BASINLEMIGAS


SOURCE ROCK POTENTIALParalic/delta/restricted shallow marine carbonaceous shales of the Tanjung, Pamaluan, and Balikpapan Formations.

SOURCE ROCK POTENTIALParalic/delta/restricted shallow marine carbonaceous shales of the Tanjung, Pamaluan, and Balikpapan FormationsFormations.

RESERVOAR POTENTIALEocene Tanjung FormationCarbonate facies of the Berai Formation Equiv. and Bebulu FormationMiocene deltaic sediments of Balikpapan and Kampung Baru Formation

RESERVOAR POTENTIALEocene Tanjung FormationCarbonate facies of the Berai Formation Equiv. and Bebulu FormationMiocene deltaic sediments of Balikpapan and Kampung Baru Formation

SEAL POTENTIALOligocene shalesIntraformational seal within deltaic sediments of Late Tertiary Sediments

SEAL POTENTIALOligocene shalesIntraformational seal within deltaic sediments of Late Tertiary Sediments

PETROLEUM SYSTEMLEMIGAS


TRAP POTENTIAL

Structural trapStratigraphic/structural trap (Carbonate buildup)Clastic stratigraphic traps

TRAP POTENTIAL

Structural trapStratigraphic/structural trap (Carbonate buildup)Clastic stratigraphic traps

HYDROCARBON GENERATION & MIGRATION

First Hydrocarbon generation was inferred at Early Miosen Time Migration began around Middle Miocene time until present dayMigration pathway through up-dip and vertical faults

HYDROCARBON GENERATION & MIGRATION

First Hydrocarbon generation was inferred at Early Miosen Time Migration began around Middle Miocene time until present dayMigration pathway through up-dip and vertical faults


PPM Project of the Indonesia Case StudyPPM Project of the Indonesia Case StudyGeneral Petroleum System Chart of Kutai Basin


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Oil Companies in the Kutai BasinNo. Company Block StatP-16 PERTAMINA Sangata Prod

ExpExpProd

33 Total Donggala ExpProdExpProdProdExpExpProdExpProdExpExpExpExp

01 Amerada Tanjung Aru15 ENI Muara Bakau21 Inpex Attaka

34 Total Mahakam35 Total Saliki36 Total Tengah37 Unocal E. Kalimantan38 Unocal Ganal39 Unocal Rapak41 Unocal Makassar Str42 Unocal Sesulu43 Vico E. Kalimantan44 Zodan NV Popodi45 Zudavi NV Papalang46 Eksindo Bontang47 Elnusa Bangkanai

LEMIGASRESOURCE ASSESSMENT


5 blocks of the oil companies 5 blocks of the oil companies have mapped plays and lead have mapped plays and lead in the area during 2003in the area during 2003--20042004

Bangkanai Block

Rapak Deep Water Block

Sangasanga Block

Mahakam Block

Ganal Deep Water Block

BangkanaiBangkanai BlockBlock

RapakRapak Deep Water Deep Water BlockBlock

SangasangaSangasanga BlockBlock

Mahakam BlockMahakam Block

GanalGanal Deep Water BlockDeep Water Block

Others are in the exploration stageOthers are in the exploration Others are in the exploration stagestage

LEMIGASRESOURCE ASSESSMENT


IN PLACE

OIL GAS(MMSTB) (BSCF)

HYPOTHETICAL (Mapped) 8,281 55,065

SPECULATIVE (Unmapped)SPECULATIVE (Unmapped) 15,20015,200 30,91630,916

TOTAL 23,481 85,981

UNDISCOVERED RESOURCES

RESOURCE

The hypothetical inThe hypothetical in--place resource was resulted from 93 P/L, place resource was resulted from 93 P/L, coming from 13 Block that operated by 6 Companies. coming from 13 Block that operated by 6 Companies.

The speculative inThe speculative in--place resources from the Play Analysis and place resources from the Play Analysis and calculation by using calculation by using GeoXGeoX verver. 5.2 are 15,200 MMSTB Oil and . 5.2 are 15,200 MMSTB Oil and 30,916 BSCF Gas30,916 BSCF Gas

The total InThe total In--Place Resources of Place Resources of KutaiKutai Basin are 23,481 MMSTB Oil Basin are 23,481 MMSTB Oil and 85,981 BSCF Gasand 85,981 BSCF Gas

RESOURCE ASSESSMENTLEMIGAS


Kutai Basin is the largest and the deepest Tertiary Basin in Western Indonesia. It is a mature prolific oil and gas bearing basin.

Hydrocarbon play in the Kutai basin can be divided into Middle – Upper Eocene play, Oligocene play, and Middle Miocene – Pliocene Play. Most of oil and gas accumulation comes from Middle Miocene – Pliocene Play

The total In-Place Resources of Kutai Basin are 23,481 MMSTB Oil and 85,981 BSCF Gas

Kutai Basin is the largest and the deepest Tertiary Basin in Western Indonesia. It is a mature prolific oil and gas bearing basin.

Hydrocarbon play in the Kutai basin can be divided into Middle – Upper Eocene play, Oligocene play, and Middle Miocene – Pliocene Play. Most of oil and gas accumulation comes from Middle Miocene – Pliocene Play

The total In-Place Resources of Kutai Basin are 23,481 MMSTB Oil and 85,981 BSCF Gas

SUMMARYLEMIGAS

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THANK YOU

Orang Utan from Mahakam River


LICENSING STRATEGYLICENSING STRATEGY


DevelopmentMEMR / MIGAS

MEMR / MIGASand

Other Ministries

Executing BodyBP MIGAS

MEMR / MIGASand

Other Ministries

Regulatory BodyBPH MIGAS

Oil and Gas Business ActivityConducted by Permanent Establishment / Business Entity

MEMR : Ministry of Energy and Mineral ResourcesMIGAS : Directorate General of Oil and Gas

UPSTREAM DOWNTREAM

SUPERVISION

Oil and Gas ReservesControlled by the State

Oil and Gas Business ActivityControlled by the Government

MANAGEMENT STRUCTURE OF OIL AND GAS BUSINESS ACTIVITYMANAGEMENT STRUCTURE OF OIL AND GAS BUSINESS ACTIVITY


PROMOTION FOR PETROLEUM EXPLORATIONPROMOTION FOR PETROLEUM EXPLORATION

Based on the Oil and Gas Law No. 22/2001, hydrocarbon resources be made available for domestic use in an effective and efficientmannerGOI has the authority to mine, promote and assign contract areas, determine contractors to explore and develop the resources within the area in accordance with a cooperation contractTo benefit both parties, the GOI sets the type and terms of the cooperation contract and they will dependent on the resource potential of each contract areaBPMIGAS has been authorized to sign the cooperation contract andto manage of the petroleum operations

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MAIN POINTS OF COOPERATION CONTRACTMAIN POINTS OF COOPERATION CONTRACT

Contractor provides all funds, technological expertise and has to have the ability the necessary abilities, and take all risks in the exploration.

The period of exploration is six (6) years and maybe extended for another final four (4) years. If commercial production is found, the contract could be for thirty (30) years.

Contractor is obliged and required to relinquish the area in stages.

Contractor is required to make firm written commitments for the first three (3) years of the exploration period; and during which time the contractor has to keep and maintain its majority interest in the contract area.


PROCEDURE TO ACQUIRE A BLOCKPROCEDURE TO ACQUIRE A BLOCK

REGULAR TENDERREGULAR TENDER

DIRECT OFFERDIRECT OFFER


PROCEDURE TO ACQUIRE A BLOCK PROCEDURE TO ACQUIRE A BLOCK IN REGULAR TENDERIN REGULAR TENDER

The time schedule to be tendered through an The time schedule to be tendered through an announcement by the Governmentannouncement by the Government

At least once in a year with the window for evaluation At least once in a year with the window for evaluation period for the contractor within 5period for the contractor within 5--6 months6 months


Block is offered by Government based on MIGAS study, 10-15 blocks every yearOpen to allCommonly High risk, no commercial discoveryOnshore or offshore, Conventional area or frontier areaNeed exploration commitment (drilling well in the first 3 year commitment)In June 2005 : 14 blocks offered by MIGAS, the award announcement has not been madeCost :

• Bid info : $ 5000• Data Package : min $ 20,000• Signature bonus : min $ 1,000,000

REGULAR TENDER REGULAR TENDER

Min $ 1,025,000

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PROCEDURE TO ACQUIRE A BLOCK PROCEDURE TO ACQUIRE A BLOCK IN DIRECT OFFER TENDERIN DIRECT OFFER TENDER

AVAILABLE BLOCKSAVAILABLE BLOCKS

Remaining and available unsold blocks from previous Remaining and available unsold blocks from previous bidding round. bidding round.

PROPOSED BY INTERESTED INVESTORPROPOSED BY INTERESTED INVESTOR

Block is prepared and proposed by interested company. Block is prepared and proposed by interested company. MIGAS will evaluate the proposal and prepare the terms and MIGAS will evaluate the proposal and prepare the terms and conditions.conditions.

JOINT STUDY BY INTERESTED INVESTORJOINT STUDY BY INTERESTED INVESTOR

Block is prepared and designed based on the result of the Block is prepared and designed based on the result of the joint study between MIGAS and interested companyjoint study between MIGAS and interested company


Two types :Proposed Unsold block 16 remaining blocks for 2006Proposed by interested company:

with Joint Study First Right Refusalwithout Joint Study

All Companies applying for the block shall propose and conduct presentation to Migas, covering technical assessment of the block potential and company profile. Low risk to High risk, no commercial discovery (sometimes there is)Onshore or offshore, Conventional area or frontier area, need exploration commitment (drilling well in the first 3 year commitment)In June 2005 : 13 blocks offered by MIGAS, Evaluation period from announcement date to bid submission is one (1) month, the awardshave signed contract in October 2005Cost : - Bid info : $ 5000

- Joint study : $ 50,000-$100,000- Signature bonus : min $ 1,000,000

DIRECT OFFER TENDER DIRECT OFFER TENDER

Min $ 1,105,000


Sulaw esi3% Timor

1%South Sumatra

20%

Natuna Sea5%

North Sumatra9%

Central Sumatra7%

Irian Jaya14%

Java21%

Kalimantan20%

ACTIVE BLOCKS BY REGION ACTIVE BLOCKS BY REGION TOTAL = 194 BLOCKTOTAL = 194 BLOCK


ACREAGE TO BE OFFERED YEAR 2005ACREAGE TO BE OFFERED YEAR 2005--20062006

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Cakalang

Lampung I & II

East Bawean I & II

Damplas

Balaisang

SurumanaPasangkayu

Kamrau

Buton I

Buton II

BaronangKrapu

Open Tender 2005 (14 Blocks, 4 Blocks Awarded)2 June 2006


Indonesian Unsold Block 2006Indonesian Unsold Block 2006

Tigau

Mentana

Segaf

BigaTaritip

Janggerau

EnrekangPolewali

Offshore Rote IOffshore Rote II

Onshore/Offshore SelaruOffshore Babar

Amborip BlockI II III

IVVVIOffshore NE_Madura V

East KangeanNorth Bali IIUjungkulon Block

Onshore/Offshore Lhokseumawe


FISCAL REGIMEFISCAL REGIME


GENERAL CONDITIONSGENERAL CONDITIONS

All existing mineral oil and gas within the statutory mining territory of Indonesia are national richest controlled by the State.

The government holds ‘exclusive authority to mine’.

The government established the ‘Executive Agency for Upstream Oil & Gas Business Activities’ (BPMIGAS).

Business entities conduct oil and gas business based on cooperation contracts with BPMIGAS, mostly in the form of Production Sharing Contract (PSC).

The PSC contracting parties are ‘Contractor’ and ‘BPMIGAS’.

The PSC shall prevent the government from any liabilityarising from the oil & gas business.

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PRODUCTION 100%

INVESTMENT CREDIT

MAX COSTRECOVERY : 100%

FTP 10%

EQUITY TO BE SPLIT

INDONESIA SHARE

CONTRACTOR TAKE

TAX 44%

DMO

INDONESIA TAKE

TAXABLE INCOME

CONTRACTOR SHARE

(+)

(-)

(+)(+)

(-)

(+)

(-)

(-)

(-)

(-)

(+)

(+)

(+)DMO FEE

INDONESIA PSCINDONESIA PSC


FISCAL TERMFISCAL TERM

1. First Trance Petroleum

2. Tax Structure

3. Sharing Split

4. Investment Credit

5. Domestic Market Obligation

6. Cost Recovery

(Capital & Non-Capital Expenditures)


Sharing Split

Basic Concept Basic Concept –– Sharing of ProductionSharing of Production

100%

100%

Sharing Split

Sharing Split Sharing Split

( subject to Indonesian income tax)( subject to Indonesian income tax)

BPMIGAS Share

Contractor Share


FIRST TRANCHE PETROLEUMFirst Tranche Petroleum of 20% deducted before the recovery of Investment Credit and Operating CostsFTP shared between BPMIGAS and CONTRACTORDesigned to ensure the minimum income for the State

TAX STRUCTUREContractor pays the income taxExcluded other taxes and levies

45%20%

35%20%

30%20%

Corporate Tax (CT)Dividend Tax (DT)

Taxable Income 100%Corporate Tax Dividend Tax: DT(100%-CT)

Effective Tax Rate

INCOME TAX STRUCTURE

45%11%56%

35%13%48%

30%14%44%

Prior to198419841994

45%20%

35%20%

30%20%

Corporate Tax (CT)Dividend Tax (DT)

Taxable Income 100%Corporate Tax Dividend Tax: DT(100%-CT)

Effective Tax Rate

INCOME TAX STRUCTURE

45%11%56%

35%13%48%

30%14%44%

Prior to198419841994

FISCAL TERMS FISCAL TERMS -- 11

20


SPLIT

Sharing Splits include tax component (split before tax, gross split)Applicable to FTP, and Domestic Market Obligation (DMO) Standard Sharing Splits as follows:

INVESTMENT CREDITinvestment credit: 17% of the capital investment costs required for production facilities commencing in the earliest production Year

30/(100 - 56) = 68.1818%30/(100 - 48) = 57.6923%30/(100 - 44) = 53.5714%

15/(100 - 56) = 34.0909%15/(100 - 48) = 28.8462%15/(100 - 44) = 26.7867%

Contractor Split(before tax)

31.8282%42.3077%46.4286%

56%48%44%

70/30

65.0909%71.1538%73.2133%

56%48%44%

85/15

BPMIGAS Split(before tax)

Tax Rate

After Tax Split

30/(100 - 56) = 68.1818%30/(100 - 48) = 57.6923%30/(100 - 44) = 53.5714%

15/(100 - 56) = 34.0909%15/(100 - 48) = 28.8462%15/(100 - 44) = 26.7867%

Contractor Split(before tax)

31.8282%42.3077%46.4286%

56%48%44%

70/30

65.0909%71.1538%73.2133%

56%48%44%

85/15

BPMIGAS Split(before tax)

Tax Rate

After Tax Split

FISCAL TERMS FISCAL TERMS -- 22


Fiscal TermsFiscal Terms--33DOMESTIC MARKET OBLIGATION (DMO)

Contractor is to sell and deliver a portion of the share

DMO = 25% x Sharing Split x Production DMO Price: US$/bbl, or % of FOB as stated in the contractrelieved when operating cost is unrecovered

COST RECOVERY consist of :

• current Year non-capital costs,

•current Year’s depreciation for Capital Costs, and

• unrecovered Operating Costs of previous year

EXPENDITURES.

Capital expenditure: tangible drilling, and development costs (Utilities/ Auxiliaries, Housing/Welfare; Production Facilities; Movables)

Non Capital expenditure : IDC, exploration, and production operation cost


EXPENDITURES :EXPENDITURES :

Variable-3 Cost Recovery - Put TogetherVariableVariable--3 3 Cost Recovery Cost Recovery -- Put TogetherPut Together

LIFTING/PRODUCTION

LIFTING/PRODUCTION

EXPLORATION &DEVELOPMENT

- Seismic- G&G Studies- Drilling/Facilities- Administration

EXPLORATION &DEVELOPMENT

- Seismic- G&G Studies- Drilling/Facilities- Administration

PRODUCTION- Oil Well Operations- Sec. Recovery Opr.- Storage, Handling,

Transport, Delivery- Supervision- Maintenance- Electricity Services- Transportation- Administration

PRODUCTION- Oil Well Operations- Sec. Recovery Opr.- Storage, Handling,

Transport, Delivery- Supervision- Maintenance- Electricity Services- Transportation- Administration

GENERAL & ADMINISTRATION

- Finance & Admin.- Safety & Security- Transportation- Training- Accommodation- Personal Expenses- Public Relation- Office Rents- Gen.Office Expenses- Home Office O/H

GENERAL & ADMINISTRATION

- Finance & Admin.- Safety & Security- Transportation- Training- Accommodation- Personal Expenses- Public Relation- Office Rents- Gen.Office Expenses- Home Office O/H

CAPITALCOST

CAPITALCOST

COSTRECOVERY

COSTRECOVERYGROSS REVENUEGROSS REVENUE

PRICEPRICE EQUITYTO BE SPLIT

EQUITYTO BE SPLIT

DEPRECIATION

PRIOR YEARSUNREC. COSTS UNREC. COSTSUNREC. COSTS

NON CAPITALCOST

NON CAPITALCOST

OPERATING COSTS :

aabb

cc

1122

33


MATURE BASIN DEVELOPMENT POLICYMATURE BASIN DEVELOPMENT POLICY

21


Mahakam Delta Creaming Curve

0.02.04.06.08.0

10.012.014.016.0

1970 1975 1980 1985 1990 1995 2000 2005

Discovery Year

Cum

ulat

ive

EUR

(BB

OE)

Handil

Tunu

Peciko

Deep Water

Creaming Curve West Natuna

0.000.250.500.751.001.251.501.752.00

1970 1975 1980 1985 1990 1995 2000 2005

Discovery Year

Cum

ulat

ive

EU

R (B

BOE)

Belut/Belanak

North Belut

Belida

Kerisi

OIL AND GAS FIELDS > 50 MMBOE


121,5

4,270.8

950.8

685.9

869.7

400.1

816.5

145.3

Papua

TOTAL OIL (MMBOE)TOTAL OIL (MMBOE)

Natuna

Maluku

PROVEN = 4,187.47 MMSTBPOTENTIAL = 4,439.48 MMSTBTOTAL = 8,626.96 MMSTB

99

15,3

120.1NAD

62.8

69.1

North Sumatera

Central Sumatera

South Sumatera

East Java West Java

South Sulawesi

East Kalimantan

South Kalimantan

INDONESIA OIL RESERVESINDONESIA OIL RESERVESStatus update Status update januarijanuari 2006)2006)


1.27

7.75

24.63

6.04

10.41

53.61

48.80

4.13

24.24South

Sumatera

South Sulawesi

Papua

NATURAL GAS RESERVE (TSCF)(P1 + P2 + P3)

NATURAL GAS RESERVE (TSCF)(P1 + P2 + P3)

Natuna

East Java

EastKalimantanNorth

Sumatera

West Java

PROVEN = 97.26 TSCFPOTENTIAL = 88.54 TSCFTOTAL = 185.80 TSCF

4.49

N A D

CentralSumatera

0.43

CentralSulawesi

INDONESIA GAS RESERVESINDONESIA GAS RESERVESStatus update Status update januarijanuari 2006)2006)


0100200300400500600700800900

100011001200130014001500160017001800

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

PRO

DU

CTI

ON

(MB

OPD

)

0100200300400500600700800900100011001200130014001500160017001800

No Effort Operation Profile Maintenance Optimization On-Going Dev. Projects Marginal Fields (Projects)

Brown Fields (Projects) Expected New Field Dev. Block Cepu New Potential Dev.

Historical OutputHistorical Output Projection to 2015Projection to 2015

Marginal FieldsMarginal FieldsBrown FieldsBrown Fields

New Potential DevelopmentNew Potential Development

Oil Production Profile: 1994 Oil Production Profile: 1994 -- 20152015Efforts to increase future outputsEfforts to increase future outputs

22


BROWNFIELDBROWNFIELD

DEFINITIONS:DEFINITIONS:

BROWNFIELD (Brownfield KKKS Team)an existing producing field, producing field in decline, or previously developed field. uneconomic under the current terms & conditionsrequire incentives to stimulate new or additional investment in order to enhance production and/or add reserves.

BROWNFIELD (Schlumberger)A mature field in a state of declining production or reaching the end of their productive life.


INCENTIVE FOR BROWNFIELDSINCENTIVE FOR BROWNFIELDS

Incentive for EORIncentive for EOR

Secondary RecoverySecondary Recovery17% Investment Credit17% Investment CreditDMO Holiday 60 monthsDMO Holiday 60 months

Tertiary RecoveryTertiary RecoveryChanging Equity Split (Standard in PSC)Changing Equity Split (Standard in PSC)

Incentive for NonIncentive for Non--EOR: EOR: Still in the finalization processStill in the finalization process


Incentive AlternativeIncentive Alternative

DMO DMO HoliddayHolidday 60 months60 months

Cost Recovery UpliftCost Recovery Uplift

Interest Cost Recovery (ICR)Interest Cost Recovery (ICR)

INCENTIVE FOR BROWNFIELDSINCENTIVE FOR BROWNFIELDS


WaterWater--flood flood :: Minas, Minas, KotabatakKotabatak, , BekasapBekasap and and WiduriWiduri fields.fields.

SteamSteam--flood flood :: DuriDuri field; (field; (BatangBatang, , KulinKulin and and RantauRantau BaisBais fields fields candidates)candidates)..

Gas lean injectionGas lean injection :: HandilHandil field (field (KutaiKutai Basin)Basin)Chemical Flooding Chemical Flooding :: Minas (pilot project in progress).Minas (pilot project in progress).

Applied IOR/EOR TechnologiesApplied IOR/EOR Technologiesin Indonesiain Indonesia

23


EOR Success Story : The Past and The FutureEOR Success Story : The Past and The Future

0

50

100

150

200

250

300

350

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Duri_NDDDSFDuri_Base

Impact of New Technology on Increasing Oil RecoveryImpact of New Technology on Increasing Oil RecoveryMBOPDMBOPD

DuriDuri basebase

DuriDuri Steam FloodSteam Flood

North North DuriDuri Dev.Dev.

RF= 8-11%RF= 8RF= 8--11%11%RF= 50-80%RF= 50RF= 50--80%80%


0

20.000

40.000

60.000

80.000

100.000

120.000

140.000

160.000

180.000

200.000

J-74

J-75

J-76

J-77

J-78

J-79

J-80

J-81

J-82

J-83

J-84

J-85

J-86

J-87

J-88

J-89

J-90

J-91

J-92

J-93

J-94

J-95

J-96

J-97

J-98

J-99

J-00

J-01

J-02

J-03

DateO

il ra

te (b

opd)

2nd IOR1st IORWIprimary

START WATER INJECTION

START 1st IOR

START 2nd IOR

HandilHandil Production HistoryProduction History


MARGINAL FIELDMARGINAL FIELD

PROBLEMATIC DEFINITIONS:PROBLEMATIC DEFINITIONS:

The standard definition in the PSC is not flexible enoughA modified dynamic definition and new criteria is required if significant additional capacity of future oil supply is expectedIt should also cover most of small fields & some larger fields that become uneconomic at current psc term and condition at various maturity stageNeeds strong effort and political will


ECONOMIC PARAMETERECONOMIC PARAMETER

The recoverable reserves and production

Current economic conditions : oil price assumption, productive life, marr

Operating methods : Good reservoir management, innovative optimum development scenario, fit for purpose technology, infrastructure, minimum facilities concept design, joint facilities & infrastructure concept

government regulations : psc terms & conditions “win-win" incentives

MARGINAL FIELDMARGINAL FIELD

24


Most of oil fields and many larger gas fields are already mature. The exploration & development prospects (particularly for oil) are getting smaller and harder to find

Numerous smaller discoveries, leads and prospects, as well as depleted fields, may contribute significant future additional capacity of supply that can be commercialized

Major challenges for MF developments and program are related to:Redefinition of a better MF terminologyNegotiation of an acceptable MARRAcceptable incentives adoption and implementationSimplification of procedures and processesBuilding up commitments & political will to realize the programs

Challenges in the development Challenges in the development of marginal fields of marginal fields


NEW DEFINITIONNEW DEFINITION

New Incentives for marginal field developmentNew Incentives for marginal field development(Decree of MEMR No. 0008/2005)(Decree of MEMR No. 0008/2005)

A Marginal Field is an oil field located within a producing block that, under the current PSC terms and conditions, is not economics to be developed

CONDITIONS FOR MARGINAL FIELDCONDITIONS FOR MARGINAL FIELD

20% Operating Cost *) Recovery Uplift

Other incentive packages that maybe applied for that field in accordance with the prevailing PSC, Laws and Regulation

*) Under PSC condition, the Operation Cost consists of current year’s Non Capital Cost and current year’s Depreciation for Capital Cost


NOT ECONOMICNOT ECONOMIC

NOT ECONOMICNOT ECONOMIC

THE CREATION OF A JOINT TASK FORCE(BPMIGAS + PSCS + SERVICES COMPANIES)

TO RE-EVALUATE THE ECONOMICS OF MMFS?

TO DEFINE THE METHOD TO IMPROVE MMFS ECONOMICS

TO DEFINE WHAT INCENTIVES REQUIRED

MATURE and MARGINAL FIELDMATURE and MARGINAL FIELDEfforts and ChallengesEfforts and Challenges


EFFORTS TO BE NEEDEDFOR NEW POLICY BREAKTHROUH AS THE ROLE OF BPMIGAS & GOI

EFFORTS TO BE NEEDEDEFFORTS TO BE NEEDEDFOR NEW POLICY BREAKTHROUH FOR NEW POLICY BREAKTHROUH AS THE ROLE OF BPMIGAS & GOI AS THE ROLE OF BPMIGAS & GOI

Production Sharing ContractsProduction Sharing Contracts (if necessary).(if necessary).-- Incentives (for Exploration in New Frontier)Incentives (for Exploration in New Frontier)-- Incentives (Marginal & Brown fields and New EOR)Incentives (Marginal & Brown fields and New EOR)

Efficient Process for POD, WP&B, and AFE ApprovalEfficient Process for POD, WP&B, and AFE Approval-- Reorganization of BPMIGAS to provide a Reorganization of BPMIGAS to provide a ““Proper VehicleProper Vehicle””-- Legal support for Legal support for ““Fast Track Development PolicyFast Track Development Policy””

Better Fiscal RegimesBetter Fiscal Regimes

25


CONCLUSIONSCONCLUSIONS


The Indonesia PPM Case Study was strongly supported by 2 main governmental agencies, ie. Directorate General Migas and BPMIGAS, which was expected to bridge a joint cooperation among the agencies concerned

The Indonesia team members are coming from multi-governmental agencies, could not make the team compact and solid, created a little problem in the implementation of the PPM activities.

Difficult to invite the members from those agencies due their tight schedule of their official jobs, prefer to attend a workshop held by another case study countries.

PPM Team MembershipPPM Team Membership


Not easy to get the real data

There is no the so-called ‘data manager’ either in BPMIGAS or in the Directorate General of Oil and Gas, the data is still kept by the oil companies.

Data can be obtained from BPMIGAS after having an approval from DG of Oil and Gas, and it takes time to approach the data availability.

D A T AD A T A


The most useful tool and was used by all case study countries during the project. However, it is very difficult to convince the government, either DG of Oil and Gas or BPMIGAS, that the software is helpful in considering the policy in the petroleum sector.

The modul of GeoX/gFullCycle is also very beneficial in the economical analysis of a petroleum project. However, in the reality it is very complicated and need more practices.

The software can not accommodate all elements of the Indonesia fiscal regime, e.g. First Tranche Petroleum (FTP) which is not similar to Royalty. In the home country, the oil companies have their own software to do the same thing.

GeoX license is issued for a particular computer

GeoXGeoX SoftwareSoftware

26


There are many things in the oil sector in Indonesia which are not touched by PPM, and most are internal aspects; such as the production sharing due to the district autonomy, get the benefit of being oil and gas producer, the community development.

The workshops, in general, were a forum to present experiences in solving the CCOP MC’s petroleum problems in their own country, depend on the topic of the workshops

The petroleum business in Indonesia is worked out by many oil companies with their own technologies as well as their own h/wand s/w.

The Indonesia PPM case study contents are in line with the target and strategic planning of the upstream oil and gas sub-sector as stated in the work programme of MEMR 2004 -2009

PPM in PracticePPM in Practice


National petroleum management and policy are determined by government, as approved by the House of Representative

The revision and improvement of the petroleum management and policy arrangements due to changes in political, economic and market conditions, have to be approved by the House of Representative

The capacity and capability in petroleum resource management are to be improved

Achievement of the PPM goalsAchievement of the PPM goals


Target :To To encreaseencrease exploration and to achieve additional reserves and exploration and to achieve additional reserves and production of oil and gas. production of oil and gas. To increase investment in oil and gas sector.

Strategic programme:To prepare and to promote blocks or working areas.To prepare and to promote blocks or working areas.To do exploration and to discover new oil and gas reserves.To do exploration and to discover new oil and gas reserves.To assess reserves potential in order to increase oil productionTo assess reserves potential in order to increase oil production. . To increase exploration, reserves and production of oil and gas.To increase exploration, reserves and production of oil and gas.To revise investment climate for exploration and production of oTo revise investment climate for exploration and production of oil and il and gas activities.gas activities.Reviewing on Local govt. rules that potentially impact on confliReviewing on Local govt. rules that potentially impact on conflicting cting between central and local govts. between central and local govts. Reviewing and applying technology to increase production. Reviewing and applying technology to increase production.

TARGET AND STRATEGIC PROGRAMME OF MEMR IN TARGET AND STRATEGIC PROGRAMME OF MEMR IN UPSTREAM OIL AND GAS SUBUPSTREAM OIL AND GAS SUB--SECTOR (FOR THE SECTOR (FOR THE

PERIOD OF 1 PERIOD OF 1 –– 5 YEARS)5 YEARS)


THANK YOUTHANK YOU

presentation outline - ccop · 26. eddy m. suharyadi bph migas 27. sri wahyu purwanto bph migas 28....

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