OGE 60 Small

INDONESIAN OIL, GAS & POWER
JOKOWIS DECISION: ONSHORE LNG FOR MASELA
VOLUME 60 | MARCH 28 - APRIL 28, 2016
PETROMINDO MARCH 28 APRIL 28, 2016
CONTENTS
10 OPINION | Madjedi Hasan

Masela block development state
soverignty versus contract sanctity
14 INDUSTRY NEWS: OIL & GAS

34 Cover story
Masela decision draws reactions
35 Onshore LNG supporters launch
black campaign
36 OIL & GAS

Deadline for gas traders to
build infrastructure
37 Ministry proposes lower
gas price for 10 GSPAs
30
38 POWER

Sukarame power project put on hold
40 PGEs geothermal projects onsream
this year
42 interview

State oil revenue may drop 50%
47 OIL & GAS

April-delivered LNG down 38.7%
48 INTERNATIONAL

Wood Mackenzie:
Oil markets Back to the Future II?
49 Petronas names first floating LNG facility
50 CRIME

AGO investigating FSRU Lampung
52 INTERNATIONAL

Indonesia strikes deals with OIC countries
COVER sTORY
Jokowis decision:
Onshore LNG for Masela
President Joko Widodo has finally made a decision
that the LNG plant that will be built to process gas
from the Abadi field in Masela block in Maluku
province must be located onshore, thus rejecting
the floating LNG (FLNG) option proposed by the
contractors of the block.
CONTENTS
58
53 OIL & GAS

Andalas signs farm-in agreement
for Tuba Obi East
54 COMPANIES

AKR reports strong profit despite
oil price slump
56 OIL & GAS
Premiers production stable in 2015
57 COMPANIES

Elnusas 2015 profit drops 11.84%
61 OIL & GAS
Pertamina starts preparations for Mahakam
62 Pertamina to build Rp 2.5t infrastructures
63 COMPANIES

Manhattan eyes at least 51%
of Kariangau Power
64 OIL & GAS

PGN to build gas connections to
110,000 houses
65 POWER

PLTU Lontar gets loan from JBIC
66 OIL & GAS

BP opens Tangguh Train 3 onshore EPC
commercial bids
OIL & GAS
Black Platinum
to forge ahead
in East Natuna
Despite current industry conditions, private
equity funded Black Platinum Energy (BPE)
announced it has plans to forge ahead with
exploration and appraisal/development activities
to prove up its shallow gas plays in East Natuna.
61
CONTENTS
67 Infrastructure

MEMR signs energy-related
infrastructure projects
83 OIL & GAS

RI, Iran agree to boost oil cooperation
84 EWC confirms Sengkang project delays
71 petrochemical
Wison, Lion complete FS
for coal gasification
72 POWER
PLN has signed PPAs for 19,000 MW
85 power
Global geothermal power
projected to double
86 INDUSTRY NEWS: POWER
74 PLN, Jakarta sign agreement
94 eVENTS
75 INTERNATIONAL
Cheniere starts exporting LNG from US
96 STATISTICS
76 OIL & GAS

Light at the end of the tunnel?
68
POWER
78 Environment
CO2 emissions stall as renewable
energy surges
I nsecure coal supply for

power plant projects
80 international
Chevron celebrates first LNG
production at Gorgon
Future coal supply for coal-fired power plants

to be developed under the governments crucial
35,000 MW power generation program is at risk
as existing coal reserves at the countrys mines
may deplete sooner than anticipated, according
to a recent joint survey by Indonesia Coal
Mining Association (ICMA) and consultancy firm
PricewaterhouseCoopers (PwC).
82 refinery
Mini refinery projects attract investors
Overseas advertising representative

SINGAPORE
Sean Worrall
The Gate Worldwide (S) Pte Ltd
10 Raeburn Park #01-10, Singapore 088702
Phone: +65 6513 0520
Email: sean.worrall@thegateworldwide.com
www.thegateworldwide.com
MALAYSIA
Shallie Cheng
Mind Sense Sdn.Bhd.
No.107, 1st.Floor Menara Mutiara Majestic,
No.15, Jalan Othman, Section 3, 46,000 Petaling Jaya,
Selangor, Malaysia.
Phone: + 603 7781 7700
Email: shalliecheng@gmail.com
www.mind-sense.biz
JAPAN
Shigenori Nagatomo Pacic Business Inc
Akutagawa Bldg., 7-7, Nihonbashi
Kabutocho,
Chuo-ku, Tokyo 103 0026
Phone: +81 3 3661 6138
Email: nagatomo-pbi@gol.com
CHINA
Dr Phil Ren
eCoalChina.com
Noble Tower No 22 Titan Road
Shahekou District
Dalian PC 116000
Phone: +86 411 3999 7749
Email: zhangp@ecoalchina.com
www.eCoalChina.com
UNITED KINGDOM
David Hammond
Major Media Ltd
1 Wythes Close Bromley Kent BR1 2BA
Phone: + 44 0 20 8467 8884
Email: david.hammond@majormedia.co.uk
www.majormedia.co.uk
GERMANY
Claudia Voigt
Beratung Mediaplanung
Pilot Mnchen GmbH
Ohmstrasse 1 (Rgb.) 80802
Mnchen - Germany
Tel: +49 89 72 484 - 21
Email: c.voigt@pilot.de
www.pilot.de
EDITOR'S NOTE
Finally, a decision on Masela

PUBLISHER
Alexander Ginting
NEWS DIRECTOR
Reiner Simanjuntak
CHIEF EDITOR
Johannes Simbolon
EDITORS
Godang Sitompul
Bernard Lubis
Benget Besalicto ST
Febry Silaban
Cepi Setiadi
Rikordias Dominius
ART DIRECTOR
Ipunk AF.
PHOTOGRAPHERS
Khalsa Leatemia
Abdul Rahim
Mudasir
Lucky Ginting (Research)
GRAPHIC DESIGNER
Ach. Sakti W.
M. Yunus (Info Graphic)
ADVERTISING MANAGER
Ronald Siahaan
Nizma Sari Nurulita
ADVERTISING SUPPORT
Santi Marpaung
Irmawati
FINANCE DIRECTOR
Anton Leonard J.
EDITORIAL SECRETARY
Firmansyah Sembiring
PROOF READER
Tyasno Hery
DISTRIBUTION MANAGER
Tria Purnama Sari
CIRCULATION
Riyanci Dina
PETROMINDO is part of
Editorial
Jl. Gajah Mada No.149C 2nd Floor,
Jakarta Barat - Indonesia
Phone: +62-21- 687 0020 (Hunting)
Fax: +62-21-6385 8655
Advertising & Circulation
Jl. Melawai Raya No. 21C
Jakarta Selatan 12130 - Indonesia
Phone: +62-21-722 6564 (Hunting)
Fax: +62-21-722 6567
Advertising inquires contact

advertising@petromindo.com
Subscription inquires contact
circulation@petromindo.com
fter months-long debate among the public whether the government

should accept or reject the floating LNG (FLGN) scheme for the
Masela block, President Joko Widodo on March 23 announced that he
had decided that the LNG plant for the block should be built onshore.
Many people are disappointed over the decision but others welcome the
Presidents move as it is expected to soon end controversies surrounding
the Masela LNG project.
The President argued that an onshore LNG plant will provide greater
benefits for the national economy and the economy of Maluku, compared to
an FLNG plant as proposed by the operator of the block, Japanese firm Inpex
Corp.
All people agree that both schemes onshore LNG and FLNG will
bring great benefits for Indonesian people in general and the Maluku people
in particular in view of the huge gas reserves discovered at the Abadi field
of the block. The disagreement revolves around the question: Which scheme
will bring greater benefits? In terms of amount of revenue to be generated
for the government, all experts, including international consultant Poten
and Partners, agreed that an FLNG plant holds a big advantage over onshore
LNG plant. It is the very reason that Inpex and its partner, Royal Dutch
Shell, proposed to build an FLNG plant for the block in their revised Plan of
Development (PoD)-1.
The President however believes an LNG plant built onshore is better
for Indonesia. He claimed that he made such a decision after a lot of
considerations, studying inputs from various parties and making his own
calculations about the benefits of the project.
As of this writing, Inpex and Shell have yet to make responses to the
Presidents decision. Its thus still unclear whether they will accept the
decision. Certainly, making a completely new PoD is not easy and takes
time. The PoD that has been sent by the firm to the government and has
been officially rejected by the President took several years for the firm
to complete. Meanwhile, the firms contract will end in 2028, 12 years from
now and the government has yet to give a green light that it will extend the
contract.
All the controversies surrounding the Masela LNG project, including the
infighting among the Cabinet members and involvement political interest in
the debate, have hurt investment climate in the oil and gas sector. Hopefully,
from now on, all things will go smoothly that Indonesia can regain investors
confidence.
Johannes Simbolon
Editor in Chief
Send your letters or comments on this magazine or articles inside, as well as your
opinion articles to ogeasia@petromindo.com. Opinion articles, either in Indonesian or English, are between 1,500 and 2,000 words in length.
OPINION
Masela block development state

soverignty versus contract sanctity
he long debated issue of

development options for the
Masela block in the Arafura
Sea, Maluku province has
finally ended following President Joko
Widodos decision to build the LNG
plant on land, as he recently stated
in a press conference in Pontianak,
West Kalimantan. The decision
for onshore installation is based
on the consideration for boosting
regional economy development. The
Presidents decision seems to be
based on political reasons; in fact it
was at odds with his own vision of
Indonesia as a global maritime axis.
As Minister of Energy and Mineral
Resources Sudirman Said stated, the
two contractors of the block, Inpex
Corp. and Royal Dutch Shell Plc, will
be given opportunities to review the
project costs for onshore installation
as decided by the President. There
will be indeed a delay, but I have
asked the SKK Migas to discuss with
the operators to reduce the delay,
the minister said. Although the
government decision has been made,
the timeline is still far from clear.
One of the causes for technical
delay will be finding a suitable site
for the LNG processing facility. In
addition to technical, the issues would
involve socioeconomic and cultural,
as well as religious background. The
site selection for the plant would
require a close coordination and
synergy with local governments,
including for land acquisition and
10
securing permits. Also, a survey

would require considerable time to
determine the pipeline route, given
an ocean trench between the field and
processing facility.
On non-technical matters, an
important and essential factor
that would affect the execution of
the plan is securing financing for
the project. Given the high capital
requirement, it is anticipated that
the Masela development project will
be funded using a Project Finance
scheme, i.e. a method of funding in
which the lender looks primarily to
the revenues generated by a single
project (projected cash flows of
the project), both as the source of
repayment and as security for the
exposure.
Often called off-balance sheet
financing, a project financing
structure usually involves a number
of equity investors, known as
sponsors, as well as a syndicate
of banks or other lending institutions
(likely overseas institutions) that
provide loans to the operation. The
financing is typically secured by
all of the projects assets, including
the revenue-producing contracts.
Project lenders are given a lien on all
of these assets and are able to assume
control of a project if the project
company has difficulties complying
with the loan terms.
The financing method has several
advantages, including a relatively
efficient way to finance infrastructure
projects that are important for

fulfilling people in these countries.
This kind of financing becomes an
important channel for economies to
grow. In addition to infrastructure
such as power plants, roads,
telecommunications and highways,
project finance schemes are also used
by countries being developed for the
exploration of commodities exported
to countries advanced.
For lenders, there are risks of
Project Finance scheme in various
forms, including pre-operative risks
during construction to completion of
development, risks during surgery,
risks associated with such financial
changes currency exchange rates and
the governments failure to provide
a guarantee of payment and political
risks such as riots in the country
and changes to the contract due to
changes in circumstances (changed
circumstances). The risk allocation
is done through bonds and longterm contracts between the projectcompany with other parties -which in
many cases - also a sponsor member
of the investment projects. The
willingness of a third party provides a
guarantee motivated the benefits that
can be expected from the transaction
either directly or indirectly.
Project Finance transactions
play an important role in financing
development throughout the
world. This type of financing is
usually used for large, complex
and expensive installations that
Madjedi Hasan
product that will be the source of loan

repayment is exported under a long
term sales contract, rather than sell
domestically. Accordingly, the Masela
block would ultimately be developed
using two schemes, i.e. pipeline and
onshore LNG for export. The pipeline
may also be used for subsequent gas
discoveries in the area.
Another matter that is pertinent
to be considered in the execution of
government development plan is the
potential litigation by the contractor
in the international arbitration, in
case the contractor does not agree
with the Presidents decision. This
should not be a surprise, having
regard to the myriad contractual

relationships and the immense
costs of exploration that have
been spent to find the resource.
Indonesia has some experiences in
international arbitration both dealing
with geothermal and oil and gas
contracts, as shown in the following
illustrations.
To date more than 300
energy related contracts (oil, gas,
geothermal) have been concluded
between the Government of Indonesia
(GOI) and investors. However, as of
today only three arbitration cases
have been reported, consisting of two
cases involving geothermal and one
Petromindo|Khalsa
might include, for example, power

plants, chemical processing
plants, mines, transportation
infrastructure, environment, and
telecommunications infrastructures.
In Indonesia, starting in the mid1970s for the construction of
liquefied natural gas (LNG) in Arun in
Aceh and Bontang in East Kalimantan,
the use of Project Finance scheme
is growing rapidly in power plant
construction in the 1990s, when
the government opened the power
generation market for private
business.
As it will involve foreign creditors,
this would easily be secured if the
11
OPINION
arbitral tribunal under the UNCITRAL
rule.
In late 1997 and early 1998,
as a result of Asian financial
crisis, the GOI issued a series of
presidential decrees (PDs) declaring
that a number of international
infrastructure projects including
geothermal projects would be
reviewed or postponed. While
some companies were affected by the
PDs, but only two groups of company,
namely consortium of California
Energy (CE) and Patuha Power
(PP) and Karaha Bodas Company
(KBC) decided to initiate arbitration
proceedings, alleging breach of the
ESCs by PLN in the case of CE, and
JOC by Pertamina in the case of KBC.
They both seek the termination of the
contracts and the award of damages.
The CE and PP arbitration

proceeding centered on claims arising
under two separate ESCs that gave
the two project companies the right to
explore geothermal power resources
in the Dieng and Patuha regions and
to build power-generating plants to a
contractually specified capacity. Even
though the impact of the economic
crisis on the Indonesian economy
was amply noted by the arbitrators,
they did not allow PLN to use either
changed economic circumstances
or the PDs as an excuse to depart
from its contractual obligations. The
Final Awards (totaling US$572.3
million) stated that PLNs breaches
amounted to anticipatory repudiation
of the contracts and ordered their
termination. In the case of KBC, the
arbitrators ruled that Pertamina and
Courtesy of SKK MIGAS
case involving oil activities. The two

arbitration cases involved dispute
in the geothermal contract centered
on claims arising under the Joint
Operation Contract (JOC) and Energy
Sales Contracts (ESCs). The JOC is an
agreement between state owned oil
and gas firm PT Pertamina (Persero)
and its investor, in which the former
gives the investor the right to explore
geothermal power resources and
build power-generating plants to
a contractually specified capacity.
Under the ESC, state owned electricity
firm PT Perusahaan Listrik Negara
(Persero) (PLN) is obligated to
purchase the electricity produced
from the plants for a period of
thirty years. In the two contractual
agreements, the parties agreed to
settle all disputes in an international
12
PLN had breached the agreements

with KBC, and were condemned
to pay $111.1 million for lost
expenditures plus interest and $150
million for loss of profits.
In oil and gas sector, there is
only one record of arbitration case
involving a PSC contractor and state
owned enterprise (SOE), i.e. PT Lirik
Petroleum (PTLP) vs. Pertamina,
which was resolved under the
ICCs arbitration rule. The dispute
stemmed from disagreement on the
determination of commerciality of a
field under the enhanced oil recovery
(EOR) contract and Pertaminas
failure to meet the cash call as agreed
in the EOR contract. Efforts to settle
by the governments mediation failed
to resolve the dispute and as a result
PTLP decided to bring up the matter
to ICC Court of Arbitration.
In its final award, the tribunal
stated that Pertamina wrongly refused
to accord commerciality to the three
fields in breach of the EOR contract,
and was therefore liable to Lirik
Petroleum for its loss of profits from
being unable to realize incremental
oil from the three fields. Pertamina
shall pay Lirik Petroleum the sum of
$34,496,428 in damages for breach of
the EOR contract. In its consideration,
the arbitration tribunal said as much
as Lirik Petroleum bears the financial
risk of the pilot program, Pertamina
could not simply deny commerciality
to a field solely based on its discretion.
Pertamina must consider the results
of the pilot study and determine
whether the criteria for commerciality
as espoused by the EOR contract
are met. It must, of course, act in
good faith. In coming to its decision,
Pertamina cannot take into account
circumstances and criteria which are
not relevant under the EOR contract.
Contract sanctity
An important issue that is
pertinent to see the fairness of all
the three awards is the decision of
tribunal to apply the principle of
pacta sunt servanda rigidly, while in
geothermal case some indeed would
argue that economic downturns
are simply a contractual risk and
parties should take into account
when negotiating their contracts.
The principle of pacta sunt servanda
(ones word be kept) is the traditional
fundamental underpinning of any
business contract law and is based
on natural justice and economic
requirements in order to provide
legal certainty and stability. Such a
philosophy is also found in the Islamic
Sharia (Holy Koran) as for instance
expressed in the first paragraph of Al
Maidah where it says O Ye Muslims,
Keep Your Word. The award is also
based on the principle of good faith,
which has been universally applied as
a general legal principle both in civil
code countries (such as Indonesia)
and international law, and even in the
Indonesias old traditional law which
imposed sanctions of isolation from
the community for those who fail to
pay damages for breaching a promise.
However, the rigid and formalistic
application to contract may in
practice lead to inequitable situations
which are contrary to its objectives,
such as in the two arbitration
cases. In fact, the financial crisis
in geothermal case, which was not
only affected Indonesia, has altered
the foundation of the contract and
affected the position of the parties,
who, acting as reasonable persons,
would have made it differently,
had the changed situation been
known to them. Also, GOIs decision
to postpone some infrastructure
projects has been requested by the

IMF.
While it has been recognized that
contract sanctity has never been
treated as an absolute principle
in both theory and practice,
nevertheless, the application of pacta
sunt servanda principle remains
essential in social and business life
and international relations as well.
Although it is not stated explicitly, the
principle of pacta sunt servanda has
been the foundation of the Production
Sharing Contract as stated in the
preamble of Indonesias PSC under
the Law Nr. 44/1960 as follows:
Now, therefore, in consideration
of the mutual promises, covenants
and conditions, hereinafter set out, to
be performed and kept by the parties
hereto, it is hereby stipulated and
agreed by and between the parties
hereto as follows:
In conclusion, the sovereignty
over natural resources should not
always prevail over rights under
investment contracts as reflected
in the three arbitration cases. It
has been a fundamental principle of
law that contractual undertakings
must be respected. As one of the
contracting parties, GOI is bound
to apply the principle in applying
new law and regulation to the
existing contract, especially if it
affects commercial terms of the
contract. The respect for contractual
obligations, however, does not
imply that a state cannot exercise its
sovereignty to request adjustment
or adopt laws or regulations, but as
the three arbitration awards show
this must be made in accordance
with the terms and spirit of the
contract which constitutes a binding
legal agreement and upon which the
parties voluntarily entered.
13
Pertamina cuts fuel prices

State-owned oil and gas firm PT
Pertamina starting March 15 cuts
down the price of its oil fuel products
including Pertamax, Pertamax Plus,
Pertamax Dex and Pertalite by Rp 200
per liter.
Pertamina Vice President for
Corporate Communications Wianda
Pusponegoro said in a statement
Tuesday that the price cut is made in
line with the current drop in crude
prices.
The price of the Pertamax fuel
brand in Jakarta, for instance, has
been cut down from Rp 7,950 per
liter to Rp 7,750 per liter, while the
price of Pertamax Plus declines from
Rp 8,950 to Rp 8,750 per liter. The
price of high quality automotive
diesel fuel Pertamax Dex has also
been lowered to Rp 8,600 per liter
from Rp 8,800. Meanwhile, the price
of Petralite is lowered to Rp 7,500
from Rp 7,700 per liter.
Pertamina said that the price of
non-subsidized automotive diesel seen
a greater price cut of Rp 400 per liter.
Medco plans 2D seismic

in Q4 for South Sumatra
IDX-listed PT Medco Energi

Internasional announced recently
that it plans to carry out a 2D seismic
survey on 330 km in South Sumatra
PSC in South Sumatra province in the
fourth quarter of 2016.
Authority for Expenditures (AFE)
for the survey has been approved by
SKK Migas, the firm said.
The program, which was a followup to the previous program, aims to
ascertain targets in shallow areas
of Musi Platform which has a better
success rate as evidenced in the new
discoveries at Arung-1 and Hijau-2
wells.
14
Petromindo|Khalsa
INDUSTRY NEWS: OIL & GAS
The block is 100 percent owned

by PT Medco E&P Indonesia with its
contract valid through 2033.
Pertamina to start
construction of 956 km
fuel pipeline this year
State-owned oil and gas firm

PT Pertamina said it is finalizing
the front end engineering design
(FEED) for the planned 956 km
oil fuel pipeline project in Java as
construction is expected to start end
of this year.
The FEED is in the process of
being completed. Construction is
expected to start end of this year,
said Pertamina Vice President for
Technical Services Sofyan Yusuf in a
statement Saturday.
In the first stage, Pertamina
will construct a combined 401
km pipeline comprising of the
Lomanis-Rewulu (180 km) section,
Lomanis-Tasikmalaya (128 km), and
Cikampek-Plumpang II (93 km).
Sofyan said that total investment
for the project is still being calculated.
The pipeline will channel Premium
Brand, automotive diesel, Pertalite

brand and Pertamax brand fuel
products.
Pertamina currently operates
1,283 km oil fuel pipelines in Java,
and is seeking to expand the pipeline
as total pipeline requirement on the
island reaches 2,239 km.
Santos to spud two wells

in Madura Offshore block
ASX-listed Santos Ltd is scheduled

to spud one well, Merem 1, in Madura
Offshore block, East Java on March
12, which will be followed by the
spudding of another well, Meliwis-1.
This was said by Ngatijan, Deputy
of Survey and Drilling Division at SKK
Migas.
Santos has a 67.5 percent interest
and is the operator of Madura Offshore
PSC. Other partners are PC Madura Ltd
and PT Petrogas Pantai Madura.
As reported earlier in this
magazine, Santos Indonesia has
allocated between US$15 and $20
million in capital expenditures for
exploration activities in Indonesia
this year.
15
UK-based firm Ophir Energy Plc

said it has completed the construction
and commissioning of production
facilities at Kerendan gas field in
Bangkanai PSC, Central Kalimantan,
last year.
The company said in a statement
recently that at the end of the year the
company supplied a small quantity of
commissioning gas to a power plant
of state-owned electricity firm PT
Perusahaan Lisrik Negara (PLN)
We forecast that low rate
commissioning activities will
continue into the second half of 2016,
at which time the plant will start full
production of phase 1, the company
said in the statement.
Ophir said that agreement has
been reached with PLN to amend the
Gas Sales Agreement (GSA) to set the
commercial start date as January 11,
2016 with Take or Pay on the initial
GSA applicable from this date.
There is little progress to report
so far in revising upwards the price
of the gas; the negotiation is taking
longer than hoped due to regulatory
processes that have had to be
16
completed prior to the gas price being

finalised, it said.
We expect these processes to
conclude during 2016 and to yield
an improvement to the current
gas price. In the meantime, as part
of the amendment to the GSA, the
inflation mechanism was amended
from 3 percent every three years to 3
percent per annum, Ophir added.
The Kerendan field contains 120
Bcf of 2P reserves and a further 160
Bcf of contingent resource. Ophir
owns 70 percent of Bangkanai PSC
through Salamander Energy, which
was acquired in November of 2014.
Pertamina targets $100m

efficiency in crude and fuel
procurement
State owned oil and gas firm

PT Pertamina (Persero) target cost
cutting amounting to US$100 million
this year as a result of efficiency
program implemented in procurement
of crude and oil fuels by its purchasing
arm, Integrated Supply Chain (ISC).
Last year, system management
implemented by ISC managed to
book cost efficiency worth $208.1
million, well higher than the target
of $91.7 million in crude and fuel

procurement. This year, the system
management will continue. Our
efficiency target from crude and
fuel procurement is $100 million,
Pertaminas Corporate Secretary
Wianda Pusponegoro said.
In order to achieve the cost
efficiency target, Pertamina plans
several strategic initiatives, including
maximizing the purchasing of
domestically-produced crude,
efficiency in procurement of crude,
oil fuels and LPG, processing of crude
outside of the country, purchasing
crude, condensate, oil fuels and LPG
from various countries on G-to-G basis.
In 2016, gasoline demand is
estimated at 164.6 million barrels,
while gasoil at 171.1 million barrels,
LPG at 7.45 million tons.
Nusantara Regas awaits

LNG from Tangguh
Ophir completes construction

of Kerendan gas plant
PT Nusantara Regas, a joint

venture company between stateowned oil and gas firm PT Pertamina
dan state-controlled gas distribution
firm PT PGN Tbk, is awaiting for
the arrival of three cargoes of LNG
from the Tangguh LNG plant in West
Papua.
Cargoes from Tangguh have yet
to be delivered, it will be end June
or early July, said Nusantara Regas
President Director Tammy Meidharma
Sumarna to Petromindo.
Nusantara Regas has been
allocated 26 cargoes of LNG this
year, of which 23 come from Bontang
plant in East Kalimantan, and the
remainder from Tangguh.
Nusantara Regas operates a
floating storage and regasification
unit (FSRU) in the port of Tanjung
Priok in Jakarta and supplies gas to
state electricity firm PT PLN.
17
Six cargoes of LNG from

the Bontang LNG plant in East
Kalimantan will be sold to traders
rather than end buyers through spot
market as efforts to sell them to end
buyers have apparently failed.
Director General of Oil and Gas
IGN Wiratmaja said the Ministry
of Energy and Mineral Resources
has approved plans of upstream
authority SKK Migas to sell the six
cargoes.
All the cargoes will be released
in the second quarter of 2016,
Wiratmaja told Petromindo.
SKK Migas LNG Marketing Section
Head Rayendra confirmed that six
cargoes from Bontang will be sold to
traders, better known in the industry
as portfolio players, rather than
end-buyers.
We have received approval from
the ministry to sell the cargoes on the
spot market in the second quarter
to portfolio players or traders,
Rayendra said.
The government has assigned
state owned oil and gas firm
PT Pertamina (Persero) to sell
Indonesian LNG for which the firm
is entitled to some marketing fee.
Pertamina is normally able to sell the
LNG to end-buyers. This is probably
the first time the firm has failed to sell
the LNG to end-buyers.
Tangguh Train-1 to undergo

routine maintenance
Tangguh LNGs Train-1 will

undergo routine planned maintenance
in April of this year, said Dharmawan
Samsu, BP Indonesia Country
Manager.
The maintenance has been
factored into Tangguhs 2016
18
production plan and will not impact

our commitment to Tangguh LNG
buyers, he told Petromindo.
The Tangguh LNG plant, which
is located in West Papua province,
currently has two units each with
capacity of 3.8 MTPA.
SKK Migas: Govt receives

$780m of ASR funds
Upstream authority SKK Migas

said that the goverment has currently
received about US$780 million
worth of the so-called Abandonment
and Site Restoration (ASR) funds
allocated by production sharing
contractors (PSCs) operating in the
country.
Deputy for Finance Control at
SKK Migas Parulian Sihotang said to
Petromindo that the ASR funds were
received from 58 PSCs.
The ASR funds will be used to
among others finance restoration
work after the PSCs abandon
their concessions. While it is not
mandated under the contract, the
funds are required as ruled by a 2010
regulation issued by the oil and gas
upstream authority.
Petromindo|Boim
Six cargoes from Bontang

sold to traders
Sakas Fasken block

producing 160 mmscfd
of shale gas
PT Saka Energi Indonesia, a
subsidiary of state-controlled gas
distribution firm PT Perusahaan Gas
Negara Tbk. (PGN), said that the Fasken
area Eagle Ford shale properties in
Texas, the US, has currently produced
an average 160 mmscfd of shale gas.
Saka Operation Director Tumbur
Parlindungan told Petromindo that
the production target for this year is
approximately 160-190 mmscfd of gas.
In 2014, Saka set up a joint
venture with US-based Swift Energy,
in which the former holds 36 percent
stake and the latter 64 percent, to
develop the Fasken shale gas block,
which is estimated to have shale gas
reserves of about 1 trillion cubic feet.
Elsewhere, Saka said that gas
pipeline infrastructure supporting the
Fasken field has a capacity of up to
250 mmscfd, while output dedicated
for export can be made via LNG plant
in Texas. Tumbur hopes that Sakas
investment in Fasken would help
strengthen Indonesias gas supply
security.
19
Petromindo|Boim
SKK Migas prepares online

system for land reports
has prepared an online system for
Production Sharing Contract (PSC)
holders to report the lands used for
their operation, the agency said in
statement recently.
According to SKK Migas Deputy
of Business Support Control Rudianto
Rimbono, lands used by PSC holders
are considered as state assets.
Still, each of them is required
to make report about the lands in
accordance with several regulations,
including Ministry of Finance
Regulation No. 135/PMK.06/2009,
Director General of State Assets
Circular No. S-11161/MK.5/2015
dated Dec. 31, 2015 and Letter
from SKK Migas Head of Formality
and Legal Advice No. SRT-0586/
SKKD3000/2015/S0 dated July 30,
2015.
The (online) system is being
communicated (to PSC holders) and is
20
now on trial. Once completed, it will

be implemented, Rudianto said.
Plaju refinery gets

condensate from
Perta-Samtan
The Plaju-Sungai Gerong refinery

owned by state owned oil and gas
firm PT Pertamina (Persero) in South
Sumatra has started processing
condensate produced from the LPG
plant owned by PT Perta-Samtan Gas,
also located in South Sumatra.
The condensate is a by-product
of the LPG plant owned by PertaSamtan. Previously, the condensate
was delivered to PT Pertamina
EP Asset Prabumulih, which later
sold it to buyers outside Pertamina
through Pertaminas marketing arm,
Integrated Supply Chain. Since last
month however, the condensate has
been delivered to the Plaju-Sungai
Gerong refinery, the refinerys
General Manager Mahendrata
Sudibja said.
The condensate was processed

into valuable products such as
solvents and naphtha at the refinery,
according to him.
This, he said, optimizes business
efficiency and profit margin of
Pertamina.
Perta-Samtan supplies 14,000
barrels of condensate per delivery
and around 42,000 barrels per
month. The Plaju-Sungai Gerong
refinery has built a 6 pipes
measuring around 4 km to transfer
the condensate from Perta-Samtan
plant to the refinery. By building
the transfer pipes, the refinery
is able to cut its transportation
costs. Previously, the refinery uses
vessels to bring its condensate
feedstock.
Perta-Samtan is a joint venture
between Pertamina (66 percent)
and Korean firm Samtan Co. Ltd
(34 percent). The Plaju-Sungai
Gerong refinery is wholly owned by
Pertamina.
Petromindo|Khalsa
Spudding of Sidayu-4 well

to be completed end-March
PT Saka Energi Indonesia, a
subsidiary of state-controlled gas
distribution firm PT Perusahaan Gas
Negara (PGN) Tbk, expects the spudding
of the Sidayu-4 exploration well in
Pangkah PSC, offshore East Java, will be
completed by the end of this month.
Spudding in Sidayu-4 well is
still on-going and it is expected to be
finished late March, Chief Operating
Officer Tumbur Parlindungan said to
Petromindo.
The drilling began in mid-January,
he said earlier. After the drilling,
his firm would submit a Plan of
Development (PoD) for the block in
June 2016, according to Tumbur.
In October 2015, Saka announced
a significant discovery during the
drilling of the Sidayu-3 exploration
well on Aug. 17, 2015 with preliminary
assessment indicating reserves
amounting to 300 million barrels of oil.
The Sidayu discovery is the latest
in the string of success made by the
firm during exploration in recent
years. Five months ago, the firm also
announced the discovery of gas at the
Tumbur Parlindungan
SIS-A#1 wildcat well in South Sesulu

block, offshore East Kalimantan.
The Pangkah block, located off the
northeast coast of Java, is 100 percent
owned by Saka. The firm bought out the
block from American firm Hess Corp in
two transactions worth US$915 million
executed in 2013 and 2014.
HCML unveils EPCI tender

for MDK field development
Husky-CNOOC Madura Limited

(HCML) is inviting qualified providers
of goods/services to participate in
the qualification assessment for
procurement services tender of the
following: Engineering, Procurement,
Construction and Installation (EPCI)
for MDK Field Development in the
Madura Strait block, offshore East Java.
HCML, the operator of the block,
said in a tender announcement seen
recently that contractor shall be fully
responsible to build facilities which
consist of a four-legged unmanned
platform and install 10subsea
pipeline approximately 100 meters
long connecting to a tie-in point at a
water depth of approximately 103
meters.
The construction work of the

facility shall include but not limited to
the following: detailed engineering,
procurement (including material
take-off), supply, pre-fabrication,
construction, pre-commissioning and
commisioning for onshore system/
package, load-out, transportation,
offshore installation, hook-up,
offshore pre-commisioning and
commisioning, x-tree connection to
the production line (after drilling) and
hydrocarbon start-up of the facility.
Husky Energy and CNOOC Ltd
respectively hold a 40 percent equity
interest in Madura Straits PSC, with
the remaining 20 percent held by
Samudra Energy Ltd. The MDK field is
expected to come onstream in 2017.
Regulation on mini fuel

refinery to be completed
this year
The Ministry of Energy and

Mineral Resources is currently
drafting a new regulation to facilitate
the planned development of mini fuel
refineries in the country.
Director General of Oil and
Gas IGN Wiratmaja Puja said in
a statement recently that the
ministerial regulation is expected to
be completed this year.
He said that the government is
planning to develop a number of mini
fuel refinery with capacity of 6,00020,000 bpd to help cut down import
and reduce distribution cost.
He added that the planned mini
fuel refinery projects form part of the
countrys energy security.
The mini fuel refineries will
be developed in eight clusters
including in North Sumatra, Riau (two
clusters), Jambi, South Sumatra, South
Kalimantan, North Kalimantan, and
Maluku.
21
The Ministry of Energy and

Mineral Resources said recently it
will continue to simplify its licensing
system, seeking to cut the number of
licenses from 89 at present to only
ten this year.
We have agreed to cut the number
of licenses to only ten (this year).
This is in line with the Presidents
instruction to continue simplifying
licenses, Minister of Energy and
Mineral Resources Sudirman Said said
over the weekend during the signing
of the ministrys 2016 service and
goods procurement contracts.
The ten licenses consist of three
for the oil and gas sector, three for
mineral and coal sector, three for
power sector, one for renewable
energy sector, he said.
The three licenses for the oil
and gas sector are one, license for
upstream business, second, license
for downstream business and third,
license for service business.
Sudirman explained until 2015,
licenses that investors needed to
obtain from the ministry numbered
22
218. It was later reduced to 89. Of the

89 licenses, 63 has been delivered to
the one-stop licensing service at the
National Investment Coordinating
Board (BKPM) for handling.
Spudding of M3nergys
Cula-1 well completed
Drilling activity at the Cula-1

exploration well within the Ujung
Kulon block, offshore Banten,
operated by Malaysian firm
M3nergy Gamma Sdn. Bhd. has been
completed.
The well was spudded by using
the Soehanah jackup rig owned
by IDX-listed oil and gas drilling
contractor PT Apexindo Pratama
Duta Tbk.
Drilling at Cula-1 well was
finished a few days ago, Manager
of Corporate Finance & Investor
Relations at Apexindo, Paolo
Kartadjoemena said to Petromindo.
The well was drilled up to total
depth of 7,870 feet.
The Ujung Kulon PSC covers an
area of approximately 3,706 sq km
both onshore and offshore in the
southern part of Banten province. The
30-year PSC was signed on March 22,

2007 and was awarded to M3nergy.
The firm has a 100 percent interest in
the block.
Sele Raya to spud

Lumbian-2 well
Oil and gas firm PT Sele Raya

Merangin Dua (SRMD) plans to spud
the Lumbian-2 well in the Merangin
II block this month, according to a top
official of the firm.
This year we will drill only one
well in Merangin II block. The spud-in
of the Lumbian-2 well is planned for
this month, companys President and
General Manager Juchiro Tampi told
Petromindo.
The Merangin II block spans three
regencies, namely Musi Rawas, Musi
Rawas Utara, both in South Sumatra
province, and Sorolangun in Jambi
province.
The block was awarded to Sele
Raya in October 2003. Sele Raya
operates the block with a 44.6
percent interest, while the remaining
is held by Merangin B.V. (35.4
percent) and Sinochem Merangin Ltd.
(20 percent).
Ministry to cut licenses

to only 10
Petromindo|Khalsa
Cepu block in the East JavaCentral Java border area, is the most
significant oil recovery in the past
decade in the country.
The oil production is sent through
a pipe to storage tank on the Gagak
Rimang vessel off the coast of Palang,
Tuban.
ExxonMobil and state owned
oil company Pertamina have a 45
percent stake each in the Cepu block
with the remaining 10 percent held
by local minority shareholders.
Pertagas ready to deliver

gas to Unilever
SKK Migas supports
Simenggaris mini LNG plant
said it full supports plan by JOB
Pertamina-Medco E&P Simenggaris,
the operator of the Simenggaris block
in North Kalimantan, to develop a
mini LNG plant.
This was said by SKK Migas
deputy M.I. Zikrullah in a statement
seen recently.
As has been previously reported,
JOB Pertamina Medco plans to
develop a mini LNG with a capacity
of 30-35 mmscfd in a bid to monetize
stranded gas in the Simenggaris block
using the Donggi Senoro LNG plant in
Central Sulawesi as a model.
The SKK Migas statement quoted
General Manager of JOB Pertamina
Medco E&P Simenggaris Ahmad Zaidy
as saying that state-owned electricity
company PLN and state-owned oil
and gas firm PT Pertamina are seen
as potential buyers, respectively with
a volume of 5 and 25 mmscfd.
As of November of last year, SKK
Migas said that the Simenggaris block
had produced 0.5 mmscfd of gas,
distributed to a power plant in Tana

Tidung regency, North Kalimantan.
The Simenggaris PSC is located
in Tana tidung regency, North
Kalimantan province bordering to the
Malaysian state of Sabah. The block
is operated by JOB Pertamina-Medco
E&P Simenggaris (JOB-PMEPS), in
which Medco holds 62.5 percent
interest and the balance is owned by
Pertamina.
Cepu block oil production

rises to new peak
The oil production of the Banyu

Urip field in the Cepu block has risen
to a new peak at 165,000 barrels per
day (bpd), its operator ExxonMobil
Cepu Limited (EMCL), the subsidiary
of ExxonMobil Indonesia (EMOI) said.
EMOI Vice President for Public
and Government Affairs Erwin
Maryoto was quoted by Antara as
saying the production rose gradually
from earlier peak at 150,000 bpd.
Erwin said the company hopes to
be able to increase the production,
adding the peak production could be
as high as 205,000 bpd.
PT Pertamina Gas (Pertagas) is

now ready to deliver gas to consumer
goods producer Unilever in Sei
Mengkei special economic zone (KEK
Sei Mengkei) in North Sumatra.
We are only waiting for
Unilevers readiness (to receive
the gas). The gas is ready to flow,
Pertagas President Director Hendra
Jaya told Petromindo recently, adding
that the delivery to Unilever is likely
to start in early April.
The gas will be channeled through
the pipeline stretching from Medan
Industrial Zone (KIM) to Sei Mengkei
Special Economic Zone (KEK Sei
Mengkei). According to Hendra, the
KIM-KEK Sei Mengkei is now in the
tie-in process to link it to the ArunBelawan pipeline, which is used to
transmit gas from Aceh to North
Sumatra.
The gas will be channeled to
Unilever at a volume rate of 3-4
mmscfd. According to Jugi Prajogo,
President Director of PT Pertagas
Niaga, a subsidiary of Pertagas, under
conract, Unilever will get gas supply
from Pertagas over a period of five
years at the price of around $13 per
mmbtu.
23
Minister of Energy and Mineral

Resources Sudirman Said on March
3 inaugurated the operation of city
gas network, a compressed natural
gas (CNG) station and five units of
gas transportation module (GTM) in
Cikarang, West Java province.
The city gas network and CNG
station was built using state budget.
The management of the new facilities
is entrusted to state owned oil and
gas firm PT Pertamina (Persero),
Sudirman said.
In his speech during the
inauguration ceremony, the minister
underlined that the development
of the new facilities was part of the
governments efforts to upgrade the
publics service in providing cheap,
clean and safe energy and reduce fuel
subsidies, particularly for kerosene
and LPG.
Petrogas supplies 0.2 mmscfd

for Sorong city gas
Petrogas (Basin) Ltd, the operator
of Kepala Burung PSC in West Papua
province, has been assigned by the
government to channel gas to state
owned gas distributor PT Perusahaan
Gas Negara (Persero) Tbk (PGN) for
city gas network in Sorong regency.
The gas supplied in a volume of
0.2 mmscfd is distributed to 3,898
houses in several districts of Sorong
regency, namely Malawii, Malawele,
Mariat Pantai, Klabinain and Aimas
The utilization of gas
by households is part of the
governments program of
encouraging the public from
kerosene to gas. The gas distribution
is expected to create significant
multiplier effects for the development
24
of eastern Indonesia, particularly

Sorong, Petrogas (Basin) Ltds
General Manager Syafri Syafr told
Petromindo
He said the gas supply proves
Petrogas commitment to supporting
the governments city gas program.
Philips 66 teams up KAS

to market Kendall lubricants
di Indonesia
American lubricant producer

Phillips 66 Lubricants and
Indonesian firm PT Kendali Andalan
Sempurna (KAS) announced
recently cooperation in marketing
the formers Kendall lubricant in
Indonesia.
Phillips 66, the third largest
lubricant producer in the US partly
owned by investor giant Warren
Buffet, now produces four brands
of lubricants, namely Phillips 66,
Conoco, 76 and Kendall, used various
industries, such as automotive,
agriculture, aviation, mining, power
and construction industries The
Minister inaugurates city

gas, CNG station and GTM in
Cikarang
Kendall lubricant is available in 50

countries, Director of International
Sales Lubricants Phillips 66 said in a
press conference.
The Kendall product that is now
sold in Indonesia is produced in the
United Sates with KAS handling after
sales service, she said.
KAS Head of Sales and Marketing
Christopher Tan said in Indonesia,
KAS will introduce Kendall products
for vehicles using oil fuel and
diesel as fuel as well as automatic
transmission fluid (ATF) vehicles
with limited slip gear lubricants.
The products include GT-1 Full
Synthetic Motor Oil 0W-20 with
Liquid Titanium for gasoline-fueled
vehicles (API SN), Super-DXA
Diesel Engine Oil with Liquid
Titanium 10W-30 for diesel-fueled
vehicles (API CJ4/SN), and Kendall
VersaTrans ATF for transmission
oil which is suitable for all types of
vehicles (JASO M315 Class IA and
Special Limited-Slip Gear (API GL-5,
SAE 80W-90).
The operation of a mini-scale

LNG Terminal in Benoa, Bali, which
is operated by PT Pelindo Energi
Logistik (PEL), a subsidiary of stateowned port operator PT Pelabuhan
Indonesia (Pelindo) III, has been
postponed among others because the
required permit for the use of foreign
vessel has yet to be issued.
This was said by Director
of Operations and Business
Development of Pelindo III, Rahmat
Satria to Petromindo. He added that
certain facilities in Benoa are not yet
ready as required special material has
to be imported from Germanay.
Director of PEL Gembong
Primadjaja said the delay was also
made because a gas sales agreement
with the Bontang LNG plant has yet to
be completed.
Rahmat said that the LNG terminal
is now expected to start operation
in early May of this year, assuming
that the permit for the use of foreign
vessel will be issued mid March, and
the first gas shipment takes place end
of March.
PEL has appointed IDX-listed
energy transporter PT Humpuss
Intermodal Transport Tbks subsidiary
PT Humpuss Transportasi Kimia
(HTK) to transport the LNG from
Bontang LNG plant in East Kalimantan
to the Benoa LNG terminal under a
seven-year contract. Previously, PEL
scheduled the first delivery of LNG to
occur on Feb. 25, 2016.
President Director of Humpuss
Theo Lekatompessy confirmed to
Petromindo that until now there
has been no delivery of LNG from
Bontang to Benoa.
He said that Humpuss vessel
called Triputra has been ready in
Petromindo doc.
Pelindo postpones operation

of Benoa LNG terminal
Ibrahim Hasyim
Bontang since January 2.

The LNG carrier Triputra is
formerly known as Surya Satsuma,
which was previously used by
Humpuss to transport LNG from
Bontang LNG plant to Japan LNG
buyers.
The Benoa LNG terminal will
deliver 40 mmscfd of gas, sourced
from the Bontang LNG plant, to the
200 MW PLTDG Pesanggaran diesel
and gas power plant owned by PT
Indonesia Power, a subsidiary of state
owned electricity firm PT Perusahaan
Listrik Negara (PLN).
Pertamina to switch to gas as

fuel of Dumai refinery next
year
Pertamina will switch from oil fuel
to cheaper gas as fuel for its crude
refinery in Dumai, Riau Province,
starting next year.
This was said by Ibrahim Hasyim,

an official at downstream oil and gas
authority BPH Migas, in a statement
issued last week. He said that
the switch into gas forms part of
efforts by the company to increase
efficiency in the downstream
business.
The plan also comes as Pertamina
is in the process of increase the
capacity of the Dumai refinery from
120,000 bpd to 150,000 bpd.
The required gas supply will
come among others from gas
fields operated by PetroChina to
be channeled via a planned 90-km
dedicated pipeline from Duri to
Dumai.
The gas requirement in the initial
phase will be 50 mmscfd, and will
gradually increase to 150 mmscfd
in line with the progress of the
(expansion of the) refinery, Ibrahim
said.
25

The Tanjung II CBM PSC, which is
wholly owned by PHE, covers a total
area of 1,092 sq km spanning the
regencies of Tabalong, Balangan, Hulu
Sungai Tengah, Hulu Sungai Utara
dan Barito
Govt to issue regulation to

create uniform gas price
February ICP up
to $28.92 per barrel
The Indonesian basket oil price,
known as Indonesian Crude Price
(ICP), stood at US$28.92 per barrel in
February 2016, up $1.43 from $27.49
in January, as shown recently on the
website of the Directorate General of
Oil and Gas at the Energy and Mineral
Resources Ministry.
The benchmark price of Minas/
SLC crude averaged at $28.66 per
barrel in February, an increase
from $26.63 in January, the website
reported.
The increase occurred in line
with the rise of crude prices in the
international market.
PHE has drilled eight CBM

wells in South Kalimantan
PHE Metana Tanjung II announced

recently it has completed the drilling
of three exploration wells and five
pilot/dewatering wells in Tanjung II
CBM PSC in South Kalimantan.
26
Tonny S.Priantoro, General

Manager of PHE Metana Tanjung II,
said the drilling campaign has been
carried out since 2012.
Three coal seams were found
during exploration drilling at
Warukin Atas formation, namely
Seam A, B and C.
The discovery was followed by
drilling of pilot/dewatering wells by
making four wells as cluster around
TJ-2-CBM-002 exploration well. The
drilling of four wells and re-entry of
the TJ-2-CBM-002 well was carried
out in 2014 and 2015 with zero
accident and cost efficiency of 35
percent.
With regards the five pilot/
dewatering wells, PHE used Cased
Hole Perforation at TJ-2-CBM-P4
and TJ-2-CBM-002P wells as
completion method, followed by
fracturing. Thus far, there are two
wells -- TJ-2-CBM-002P and TJ2-CBM-P4 which have flowed
methane gas (CH4).
The government will issue a

presidential regulation to control
natural gas market with the purpose
of creating uniform prices for the fuel
across the country, the Directorate
General of Oil and Gas said in a
statement recently.
Today, natural gas prices are
varied with some areas of the country
paying lower prices than the others,
thus creating a sense of injustice
among the people. The regulation
aims to rectify the situation by
creating justice for all, Director
General of Oil and Gas IGN Wiratmaja
said in a statement.
In each area of Indonesia, gas
prices are varied. The challenge and
homework for us is thus, How to
manage the gas market in a good and
fair way, how to manage the prices,
he said during the Petrogas Days
Energizing Indonesia Forum 2016 in
Jakarta recently.
The gas prices in Java for instance
are starkly different from those in
Sumatra, he added.
He said the government was
getting inputs from universities such as
Yogyakartas University of Gajahmada
for the drafting of the regulation.
Under the regulation, all gas,
either produced locally or imported,
will be managed by a buffer agency
which create uniform prices. The
agency wont manage the gas market
physically but virtually instead, he
said.
PT Pertamina EP (PEP) Asset

2, an upstream subsidiary of state
owned oil and gas firm PT Pertamina
(Pesero) will soon kick off the
Engineering, Procurement and
Construction (EPC) works for the
Paku Gajah Development Project
(PGDP) in Muara Enim regency, South
Sumatra.
Asmudin, PHE Asset 2s HSSE
Operation Manager, said campaign to
inform the local community and the
government on the project has been
completed.
With the socialization having
been completed, the EPC for PGDP
will soon kick off. The project is
expected to come onstream at end2016 or early 2017, he said.
In May 2014, then Pertaminas
SVP Technology Development
Gunung Sardjono Hadi said the Paku
Gajah field will produce 45 MMCFD
of gas and 350 barrels of condensate
per day. Pertamina will spend
US$135 million to develop the field.
Paku Gajah gas will be absorbed by
consumers in South Sumatra as well
as in West Java.
Govt to build gas connections

to 89,000 houses this year
The government will build gas

pipes to a total of 89,000 houses
this year as part of the expansion of
city gas networks in six cities, the
Directorate General of Oil and Gas
said in a statement recently.
The six cities are Tarakan,
Surabaya, Balikpapan, Cilegon, Batam
and Prabumulih. The largest project
will be developed in Prabumulih with
a total cost of Rp 493 billion.
Next year, the government will
build gas pipes to 200,000 houses,
Director General of Oil and Gas IGN

Wiratmaja said during Petrogas Days
Energizing Indonesia Forum 2016 in
Jakarta recently
The development of city gas
networks aims to provide the public
with clean and cheap energy and
encourage the public to switch to
gas from LPG and thus reduce the
countrys LPG imports. We still have
a lot of gas reserves, he said.
Wiratmaja noted that LPG
consumption grows by 13 percent
each year. Indonesian LPG production
now reaches 2.27 million tons, while
consumption stands at 6.57 million
tons per year, a huge deficit which
forces Indonesia huge amount of LPG
each year.
PEP expects output from

Asset 2 to contribute 42.5%
of total production
PT Pertamina EP (PEP), an
upstream subsidiary of state-owned
oil and gas firm PT Pertamina, said
that its subsidiary PT Pertamina EP
Asset 2 is expected to contribute
about 42.5 percent of PEPs total gas
production of 1,050.73 mmscfd this
year, Investor Daily reported recently.
Petromindo|Khalsa
PEP to start EPC for Paku

Gajah project soon
The paper quoted Ekariza, General

Manager of Pertamina Asset 2 as
saying that gas production from
January to February of this year
has reached 449.22 mmscfd, which
exceeded the year-to-date target of
446.58 mmscfd.
The gas production comes from
four oil and gas fields located in
southern part of Sumatra including
Field Prabumulih, Field Pendopo,
Field Rimau, and Field Adera.
Ekariza said the company
seeks to exceed this years gas
production target by maintaining
production facilities and developing
a compressor for the East Musi
structure, which is expected to start
operation mid April of this year.
The gas production are
distributed to consumers in the
region including PT Pupuk Sriwijaya,
PT PLN Keramasanm, PT Asrifita
Prasarana, PT Multidaya Prima, PT
Elnusa Prima Elektrika, and PT Pura
Daya Prima. Part of the output is also
allocated for PT Pertamina Refinery
Unit III Plaju, Pertamina gas network
in Prabumulih, PT Perta Samtan Gas,
PT Ogspiras Basya Pratama, and PT
PGN Tbk.
27
Lion: Oseil proven oil

reserves upgraded
ASX-listed Lion Energy Ltd said
recently that proven (1P) oil reserves
at Oseil field in Seram (Non Bula)
PSC, onshore Seram Island, eastern
Indonesia, increased by 28 percent
(or 1.36 mmbbl) due to success of
development drilling program in
2014/2015.
Lion, which has a 2.5 percent
interest in the PSC, said in a statement
that production from the Seram PSC
remains strong at approximately
4200 bopd (105bopd net to Lion)
and the joint venture is implementing
aggressive cost saving measures,
including suspending future
development drilling (including the
planned Oseil-23). This is anticipated
to allow increased free cash flow from
the Seram PSC.
Commenting on the reserve report
and Seram PSC activities, Lion CEO
Kim Morrison said: The increase in
Oseil area reserves by well-respected
firm DeGolyer & MacNaughton is
28
a pleasing outcome and reflects

the positive development drilling
outcomes on the Oseil field in recent
times. At the same time the operator
is responding to the current oil price
environment and prudently reducing
costs while continuing to work on
development options for the exciting
Lofin gas discovery including ongoing
engagement with relevant authorities
on extension of the PSC beyond 2019.
Lion said an updated reserves
report for the Seram PSC,
commissioned by the operator of the
project, by US experts, DeGoyler &
McNaughton (D&M), was received
on February 22, 2016. The report is
effective December 31, 2015 and is
based on 2015 gross production of
1221mbbl (3345 bopd). The Proven
(1P) reserve estimate at end 2015 is
4881mbbl compared to 4746mbbl at
end 2014. When the 2015 production
is taken into account the report
shows an increase in Proven reserves
from the Dec 2014 figure of 1356
mbbl.
The December 31, 2015 Proven

reserves are classified into ProvenDeveloped reserves of 3833mbbl
and Proven-Undeveloped reserves
of 1048mbbl. This compares with
December 31, 2014 estimates
of 2409mbbl and 2337mbbl,
respectively. The increase of in the
overall Proven and more particularly
the Proven (Developed) numbers
reflects the successful development
drilling in the Oseil 2 area of the
Oseil field during 2015. The ProvenDeveloped number in the D&M
report does not assume any further
development wells being drilled.
Lion, via its wholly owned
subsidiary Lion International
Investment Ltd, holds a 2.5 percent
participating interest in the Seram
(Non-Bula) Block PSC. The major
equity holder and operator of
the joint venture is CITIC Seram
Energy Ltd (51%). Other partners
are KUFPEC (Indonesia) Ltd (30%)
and Gulf Petroleum Investment
(16.5%).
Petromindo|Khalsa
by the government in partnership

with private companies; third, it will
developed by the SOE in partnership
with private companies; fourth, it
will be developed solely by private
companies.
Government to help TWU to

resume production of mini
refinery
Luhut Binsar Panjaitan
Pertamina delays decision

on partner for Tuban
refinery project
State owned oil and gas firm PT
Pertamina (Persero) has delayed
decision on partner to develop the
Tuban refinery project in East Java,
according to a source.
The firm has shortlisted five
potential partners through beauty
contest held since January of
this year, namely Rosneft, Saudi
Aramco, CNOOC, Kuwait Petroleum
International (KPI) and the PTT
Thailand-Thai Oil consortium.
Initially, the firm planned to take its
pick among the five firms at the end
of February. However, the firm has
yet to make a decision.
It has been delayed. The decision
was supposed to be made endFebruary. It seems that the decision
will be made in the middle or at the
end of March. The problem is that
Pertamina has yet to talk with the

CEO of one potential partner, the
source said.
One of the issues questioned
by the potential partners are the
economics of the project, the Internal
Rate of Return (IRR).
The government has promised
incentives for the US$18 billion
project. The incentives include the
investors may use lands for the
project gratis for between 50-80
years, Minister of Energy and Mineral
Resources Sudirman Said said on
Monday.
There are also other incentives
such as tax holiday, offtaking
assurance. Pertamina will become the
offtaker, Sudirman said.
Sudirman said the government
is considering four schemes for the
development of the project: First, the
project will be financed with state
budget; second, it will be developed
The government will find ways to

help Tri Wahana Universal (TWU), a
subsidiary of IDX-listed PT Saratoga
Investama Sedaya Tbk, resumes
production of its mini fuel refinery in
Bojonegoro, East Java, Investor Daily
reported recently.
I dont understand why
production has stopped. Were
now trying to (find ways) resume
production, because they (TWU)
have complained to us, Coordinating
Minister for Political, Legal, and
Security Affairs Luhut Binsar
Panjaitan said as quoted by the paper.
He said that the issue will be
discussed with the upstream oil and
gas authority SKK Migas, Ministry
of Energy and Mineral Resources,
and state-owned oil and gas firm PT
Pertamina. I dont understand why
it has stopped productin, Luhut
said.
TWU suspended production at the
mini refinery as no agreement has
been reached between the firm and
crude suppliers on the price of crude
supply, said Saratogo, which has a 35
percent effective interest in TWU, in a
statement February 18.
TWU operates a small scale
refinery with a processing capacity of
18,000 bpd. The refinery gets crude
supply from Mobil Cepu Limited oil
field, which is channeled through five
kilometers pipe to the Bojonegoro
plant.
29
Cover story
30
Jokowis decision:
Onshore LNG for Masela
resident Joko Widodo has

finally made a decision that
the LNG plant that will be
built to process gas from
the Abadi field in Masela block in
Maluku province must be located
onshore, thus rejecting the floating
LNG (FLNG) option proposed by the
contractors of the block.
With the decision, the President,
also known as Jokowi, ended
uncertainties regarding the project
which has become a subject of debate
for months among oil and gas players,
experts, politicians and members of
the Cabinet. At the same time, the
decision came as a bitter pill for the
Masela contractors and proponents
of FLNG.
According to Jokowi, an LNG
plant built onshore will cause greater
impacts on the public.
After a lot of considerations and
(having received) inputs and based
on my own calculations, I decides (the
LNG plant) must be built onshore,
Jokowi said on Wednesday (March
23) in a press conference at the
Soepadio airport in Pontianak, West
Kalimantan.
Jokowi said he decided to choose
an onshore LNG plant so that the
project can generate significant
benefits for the national economy and
the people living near the project.
I want the Masela project to
create great impact on the national
economy as well as the regional
Petromindo|Dasir
By: Godang Sitompul & Febry Silaban
Jokowi
economy. This is a long term projects

involving (investment worth)
hundreds of trillions of rupiah, he
said.
I instruct the minister of energy
and mineral resources and SKK Migas
to follow up this decision, he added.
Jokowi was on a visit to the
province to inaugurate the Tayan
river bridge, said to be the longest
river bridge in Kalimantan. It
remains unclear why Jokowi chose
to announce his decision on the
occasion. Accompanying him on the
visit were among others Minister
Sudirman Said and SKK Migas
Chairman Amien Sunaryadi, both
are known as the strong proponents
of FLNG option. Clearly absent was

Coordinating Minister of Maritime
Affairs Rizal Ramli, the strongest
opponent to the FLNG option among
the Cabinet members.
Sudirman expressed happiness
that the President has finally made a
decision on the Masela project.
We have given all explanations
and inputs (about the project to the
President). It is up to the President to
decide. To follow up the decision by
the President, I will ask the investors
(the contractors of the Masela block)
to review all their plans, Sudirman
said, adding he will notify the
investors through an official letter.
Sudirman noted that the
development of the project will
31
Cover story
certainly be postponed since the
contractors have to review all their
plans for the project.
Following the announcement, Rizal
sent a tweet, saying, Thanks God. The
President has decided that Masela
(LNG plant) must be built onshore.
May Indonesia people get more
benefits from its natural resources.
Inpex and Shell refused to
immediately comment about Jokowis
decision, saying they are waiting for a
formal letter from the government on
the issue.
We cant make any comments for
the moment as we are still waiting
for an official notification from the
MEMR regarding the proposal to
revise the PoD, Usman Slamet, Sr.
Communication Manager of Inpex
Indonesia, said..
Shell made a similar statement.
We are unable to comment
now as we are waiting to receive a
formal letter from the Government
of Indonesia. We look forward to
Aru Islands
Tanimbar
Islands
Saumlaki
EAST TIMOR
Timor Sea Joint Petroleum

Development Area
LOCATION
32
Masela Block
INDONESIA
Abadi Gas Field
Arafura Sea
Darwin
AUSTRALIA
better understanding and discussing

the implications of the decision with
the relevant government agencies,
Haviez Gautama, GM External
Relations of Shell Indonesia, said.
Layoff
Masela is 65 percent owned by
Inpex and 35 percent by Shell. Inpex
signed the contract on the block in
1998 and discovered gas in Abadi
field in 2000. Initially, based on
certification by state-owned oil and
gas reserve asssement firm Lemigas,
the reserve was estimated at 6.9 tcf.
In 2010, now-defunct BPMIGAS, the
agency that has been replaced by SKK
Migas, approved Inpexs temporary
PoD-1 for Abadi field, in which the
firm proposed to build an FLNG plant
with a capacity of 2.5 million tons per
annum (mtpa).
In 2009, Inpex offered a 10
percent stake to PT Energi Mega
Persada (EMP), a company controlled
by the Bakrie family. EMP accepted
the offer.
Shell farmed into the block in
2011, taking a 30 percent stake from
Inpex. The firm is known as the only
company that has developed FLNG
technology. In 2013, Shell increased
its stake to 35 percent following the
sale by EMP of its entire 10 interest
for $313 million in 2013. Inpex took 5
percent of EMP interest, thus raising
its ownership to 65 percent.
As Inpex continued explorations,
it discovered a much larger reserve
of 10.7 tcf in the field. The firm
then revised its PoD-1, raising the
capacity of the floating LNG plant
to 7.5 mtpa. In June 2015, the firm
submitted the revised PoD-1 to
SKK Migas for approval. SKK Migas
accepted the PoD and on Sept. 9,
2015 sent it to Minister Sudirman
with recommendation for approval.

By law, the right to approve PoDs
lies with the minister of energy and
mineral resources.
While the PoD was being
evaluated at the ministry,
Coordinating Minister Rizal talked to
the media about his opposition to the
PoD. He proposed as an alternative
an LNG plant that will be built on Aru
Island, located more than 500 km
away from Masela. He argued that an
onshore LNG (OLNG) plant is cheaper
to build and brings greater benefits
to the countrys economy. Later,
Coordinating Minister of Politics, Law
and Security Luhut Panjaitan, a close
friend of President Joko Widodo, also
voiced supports to the OLNG option.
Meanwhile, like SKK Migas Chairman
Amien, Sudirman supported the FLNG
option as proposed by Inpex.
Rizals claim that OLNG plant is
cheaper to build than FLNG plant
has been refuted by SKK Migas. In
fact, based on SKK Migas calculation,
FLNG brings more revenue to the
government than OLNG. Engineering
experts from top universities have
also supported FLNG.
In order to solve the disagreement,
at the request of the President,
SKK Migas hired an international
consultant Poten and Partners to
carry out an independent study to
choose whether the ONLG or FLNG
option. Poten and Partners chose
the FLNG option. The study by Poten
and Partners has however failed to
bring the disagreement into an end as
the opponents of FLNG, led by Rizal,
continued campaigns to subvert the
efforts to win the supports of the
President for the FLNG option.
The rejection of its PoD came
as a bitter pill hard to swallow
for Inpex. Just a week prior to the
announcement of decision by the

President, the firm expressed its
frustration over the governments
delayed decision on the project by
notifying SKK Migas that it would
downsize the number of its workers.
SKK Migas called an impromptu
press conference on Wednesday
evening, March 16, to announce
Inpexs plan.
While the company did not specify
what it means by downsizing, SKK
Migas said in a statement that it is
worried that it means layoff.
Amien said during the press
conference that at present Inpex
Indonesia employs between 350400 workers. The firm may cut the
number of its workers by 40 percent.
According to Amien, Shell
management in Indonesia has also
informed SKK Migas that the firms
CEO had told its engineers dedicated
for the project to look for other
jobs elsewhere in the firms global
operations. Shell had stationed nine
engineers in Jakarta, nine in Kuala
Lumpur and 25 in the Netherlands to
handle the Masela LNG project.
Amien explained that when Inpex
submitted the revised PoD-1 for
the Masela block last September, it
expected to gain approval at endDecember so that it could make final
investment decision (FID) at around
end-2018. The firm was waiting for
the approval from January through
February. On March 19, the firm
decided it is impossible to make FID
in 2018.
Even if the PoD is approved now,
meaning the government approves
the floating LNG option, the FID will
only be possible to be made in 2020.
If the government approves onshore
LNG, the FID will be postponed much
longer, Amien explained during the
press conference.
International investors have their
own ways of thinking. They think
about country risk and other factors.
At end-2018, the risks will still be
acceptable. In 2019, Indonesia will
hold election. Investors know when
to make a decision on big-budget
projects. Each year has its own risks,
he said.
As a matter of fact, Inpex once
had an idea to build an onshore
LNG plant after discovering gas in
Abadi field, whose amount was then
estimated at 6.7 tcf. Together with the
government, the firm then studied
a scenario of building an LNG plant
at Saumlaki, the biggest town in
Tanimbar Islands, some 180 km away
from Abadi field. The gas would be
channeled via pipeline from Abadi
field to Saumlaki but the idea was
dropped as building pipelines from
Masela to Saumlaki was considered
too expensive due to the presence of a
trench between Tanimbar islands and
Abadi field.
Another option put into
consideration back then was building
an LNG plant in Darwin, which is
about 400 km from Abadi field. The
cost of building a pipeline from
Abadi to Darwin is cheaper since
the bottom of the sea between both
is relatively flat. The option was
also dropped since the Indonesian
government does not want Australia
to enjoy the benefits of the project.
Under the PoD proposed by Inpex,
Saumlaki will serve as a logistical
base for the FLNG plant to be built by
Inpex and Shell.
Rizal proposed to build an
onshore LNG plant in Aru Island, but
people on other islands nearby have
also demanded that the plant be built
on their islands.
33
COVER STORY
Masela decision draws reactions
34
Any decision made by the

government in choosing one island
over other islands for the location of
the onshore LNG plant will risk causing
jealousy among people living on other
islands. This is a social risk, he said.
The most bitter risk of all is the
likelihood of Inpex pulling out of
Masela, taking along all exploration
data and other things about the
block. All these are secret property of
Inpex, Inas said.
Meanwhile, Aussie Gautama,
former Planning Deputy of SKK Migas
now working for state owned oil and
gas firm PT Pertamina, said he was
disappointed over the decision.
I am disappointed in seeing the
results of two-year technical and
economic studies, which were neutral
and professional, have been beaten by
jargons, agitation, propaganda, even
slanders, Aussie said.
Firlie Ganinduto, Vice Chairman
of Permanent Committee on Oil
and Gas Upstream Activities at the
Indonesian Chamber of Commerce
and Industry (Kadin), welcome the
decision. This is despite the fact he
is among the proponents of FLNG
option.
We welcome the decision. That

means MEMR and SKK Migas need to
work hard now to realize the Masela
project. We dont want the project
to be stalled. Secondly, I believe the
decision was taken with the purpose
of developing the domestic economy.
The goal must be achieved. The
project should be supervised in favor
of domestic industry, he said.
Syamsu Alam, Upstream Director
of Pertamina, also welcome the
decision.
I think the decision has been made
(by the President) after considering
all aspects comprehensively. In
principle, the issue is not whether to
build production facilities onshore or
offshore, but how to utilize the natural
resources (gas) maximally for the
national welfare and energy resilience.
A decision has been made. Its
time now to focus on realizing the
project as well as possible, he said.
Febry Silaban
Petromindo|Khalsa
resident Joko Widodos

decision to build an onshore
LNG plant for the Masela
block in Maluku province has
drawn mixed reactions from members
of the public with some expressing
concerns over the decision, while
others welcoming the Presidents move
to end uncertainties over the project.
Inas Nasrullah Zubir, a member
of the House of Representatives
Commission VII which is in charge of
among others energy affairs warned
the government of the consequences
of its decision.
The government must be ready
to face all the risks, Inas said.
First, he said, the government
through the ministry of energy and
mineral resources should explain to
the public and the House why it chose
an onshore LNG plant rather than
floating LNG plant while the former is
more expensive than the latter. The
development costs of the project will
be included in cost recovery, which
will result in the decrease in the state
income every year.
He noted the government risks
paying an additional cost of $14.8
billion if the project is built onshore.
Secondly, he said, there have been
demands from various communities
living near Masela that the onshore
LNG plant should be built in their
respective areas. The demands
come from people living on different
islands such as Babar, Selaru,
Masela, Selaru and Yamdena. The
government should find a solution to
the conflicting demands.
COVER STORY
rior to the announcement by President Joko

Widodo of his decision on the Masela block, the
supporters of onshore LNG scheme launched
black campaign using questionable information
to attack Minister of Energy and Mineral Resources
Sudirman Said and investors of the project.
Ridwan Darmawan, Executive Director of little known
Indonesia Human Rights Committee for Social Justice, was
quoted by news portal rimanews.com as saying that he had
obtained information that Japanese oil and gas firm Inpex,
the operator of the Masela block with 65 percent interest
(partner Shell holds the remaining 35 percent interest),
had transferred a total of US$1 million to Kuntoro
Mangkusubroto, a former energy minister and a long-time
friend of Sudirman, to help ensure the government selects
the floating LNG scheme (FLNG) in the development of
the gas-rich Abadi field in the block as proposed by the
company.
Ridwan said that the money was not directly received
by Kuntoro as it was transferred to consultancy firm
Tridaya Advisory, owned by Erry Riana Hardjapamekas,
also a close friend of Kuntoro, for consultancy services.
He urged the Corruption Eradication Commission
(KPK) to launch investigation into the matter.
The accusation came following a controversial
statement made by Coordinating Minister for Maritime
Affairs Rizal Ramli on Feb. 22 that the government
had selected the onshore LNG (OLNG) scheme for the
development of the Masela block. This was immediately
denied by Presidential Spokesman Johan Budi, who said
that President Joko Widodo (Jokowi) has yet to make
decision.
The approval of the Masela block project has become
a protracted process with political nuance following
intervention by Rizal, who insisted on the use of the OLNG
scheme despite a two-year study by Inpex concluding that
FLNG is the most commercially feasible.
Minister Sudirman, who according to regulations has
the authority over the project (not Rizal), was supposed
to approve in October of last year the revised plan of
Courtesy of Wikimedia
Onshore LNG supporters

launch black campaign
Rizal Ramli
development (PoD) of the Masela block project with an

FLNG scheme as recommended by upstream oil and gas
authority SKK Migas.
But intervention and political maneuvering by Rizal
has prompted the president to delay the approval,
although international consultancy firm Poten & Partners,
which was later assigned by the government to give
independent assessment, confirmed the proposed FLNG
scheme.
Jokowi announced on March 23 that he had decided
that the Masela LNG plant must be built onshore.
35
Petromindo doc.
OIL & GAS
Deadline for gas traders

to build infrastructure
rivate gas traders are given

two years to build own
infrastructure facilities if
they wish to continue their
business according to a new Minister
(MEMR) Regulation No 6/2016 which
was issued on Feb. 24.
The new regulation, which is a
revision of MEMR Regulation No
37/2015, requires private gas traders
to have own infrastructure facilities
to be able to obtain gas allocation
from the government.
Chapter 35 of the new regulation
says that gas traders must meet the
new requirement within two years
after the issuance of the regulation, or
in 2018.
36
Were pushing for the development

gas infrastructures by the private gas
traders, said minister Sudirman Said
during a hearing with the House of
Representatives Commission VII on
energy and mining recently.
An investigation carried out by
upstream oil and gas authority SKK
Migas has revealed that there a total
of 74 gas traders, of which only 15
have infrastructure facilities.
at the ministry IGN Wiratmaja Puja
said several gas traders developing
mini gas pipelines can combine their
projects to build a larger network.
The MEMR Regulation No.
37/2015 was issued last November.
The regulation sparked protests from
gas traders, who even threatened to

file lawsuit to revoke the regulation.
Due to strong protests from gas
traders, the ministry finally revised it.
Wiratmaja said the revision is
centered on priority. In the MEMR
Regulation 37/2015, state owned
enterprises (SOEs) either owned by
the central or regional governments
were given priorities over private
companies. In the revision, there isnt
such priority any longer.
In the revision, SOEs and private
companies may get gas allocations
as long as they own or control gas
infrastructures to receive the gas, he
said.
Febry Silaban
OIL & GAS
Ministry proposes lower gas

price for 10 GSPAs
he Ministry of Energy and

Mineral Resources has
recently proposed to reduce
the price of gas of 10 Gas Sales
and Purchasing Agreements (GSPAs) in
Sumatra and Java from the current price
levels above $6 per mmBtu.
This was part of efforts by the

ministry to realize an earlier promise
by the government to lower gas price
for certain industries in a bid to help
accelerate investment and economic
growth.
This was said by Director of
Oil and Gas at the ministry IGN

Wiratmaja in Jakarta recently.
President Joko Widodo will issue
a presidential regulation on the gas
price cut, he added.
The 10 GSPAs with price of above $6/mmbtu are as follows:

No
Oil and gas contractors
Gas buyers
Febry Silaban
Old price (USD/MMBTU)
Proposed new price (USD/MMBTU)
West Java region

1
PT Pertamina EP
PT Indo Raya Kimia
6.95
6.00
PT Pertamina EP
PT Krakatau Steel
6.95
6.00
PT Pertamina EP
PT Pupuk Kujang
6.48
6.00
PT Tossa Sakti*
8.22
6.93
PT Petrokimia Gresik
6.28
6.00
Central Java region

1
PT Pertamina EP
East Java region

1
Kangean Energy Indonesia Ltd
Wilayah Sumatera Selatan

1
PT Pertamina EP
PT Pupuk Sriwidjaja
6.31
6.00
PT Pertamina EP
PT Pupuk Sriwidjaja
6.55
6.00
North Sumatra region

1
PT Pertamina EP
PGN*
8.24
6.83
Pertamina EP (Sumur Benggala-1)
PGN*
8.24
6.83
PHE N SB
PIM
7.25
6.00
PHE N SO
PIM
7.25
6.64
West Java region

1
PT Pertamina EP
PT Energasindo Heksa Karya (Bitung)
6.75
6.00
PT Pertamina EP
PT Energasindo Heksa Karya (Tegal Gede)
6.75
6.00
PT Pertamina EP
PT Energasindo Heksa Karya (Cilegon)
6.75
6.00
PT Pertamina EP
PT Sadikun Niagamas Raya (Cikarang)
6.95
6.00
37
POWER
Sukarame power project

put on hold
By: Romel S. Gurky | Photos: Khalsa
rench firm Velcan S.A.

announced recently that it
had put on hold the preconstruction activities of
its Sukarame hydropower project in
Lampung because until now public
utility PT Perusahaan Listrik Negara
38
(PLN) (Persero) still refuses to sign a

power purchasing agreement (PPA)
for the project.
In September last year, the firm
announced that it had started the
pre-construction activities of the
power project, after an increase in
tariff for small power plants (with a

capacity under 10MW) was issued by
the Ministry of Energy and Mineral
Resources (MEMR) under Ministerial
Regulation No. 19/2015 dated June
29, 2015.
PLN, as the sole authorized buyer
in Indonesia, was assigned as per the

regulation to purchase electricity
produced by any small power plant at
a fixed, non-negotiable price per kWh.
As per the regulation, PLN had
30 days to issue the corresponding
PPA standard contract. However,
as of today, PLN has not proposed
such contract, the firm said, adding
that according to the ministry,
PLN is refusing to comply with this
regulation and to buy the power,
claiming that the tariff is too high.
This situation results in 119 small
hydropower projects being stalled.
A possible solution, according to
the ministry, would be the creation of
a dedicated subsidiary of PLN which

would purchase electricity from the
small hydropower plants.
This entity would be financed by
an Energy Security Fund, which
has yet to be created, depending on a
new governmental regulation that the
ministry is currently studying. This
fund would be designed to promote
two activities: first, for further
exploration of oil and gas fields in
Indonesia to improve/decrease
the depletion rate of Indonesias
reserves; and secondly to support
the development of new & renewable
energy.
Given the uncertainty of the
overall administrative procedure
and without any visibility as to when
this yet to be created administrative
entity will issue the PPA, Velcan has
to put on hold the construction of the
Sukarame project, the firm said.
Velcan Energy is also discussing
with the local authorities the
potential impact of this delay on the
validity timeframe of the permits and
authorizations granted to the project.
Jean-Luc Rivoire and Antoine
Decitre, Co-CEOs of the group said: It
is a very disappointing and difficult
situation, because a lot of efforts and
money have been invested into this
project. We share the frustration of

the local population and authorities,
who like us, believed that after all
these years the adequate conditions
to invest in small hydropower plants
in Indonesia were here. Unfortunately
it is not the case.
Suka Rame is located on
Semangka River in Lampung Barat
regency. The closest town is Liwa (10
km), the capital of the Lampung Barat
regency. Project GPS coordinates are:
S 50154/ E 1041157.
Velcan has been working on the
Sukarame project since 2011 and
acquired the necessary land in 2013.
The development was slowed since
then, until the price of electricity
offered was enough to provide a
satisfying Return on Equity (ROE).
The government has increased
significantly the tariff for plants with
a capacity smaller than 10 MW. In the
case of Sukarame, and as per MEMR
Regulation No. 19/2015, electricity
will be sold to PLN at a price of 13.2
US cents per kWh for eight years and
at 8.25 cents per kWh for 12 years.
Furthermore, PLN will bear the
exchange rate risk.
In the previous statement, the firm
said construction of the hydropower
plant will take two years.
39
POWER
PGEs geothermal projects

onsream this year
Photos: Boim
T Pertamina Geothermal
Energy (PGE), a subsidiary
of state owned oil and
gas firm PT Pertamina
(Persero), expects four geothermal
power projects PLTP Ulubelu Unit
3, PLTP Lahendong Unit 5, PLTP
Karaha Unit 1 and PLTP Lumut
Balai Unit 1 -- to come onstream
this year.
The firm is building two units
at PLTP Ulubelu geothermal power
plant in Ulubelu district, Tanggamus
regency, Lampung province, namely
40
Unit 3 and 4 with one of them, Unit

3, is on track to achieve commercial
operation date (COD) in the third
quarter of 2016.
Meanwhile, Unit 4 is scheduled
to achieve COD in June 2017, PGEs
President Director Irfan Zainuddin
said.
Each of Unit 3 and 4 has a capacity
of 55 MW. At present the power
plant which is located in Tanggamus
regency has two units, Unit 1 and 2,
each with similar capacity. Once Unit
3 and 4 have been completed, the
capacity of the power plant will rise

to 220 MW.
Both Unit 3 and 4 projects are
worth US$397 million with financing
provided by Pertamina and the
World Bank. The groundbreaking of
the projects were held last year by
President Joko Widodo.
The firm is also developing two
power units at PLTP Lahendong in
Minahasa regency, North Sulawesi
province. One of the two units, Unit
5, is scheduled to achieve COD in
December of this year, the firm said.
Irfan said, the development

progress of PLTP Lahendongs Unit 5
and 6 is faster than scheduled.
As of end-February, the progress
of the projects had reached 54.63
percent, around two or three months
ahead of schedule, Irfan said.
There are already four units
in operation at PLTP Lahendong,
each with the capacity of 20 MW.
The Unit 1-4 are owned by public
utility PT Perusahaan Listrik Negara
(PLN) while PGE, as the owner of the
concession area, supplies geothermal
steam for the four power units.
Differently, the Unit 5 and 6 are
PGEs geothermal projects:

No
1
2
3
4
5
6
7
8
9
10
11
owned by PGE. Each of Unit 5 and 6

has similar capacity with the other
units, namely 20 MW.
Unit 1-4 account for 40 percent
of power supplies in North Sulawesi,
according to the firm.
The project is located Tompaso
district, 24 km away from Minahasa
regencys capital of Tomohon.
Irfan said the project could be
executed faster than scheduled
thanks to supports from the
central and local governments
as well as local community from
licensing phase, through land
acquisition and tender phases. No
Projects
Capacity
COD schedule
Ulubelu Unit 3
Lahendong Unit 5
Karaha Unit 1
Lumutbalai Unit 1
Ulubelu Unit 4
Lahendong Unit 6
Lumutbalai Unit 2
Hululais Unit 1
Sungai Penuh Unit 1
Lumutbalai Unit 3
Lumutbalai Unit 4
55 MW
20 MW
30 MW
55 MW
55 MW
20 MW
55 MW
55 MW
55 MW
55 MW
55 MW
August 2016
December 2016
December 2016
December 2016
June 2017
July 2017
June 2018
January 2018
June 2019
2022
2023
Source: Pertamina Geothermal Energy
work accident has been recorded

throughout 2.3 million work hours
than have so far been spent to
develop the project.
Meanwhile, the Unit 1 of PLTP
Karaha is scheduled to come
onstream in December of this year,
according to the data provided by
the firm. PGE has thus far planned to
build only one unit with a capacity
of 30 MW at the project located
in Kadipaten and Cinta villages,
Tasikmalaya and Garut regencies,
West Java province.
PLTP Lumut Balais Unit 1 is
also scheduled to come onstream in
December this year. PGE has planned
to build four units at the power plant,
each with the capacity of 55 MW.
The project is located in Panindayan
village, Semendo district, Muara Enim
regency, South Sumatra province,
about 108 km from Baturaja city.
PGE owns 12 geothermal
concessions which at present
produces 437 MW from four
concessions namely Kamojang
(235 MW), Ulubelu (110 MW),
Lahendong (80 MW) and Sibayak
(12 MW). The firm is now
developing a number of projects
with a total capacity of 510 MW.
41
interview
State oil revenue

may drop 50%
he government revenue
from oil and gas risks falling
by more than 50 percent
to a mere US$5 billion
this year from $11.7 billion last
year due to further oil price slump,
according Parulian Sihotang, SKK
Migass Deputy of Finance. Aside
from the impacts of the oil price
slump, Parulian also talked about a
wide range of issues in the oil and
gas sector in a recent interview
with Febry Silaban of Petromindo
magazine.
Following are excerpts of the
interview:
Will the ICP assumption for the
2016 state budget draft be revised
down, and as a result will state income
from oil and gas decline?
Were scheduled to discuss it this

April, together with the Fiscal Policy
Agency (BKF, an agency under the
ministry of finance). The price of oil
in 2016 is estimated at $35 per barrel.
The price estimation will be proposed
to the House of Representatives
(DPR). Oil lifting target set at 810,000
bopd, while gas at 1.115 million
boepd, which had been agreed upon
by the government (BKF) with the
rupiah exchange rate against the US
dollars set at Rp13,900 per $1.
We have arranged the oil and
gas lifting figures with four exercises
of ICP. It is estimated that with the
price of oil at $35 per barrel, the state
42
income will be $4.9 billion or around

$5 billion. Were also asked to exercise
at several levels of ICP. But if we use
the assumptions of BKF, then the
government will get income at around
$5 billion. This is non-tax state income
(PNBP) and taxes. But the $5 billion is
not the figure of state income recorded
in the state budget (APBN), as in the
APBN there are reduction factors, such
as reimbursement of value added tax
(PPN), upstream oil and gas fees, etc.
That means the $5 billion is PNBP from
upstream oil and gas, namely tax plus
government share, or known as PNBP
Migas plus PPH (income tax) migas. It
has also a sensitivity, meaning that if
there is any price change then every
increase of $5 in the ICP, there will be an
increase of state income at around $1
billion. If decrease, then the state income
will also decrease at around $1 billion.
Compared to 2015 with an
assumption of ICP at $60 per barrel,
then the ICP now at $35 per barrel
represents a significant drop. That
means the state income will drop by
$5 billion. In 2015, the government
share revenue was about $11.7
billion, while now is (estimated) at
a mere $5 billion, or a decrease of
more than 50 percent. The oil price
drop from $60 to $35 caused the
drop of state income by more than 50
percent. Compared to 2014 when the
state income reached $26.7 billion,
the state income in 2015 also saw a
decrease of more than 50 percent.
So, thats the situation were facing
right now, when our state income is

continually decreasing.
During a hearing with the DPR

recently, SKK Migas reported several
fiscal disincentives which need to be
removed. One of them is the ongoing
fiscal dispute, namely the application
of branch profit tax (BPT) in the case
of transferring interest by Inpex and
Chevron. What does it mean?
The case of branch profit tax or
BPT occurred during the transfer of
interest in Inpex (Masela block) and
Chevron (Makasar, Rapak and Ganal
blocks). Inpex transferred a part of its
interest to Shell, and Chevron. Based
on the government regulation (PP) no.
79/2010, the transfer of interest among
the production sharing contractors
(PSC) was charged with final tax.
Based on the PP 79, the
participating interest (PI) is subject
to 5 percent tax for exploration PSC,
and 7 percent for production PSC.
When Inpex transferred its PI to Shell,
it was charged with 5 percent tax
because it was still under exploration.
Then Inpex asked about this to the
directorate general of taxation because
at that time there had been no yet an
implementing regulation on it. The
PP 79/2010, which has been effective
since Jan.1, 2011, stipulates that all
transfers of interests are charged with
final tax at 5 percent for exploration
and 7 percent for exploitation. But
there is a need for a formulation to
Petromindo|Khalsa
Parulian Sihotang
43
interview
calculate the gain from the sale. In oil
and gas industry, there are various
schemes of transferring the PI. The
schemes include the compensation
of the already paid costs, costs to be
incurred, cut loss, etc.
During a transition period of the
PP 79, the finance minister issued
PMK 257 which has been effective
since Jan. 1, 2012. The regulation
stipulates that the PPh (BPT) taxable
period was not applicable for uplifted
income or participating interest since
Dec. 10, 2010 until the PMK 257 was
made effective on Jan. 1, 2012.
The PMK 257 was made effective on
Jan. 1, 2012, while the interest transfer
of Inpex and Shell occurred in 2011.
In the PMK, it is said that the branch
profit tax is only charged on income
derived from the PI transfer that was
received since Jan.1, 2012. Considering
that the income from the PI transfer
by Inpex and Shell was received in
2011 or before the application of the
PMK, then the transaction should not
be charged with the branch profit tax,
which is in line with a confirming letter
from the tax office. The reason of the
tax office was that in the PMK there
is an attachment of calculation which
mentions the 2011 transaction as an
example. But in the PMK there is also
a clear explanation that it is effective
for transactions since Jan. 1, 2012.
The same case also applies to Chevron
Indonesia Company (CICo) in Makasar
Strait block.
But Inpex-Shell had actually paid
the final tax of the PI transfer. What
is being disputed is the branch profit
tax, or often called dividend tax.
What does it mean?
If my income already cut by

corporate income tax, then it will be
44
my profit. The profit in the oil and gas

is considered as if it is a dividend that is
directly sent abroad and charged with
BPT at 20 percent. It means that on
top of the corporate tax, its net income
after tax considered as dividend will
be delivered to the home office abroad
and being charged again with the
dividend tax (branch profit tax).
So, what is the current progress of
the BPT dispute?
Now the tax office opined that the

oil and gas investors should pay the
BPT. But currently, a tax assessment
letter (SKP) for Chevron had been
issued. Chevron filed an objection on
this. Until now, there has been no yet
SKP for Inpex. If in the future an SKP
issued for Inpex, there is a possibility
of objection to be filed. Driven by the
current macro condition, the PI transfer
will become a normal practice among
companies, especially those with a
relatively high cost of oil. If the oil
prices now range from $30 and $35 per
barrel, they will find it hard to invest. It
will be a big question if big companies
like Chevron, Total, and others will exit
from Indonesia. What is really needed
by investors is the principal of certainty
or the sanctity of contract.
How about other fiscal
disincentives? Like the dispute on
land and building tax (PBB) for
explorations that are still undecided in
tax court?
About that, we can only say that it

is now under process in the tax court.
We can no longer intervene with the
decision of judges. But concerning the
process of objection or others, SKK
Migas has been once asked to give
explanation on the PBB by the tax office
of the directorate general of taxation.

There was a PSC which was considered
not oil and gas, although in fact it is an
oil and gas contract. So, it could not be
assumed and discharged. Its dispute
revolved on differences of opinions. So,
the case has been now taken to court
and seemingly until now there has been
no decision on this. If Im not mistaken,
there are still two PSC contractors who
are still in dispute in tax court. We had
the chances to attend and monitor the
courts sessions.
What about value added tax (PPN)
on gas distribution service and the
scheme of gas swap (Cophi Grissik and
CPI)?
Toll fee had been resolved. With

regards the gas swap, there hasnt been
any tax assessment letter on it. But
the issue here is not the PPN, but the
application of tax on the swap. From the
perspective of accountancy, borrowing
and transfer in oil and gas was just
normal. But current development has
required a transparency. Under the
swap deal, the gas value of someone is
valued or equalized in price with the
oil. For example, to get one barrel of oil
is equal to 10 mmscfd of gas. When the
crude is transferred to B, and then B
transferred it to A, it is considered as if
it is a sale and purchase transaction. In
fact, the transaction value with B is only
1,000, while with A is also the same at
1,000. On one side, when A sells, he has
a revenue, and when he receives, it is
a cost.
Here the tax office considers
that the side who receives the gas
(Chevron) should admit to have
revenue. This gas was initially owned
by ConocoPhillips (Cophi). Until now,
Chevron burns its crude as own-use
for its operations. So to avoid its crude
being burned as own-use, it is replaced

with gas from Cophi. For Cophi the gas
is a revenue, while for Chevron it is a
cost. Then the tax office said that the
revenue should be admitted by Cophi,
but the crude of Chevron which was
not burned, should be also admitted
as revenue. In fact, the crude that was
not burned was the amount of gas
received. This is actually a cost. It used
to be named as own-use. When the
crude was replaced with the gas, it
should be also considered as own-use
at the amount of gas being received.
The tax office considered the crude as
lifting which should be taxed.
What about other disincentives on
the limitation of PPN reimbursement?
FTP (First Tranche Petroleum)

is something that is demanded by
the government to secure the state
income. It is included in the PNBP. So,
the state got its production share first
after production started, but it is not
yet reduced with the accumulation of
cost recovery. In PSC contracts, it is
called assume and discharge, and FTP
are part of the contractors financial
duty to the state. But under the PSC
agreement, the PSC contractors can
ask for PPN reimbursement at the
maximum of the government share
that had been delivered. That was
the background of the emergence of
the PMK 218 concept. When drafting
the PMK, apparently the PSC was
seen not synchronized, There the
debate on the FTP started. But it was
forgotten that the
FTP, for example, gets 1,000 and
PPN also gets 1,000. And basically,
the state has already got 2,000. Of
the 2,000, 1,000 is taken from PNBP
for reimbursement of PPN, while
the state coffer in PPN is also 1,000.
The important thing is that when the

PSC mentions assume and dicharge,
contractors only pay the corporate tax
(PPh badan) and dividend tax (BPT).
For the rest, they are put under the
assume and discharge requirement.
So based on the PSC, there is no
limitation on PPN reimbursement,
as it has been previously agreed
in the signed contracts. Now with
the application of PMK 218 limited
with certain mechanisms that FTP
cannot be reduced to pay the PPN
reimbursement. In PSC there is no
mention about it. If the contractors
have already started production, the
government has to pay their PPN.
Actually, there is no reason to hold
the PPN reimbursement. It should
be paid. If there is no yet production
or lifting, the PPN reimbursement
could not be paid yet. That means, the
balance between revenue and cost
still results in loss.
In PMK 218, there is a mechanism
arranged as such so that if there is
any production, the PPN could not
be reimbursed by the government
as it is limited. As a result, all of
the PSC contractors who still have
sunk-cost could never get the PPN
reimbursement, despite there has
been FTP. As there has been FTP, it
should be used for reimbursement. So
there is still a risk for companies with
sunk-cost being unable to get the PPN.
The problem was started from
the issuance of new regulations by
the finance ministry at the end of
2014, namely the PMK 218/2014
which replaced the previous PMK
(PMK 64/2005) on guidelines of PPN
reimbursement or PPnBM to PSC
contractors in the upstream oil and
gas activities. Many of the old PSC
contractors are disturbed. I think
the new regulations should be made
effective for new contracts so that

the PSC contractors put it under the
calculation of production share.
The current value of PPN
reimbursement is still being
calculated. All of those issues will be
taken to limited discussions, Were
collecting all of the figures. I will give
it later. Our minister (Sudirman Said)
also wants that all of the issues be
taken to bilateral discussions with the
finance ministry.
What about the implementation
of the PBI 17/3/2015 on rupiah
transactions in oil and gas sectors?
The PBI 17/3 has been issued and

so far its implementation is ongoing.
Based on the PBI 17/3, a road map had
been agreed on the implementation of
rupiah uses in three categories:
First category are the transactions
which have no relations with the
imports of goods and services and
can directly use the rupiah. This
category is effective from Oct. 1,
2015.
Second category are transition
transactions which need further
process to decide whether the use
of foreign exchange or rupiah. The
transition period was agreed until
Dec. 31, 2015.
Third category are transactions
that can be implemented with
the use of foreign exchanges
and payment transactions are
implemented in rupiah. For the
third category, Bank Indonesia
(BI) Governor had issued a letter
of decision on Feb. 23, 2016.
Is there any potential problem?
The potential problems could

arise as a result of exchange rate gap
45
interview
due to dollar sale to rupiah by the
PSC contractors, and dollar purchase
from rupiah by the PSC contractors
received by vendors. The exchange
rate gap (conversion rate) can be
included into cost recovery, with the
possibility of state income reduced
due to the significant addition of the
conversion cost.
To mitigate it, SKK Migas has
designed a mechanism of transactions
under the third category, by which
there is no exchange rate gap by using
the Jakarta Inter Spot Dollar Rate
(JISDOR). SKK Migas in cooperation
with state-owned banks played
its role in mitigating the potential
problem of conversion cost. The
transaction mechanism is made
possible if it is implemented by the
PSC and vendors with the same banks
and the transactions of dollar sale and
purchase is implemented on the same
day. The agreement is contained in
a memorandum of understanding
(MoU) between the SKK Migas and
state-owned banks.
Based on the BI stipulation,
vendors as banks customers wanting
to buy dollars above certain amount
(for example for imports of goods
and services) should get approval of
underlying transaction document.
The approval of the third category
can only be given for main vendors,
while for subvendors should file
proposals of exemption from the use
of rupiah obligation to BI.
The transactions related to the
authorities of other ministries and
already excluded by BI from the list
of the third category should comply
with the regulations and/or the
policies of the ministers concerned.
In case there is not yet regulations
and/or exemption to the transactions,
then the transactions should be
46
regarded as the first category which

requires a direct use of rupiah and
should comply with the stipulations
in the PBI 17/3.
Can you explain about the fee of
selling LNG for Pertamina?
Its been implemented so from

the beginning. All contracts stipulate
that fees for PT Pertamina are
calculated from 100 percent of the
LNG volume sold or managed, and
not only of the government share.
Until now, Pertamina is assigned to
sell LNG, both of the government
share and of the PSC contractors
share. Previously, BPK questioned
whether the paid fee is based on the
LNG as the share of the government
or the share of the production sharing
contractors.
Recently, it has been decided that
the Energy and Mineral Resources
Ministrys Decree No. 1869 should be
revised. The revision will explicitly
stipulate that the fee of Pertamina is
based on 100 percent of the volume.
Based on that, the finance minister will
pay the fee to Pertamina according to
the 100 percent of the total volume of
LNG sold by Pertamina.
Actually, the government had
paid Pertamina the fee it got from the
state share, while the fee from the
PSC contractors shares for the period
of 2011-2014 not yet, Usually, the
payment of the fee is made annually.
In 2017 there is a possibility that
the fee payment is changed as its
scheme will be different.
Amid the current low prices
of oil, PSC contractors had asked
for a number incentives from the
government. What is the progress
right now?
There are several schemes

that were proposed by the PSC
contractors. One of those is to
accelerate the depreciation. Recently,
we discussed about it internally in
SKK Migas. I think, the acceleration
of depreciation can be designed as
one of incentives. But then when oil
prices recover, we have to return it to
normal practice. We realize that there
will be no solution that fits all. Each of
the PSC contractors is different.
We will identify each of them to
find out what incentives they demand
to maintain their production. The
accelerated depreciation can be
realized as it is within our authority
and basically it can be changed.
What do you mean with the
accelerated depreciation?
The PSC contractors develop

their oil fields based on the current
prices of oil. When the development
of the fields succeed, it will exceed
the expiry of their contracts. What
will happen when the PSC contract
expire, while there is still cost
unrecovered? The PSC contractors
had demanded that the unrecovered
cost can be recovered before the end
of the contract. This is particularly
important for PSC contractors who
will see their contracts end in the
near future.
As a simple example, I can say
that a depreciation that used to be
made within 10 years, now can be
quickened to five years.
Im concerned with this, how their
costs recovered with the accelerated
depreciation. In fact, there have been
several PSC contractors who already
filed such proposal. Were in the
process of proposing it to the ministry
of energy and mineral resources.
Courtesy of Safeshipping
OIL & GAS
April-delivered LNG down 38.7%
rices of spot liquefied

natural gas (LNG) for
delivery to northeast Asia
averaged US$4.460 per
million British thermal units (mmBtu)
for April, according to latest Platts
Japan/Korea Marker (Platts JKM)
data for month-ahead delivery.
The figure reflects the daily JKM
assessment published by Platts, the
leading independent provider of
information and benchmark prices for
the commodities and energy markets,
between February 16 and March 15,
expressed as a monthly average.
At $4.460/mmBtu, the April JKM
was 38.7 percent below prices for
the same delivery month in 2015.
Platts historical data shows the JKM
for April delivery is also at the lowest
monthly-average level seen since
July 2009, when the monthly-average
for August-delivered cargoes was
$4.226/MmBtu.
Sentiment for April and further
out in May continued to remain
bearish due to expectations of extra

supplies from both new and recently
commissioned projects in the United
States and Australia, as well as
additional volumes from the Angola
LNG project starting in the second
quarter of 2016.
The JKM had begun the trading
month at $4.70/MmBtu, before
sliding to an intra-month low of
$4.25/mmBtu in the first half of the
month. Expectations of oversupply
from the projects coming online
weighed on the market sentiment.
However, the downward pressure
on prices was short-lived, as demand
for April cargoes emerged at the same
time from several buyers looking to
quickly fill their April positions. Buy
tenders from Argentina, PTT, SK, Posco,
GSPC, Gail, and IOC for prompt April
cargoes reversed the downward trend
in prices. The Platts JKM rebounded
back up to $4.60/mmBtu by March 11.
Max Gostelow, Platts pricing
analyst of Asia LNG: While there
Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)
are still valid concerns that 2016

will be an oversupplied market for
most of the year, its evident that if
buyers all adopt the same attitude
and all wait for prices to bottom out
before entering the market to buy
cargoes, then we could definitely
see more volatility in the markets
like what has happened in early
March. However, the price recovery
has stalled as the market expects
sellers who had bid unsuccessfully
into Argentinas 15-cargo tender
to make those volumes available
to the spot market. We are also
noticing that the Qataris are
growing increasingly competitive
on price due to their long position,
and offering very good price for
volumes delivered to their term
buyers.
The price of fuel oil, a possible
competing fuel, decreased 53.6
percent year over year, while thermal
coal was down 24.8 percent from the
same month in 2015.
Apr-16
Apr-15
Mar-16
Year-On-Year
Change %
Month-On-Month
Change %
JKM ($/mmBtu)
7.436
7.279
5.339
-38.7
-16.5
Qinhuangdao coal ($/mmBtu)
2.558
3.403
2.503
-24.8
2.2
180 CST fuel oil ($/mmBtu)
4.193
9.039
3.881
-53.6
8.0
Note: U.K. and U.S. front-month futures roll at the end of each calendar month. Platts JKM rolls on the 16th of each calendar month.
The Platts JKM is an assessment of LNG prices for spot cargoes delivered to Japan and South Korea, based on the most recent trades and/or bids and offers from buyers and
sellers in the open market prevailing at the close of the trading day. The monthly JKM assessments are month-ahead delivered prices and are an average of the daily JKM price
assessments reported by Platts. The monthly reports on Asia LNG prices and market developments are typically published shortly after the 15th of each month.
47
INTERNATIONAL
Wood Mackenzie:
Oil markets Back to the Future II?
hirty years ago, the film

Back to the Future II
made some amazingly
accurate predictions about
everyday technology, including
video conferencing, biometrics and
wearable tech. Around that same
time, the US was also experiencing
a major oil price collapse, which is
an appropriate analogue for todays
current market slowdown. But just
as the movie didnt get it all right
(self-lacing shoes, anyone?), we
also cannot depend upon the 1986
oil market to tell the full story of
2016.
It is always important to reflect
on the lessons we learn from history.
And while the crude oil price collapse
of 1986 provides a solid framework
for understanding the similar collapse
were experiencing today, there are
also important differences.
48
Several circumstances of
the 1986 collapse are virtually
identical to the ones driving
todays low-price market,
including the percentage terms
of the price drop and the climate
of growing oil demand. Also
as in 1986, todays market is
seeing non-OPEC supply growth
exceeding that increased demand.
Further, OPECs decision to
compete for market share, largely
influenced by Saudi Arabia, echoes
its behavior 30 years ago.
Comparing the crude oil price (as
an index) in both time periods shows
a similar trajectory for the oil market
in the year immediately following the
peak price.
However, this is where the
similarities diverge and two key
differences emerge in the stories of
1986 and 2016.
The first is the current level of

high stocks. In 1987, the year after
the previous collapse, oil prices rose.
By contrast, in 2016, prices are still
declining, resulting in a weaker crude
oil outlook than history would suggest.
Secondly, the role of US tight oil
changes the recovery landscape.
Despite a brief recovery in 1987,
oil prices fell again. We expect a
different result this time around, as
the projected decline in non-OPEC
supplies will surface by 2017 more
quickly than it did in the 1980s
largely due to the responsiveness of
US tight oil.
Because of the US upstream
sectors proactive nature along with
significant demand growth from
emerging economies, we expect a
faster recovery from the current
situation than we experienced 30
years ago.
Courtesy of Petronas
INTERNATIONAL
Petronas names first

floating LNG facility
etronas first floating liquefied natural gas (LNG)

facility officially received its name, marking
another milestone for Malaysias national oil
and gas corporation in the global LNG business
arena on 4 March 2016, the firm said in a statement
recently.
The PFLNG Satu was named at a ceremony held by
Petronas, together with its strategic partners Daewoo
Shipbuilding & Marine Engineering Co. Ltd (DSME) and
Technip, at the DSME shipyard here in Okpo, South Korea.
Petronas President and Group CEO, Datuk Wan
Zulkiflee Wan Ariffin said that the floating LNG facility
signified a breakthrough achievement not only for the
company but also for Malaysia.
The PFLNG Satu is a testament to the engineering
capabilities of Petronas and its partners. Today, we have
pushed the boundaries and turned our technological
aspirations of having an LNG plant on a floating vessel into
reality, added Datuk Wan Zulkiflee.
The floating LNG facility is a significant achievement
and a game changer in the global LNG business as it paves
the way for opportunities to monetize gas resources
from remote, marginal and stranded fields, which would
otherwise be uneconomical to develop via conventional
means.
The PFLNG Satu will be moored at Malaysias Kanowit
gas field, 180 kilometers offshore Sarawak and has the
capacity to produce 1.2 million tons of LNG per year. It will

play a significant role in Petronas efforts to unlock the gas
reserves in Malaysias remote and stranded fields
The momentous occasion in Okpo was also attended by
President and Chief Executive Officer of DSME Sung Leep
Jung and Chairman and Chief Executive Officer of Technip
Thierry Pilenko
Jung in his speech said, This project has been a
remarkable experience for Petronas and the DSME/
Technip consortium and today marks the successful
completion of construction for PFLNG Satu. This
achievement, coupled with HSE record of 17 million hours
of No Lost Time Injuries is indeed a significant feat for the
partnership.
We have built a trustful and long term-relationship
with Petronas over the years and are very proud today,
with our partner DSME, to have met the challenges of this
game-changing project, Pilenko added in his speech.
Guests were then given a guided tour of the PFLNG
Satu which included the vessels modules and topside
equipment namely the Liquefaction System, Cargo
Containment System and Pre-treatment Process.
The floating LNG facility will support Petronas global
LNG portfolio and enhance its reputation as a preferred
and reliable LNG supplier.
The PFLNG Satu is expected to be Ready for Sail Away
in the second quarter of 2016.
49
CRIME
AGO investigating
FSRU Lampung
he Attorney Generals Office

(AGO) said it is investigating
suspected corruption in the
procurement process of
Floating Storage and Regasification Unit
(FSRU) Lampung owned by IDX-listed
state controlled gas distribution firm PT
Perusahaan Gas Negara Tbk (PGN).
The AGO sent a letter to PGNs
President Director Hendi Prio
Santoso on Feb. 25, summoning five
executives of the firm for questioning.
50
The five people are Agoes

Krenowo (Secretary of Procurement
Committee), Tri Setyo Utomo
(Assistant Manager of Project Finance
and Administration), M Wahid
Sutopo (Director of Investment Plan
and Risk Management), Eri Surya
Kelana (Director of Finance and
Administration) and Retno Kadarini
(Head of Procurement Committee),
AGO said in a statement released on
its website.
The letter said the five

were summoned in line with
investigation into corruption case
related to the FSRU development
owned by PGN with reference
to Investigation Order from
Solicitor General for Special Crime
No. Print-11/F.2/Fd.1/02/2016
dated Feb. 23 signed by Dr. Fadil
Zumhana.
We hereby ask for your help to
forward this letter of summoning to
suffered losses due to lacking risk

management in the development of
the project.
The FSRU was initially planned
to be stationed at Belawan, the
seaport of North Sumatra province,
in 2011, to provide gas for the
province. Then Minister of State
Enterprises Dahlan Iskan suspended
the project, while ordering state
owned oil and gas firm PT Pertamina
to build a pipeline from Aceh to
Belawan to supply gas to North
Sumatra. The Arun-Belawan pipeline
has been completed and is now in
operation.
In 202, Dahlan ordered PGN to
relocate its FSRU project to Lampung.
The FSRU was completed in two
years. In September 2014, FSRU
Lampung started channeling gas to

PLTGU Muara Tawar power plant in
Bekasi, West Java province, owned by
public utility PT Perusahaan Listrik
Negara (PLN) at a volume of 40.5
mmscfd and a price of $18 per mmBtu
The contract with PLN was
however terminated in January 2015.
Despite the absence of revenue,
PGN is obligeted to continue paying
leasing and maintenance fee of FSRU
Lampung.
Besides, PGN has also spent $100
million to build a mooring tower for
the FSRU and another $150 million
to build a 30-50 km subsea pipeline
linking FSRU Lampung to the South
Sumatra-West Java pipeline and
offtaking supporting facilities. The
prices are considered too high.
Petromindo|Boim
the aforementioned names, reads the

letter.
Earlier, the AGO announced
that it had discovered indications
of corruption in the US$400
FSRU Lampung project. There are
indications that the projects costs
have been marked up. Losses are
estimated to reach $100 million
as a result of underperformance
of the facility. Despite the
underperformance of the facility, PGN
has to pay Hegh LNG, a Norwegian
firm which owns FSRU Lampung, $6
million in leasing fee each month.
Suspicion over possible
corruption in the FSRU Lampung
project arose following a report from
Energy Watch Indonesia, a local NGO,
which alleged the state might have
51
INTERNATIONAL
Indonesia strikes deals

with OIC countries
52
the Central Asian country without

intermediaries. Indonesia will directly
buy a total of 1 million barrels of
crude oil from the State Oil Company
of Azerbaijan Republic (SOCAR). The
price is cheaper because it is bought
without intermediaries.
The purchasing of oil from
Azerbaijan will be carried out on the
government-to-government (G-to-G)
scheme, he said.
In the deal with Iran, the country
agreed to sell LPG to Indonesia at a
discount of US$25 per ton over the
prevailing market price.
The discount is significant, he
said.
Meanwhile, Saudi Arabia is ready
to relocate its oil fuel stocks, equal
to one month of oil fuel needs of
Indonesia, to Indonesia provided
that Indonesia has enough storage
capacity to hold them.
According to the ministrys data,

Indonesias oil fuel consumption in
2015 reached 71.3 million kilo liters
(kl), meaning Indonesia consumed
5.94 million kl or 37.3 million
barrels per month. Of the annual
consumption, 32.1 million kl or 45.02
percent was imported.
IGN Wiratmaja said at present, there
are idle storages with a combined
capacity of 1.5 million barrels owned
by Production Sharing Contract (PSC)
holder. The storages are however
scattered across the country and are
difficult to access.
The government considers storing
the Saudi Arabian fuels at domestic
refineries. We are going to list
refineries which can be potentially
used to store the fuels, he said.
Febry Silaban
Courtesy of OIC
inister of Energy and

Mineral Resources
Sudirman Said said
Indonesia was able to
strike important energy deals with
several member countries of the
Organization of Islamic Cooperation
(OIC) on the sidelines of the OIC 5th
Extraordinary Summit on March 6-7.
During the summit, Indonesia
sought to make deals with several
OIC member countries, who happens
to be also member countries of the
Organization of Petroleum Exporting
Countries (OPEC), Sudirman
explained during the recent hearing
with the House of Representatives
Commission VII which oversees
among other energy affairs.
The countries are Azerbaijan, Iran,
Kuwait, and Saudi Arabia.
In the deal with Azerbaijan,
Indonesia will import crude oil from
OIL & GAS
Andalas signs farm-in agreement

for Tuba Obi East
SE-listed Andalas Energy and Power Plc, an AIMlisted investment company, announced recently
that it has conditionally entered into a farm-in
agreement for the Tuba Obi East (TOE) Technical
Assistance Contract (TAC).
The TAC block is located in the South Sumatran basin
approximately 30km northwest of Jambi city in Jambi
province, Sumatra.
Andalas CEO, David Whitby, said The signing of this
agreement follows the Letter of Intent announced on 3
February 2016 and secures ADLs foundation gas asset.
We are keen to take full advantage of the opportunity
Tuba Obi East now affords Andalas, and we regard it as the
base upon which a profitable Indonesian gas and power
business can be built.
TOE has all the essential features to be a successful
first asset for the Company. It has gas proven by two
wells into the reservoir zone that has been defined on 3D
seismic and confirmed by well logs, all whilst located in a
prolific hydrocarbon basin. In addition, the field is close to
both gas and power infrastructure and has easy access to
Indonesias burgeoning energy market which is generating
high prices for producers. It represents an unrivalled
opportunity for a new Indonesian gas and power market
entrant like ADL.
Under the terms of the proposed farm in, Andalas
will acquire a 30 percent direct working interest in the
concession through the execution of a single well work

program. The work program includes the completion of a
geological, geophysical and reservoir (GG&R) study along
with the drilling and flow testing of a single well to assess
the deliverability, recoverable volumes, and gas quality in
the Air Benakat formation.
Block operator PT Akar Golindo and Andalas will
jointly operate the well work program, which is expected
to cost around US$1.075 million. Andalas has also agreed
to pay a further sum of US$500,000 to PT Akar Golindo
if the concession is renewed beyond its expiry date of 15
May 2017.
The farm-in agreement is subject to the approval of
Andalas shareholders in general meeting.
Tuba Obi East is located in the South Sumatran
basin approximately 30km north-west of Jambi city.
The wells previously drilling in the concession have
tested gas in the key South Sumatra hydrocarbon
bearing formations, namely, the Air Benakat Formation
(ABF) and the Talang Akar Formation (TAF). A total
of six wells (three wells within the concession and a
further three just outside) have been drilled through
these zones, with a number having been logged across
the ABF and TAF. Several have also flowed gas to
surface.
Romel S. Gurky
53
COMPANIES
DX-listed PT AKR Corporindo

Tbk, Indonesias leading
provider of logistic services and
supply chain solutions for bulk
chemicals and energy distribution
reported its audited financial
statements for the year ended 2015
with net profit after tax of Rp 1,034
billion, up 28 percent from Rp 810
billion during the year 2014.
In terms of margins, the company
reported significant improvements
across all business segments with
54
gross margin of 11.21 percent,

operating margin of 6.83 percent and
net margin of 5.23 percent in 2015,
the firm said in a statement filed with
the Indonesian Stock Exchange.
The company reported a decline
in consolidated gross revenues from
Rp 22,468 billion in 2014 to Rp
19,765 billion in 2015 attributed to
low oil prices.
The firm said the strong profits
demonstrates its ability to maintain
its growth momentum despite the
significant decline in petroleum

prices and slowing demand from
industries in Indonesia due to
the companys ability to deliver
effective supply chain solutions while
maintaining a strong focus on risk
management and cost control.
Commenting on the full year
financial results, President Director
Haryanto Adikoesoemo said
Continuing from last years strong
performance, its my privilege
to announce that this year AKR
Courtesy of AKR
AKR reports strong profit

despite oil price slump
Courtesy of AKR
continues to produce solid financial

results evidenced by 28 percent
growth in net income year-on-year.
Our strategy to maximize profits
while maintaining margins through
strong cost controls have enabled us
to meet our earnings target.
Utilizing our extensive
infrastructure network and capitalizing
upon the opportunity presented in
this low oil price environment, we will
continue to expand our distribution of
petroleum and raw materials. One of
the key initiatives we have embarked
this year is the introduction of RON92
product which we will distribute
through our existing and new retail
outlets, said Haryanto.
The firm sells oil products to retail
buyers and industrial customers.
The firm entered fuel retail sector in
2010 and now operates a network of
130 gas stations scattered in various
parts of the country. Fuel distributed
by AKR comprises diesel, gasoline for
motor vehicles and for fishing fleet/
vessels.
Supported by a strong network

of ports and storage, the firm has
also become the major supplier of oil
products for industrial customers.
It imports and supplies high speed
diesel, fuel oil and industrial diesel
oil to customers in the mining, power
generation, plantation, commercial,
industrial and bunker industries.
AKR is also one of the largest
distributors of basic chemicals in
Indonesia, having been distributing
basic chemicals since 1960s. The
products include chloro-alkali
chemicals, solvents, and organic and
non-organic chemicals.
The company represents
international manufacturers of basic
chemicals and acts as their principal
distributor in Indonesia. The
company supplies basic chemicals
to industrial customers, principally
to consumer goods sector, textiles
and glass manufacturers, and rayon
producers. Some of its principals
are Asahimas Chemicals, Solvay, and
South Pacific Viscose.
The firm is now developing Java

Integrated Industrial and Port Estate
(JIIPE) in Gresik, East Java province.
a project that is designed to be one
of the largest integrated industrial,
residential and deep sea port estates
with development areas totaling close
to 3.000 ha
The firm said in the statement
that significant progress has been
achieved in the development of
the JIIPE project. Construction of
industrial plants at the site has
commenced and the port operations
in first stage of 85 ha and 500 meters
jetty has commenced since January
2016.
We are now finalizing the first
power plants and other utilities
which will enable us to offer
integrated industrial estate with low
cost logistics and energy solutions
to our industrial estate tenants,
Haryanto said.
The firm expressed optimism
about the outlook of its business.
With Indonesias GDP expected
to record an increased growth from
4.9 percent in 2015 to 5.4 percent
in 2016 according to the estimate
made by Asian Development Bank
as well as the improvement in
investment climate, we are confident
that demand for basic raw materials,
petroleum products and industrial
estates will increase during the year
2016, Haryanto said.
Deregulation in downstream
petroleum segment, including
increase in demand for unsubsidized
fuels in industrial and retail
segments will enable AKR to
increase its volumes and maintain
growth in its earnings, according to
Haryanto.
Romel S. Gurky
55
OIL & GAS
Premiers production
stable in 2015
ritish firm Premier Oil Plc

announced recently that
its net production from
Indonesia in 2015 on a
working interest basis was stable at
13,900 boepd (2014: 14,400 boepd).
A strong operational performance
from the Premier-operated Natuna
Sea Block A offshore Natuna
Islands was offset, in part, by lower
production from the non-operated
Kakap field.
The Premier-operated Natuna Sea
Block A delivered stable production
into the Singapore gas market with
gas demand above the contractual
share for GSA1. Initiatives to
optimise the cost base for Natuna
have been delivered during 2015,
with sustainable operating costs of
US$8.0/boe.
Premier sold an average of 223
bBtud (gross) (2014: 231 bBtud)
from its operated Natuna Sea Block A
during 2015: (Table)
GSA1 deliveries from Block A
were 43 percent (2014: 45 percent)
of all GSA1 deliveries, above the
contractual share of 39.9 percent.
In addition Premier continues to
provide additional gas sales of up
to 40 BBtud from the Gajah Baru
Table
BBtud (gross)
GSA1
maintain the production profiles

of GSA1 and GSA2 and these fields
are now fully tied into the Gajah
Baru facilities. This increased
deliverability from Natuna Sea Block
A also allows Premier increased
operational flexibility, the ability to
fill any shortfall from other suppliers
within the existing contracts and the
potential to respond to any future
increase in Singapore or domestic gas
demand.
Elsewhere on Natuna Sea Block A,
the next generation of developments
to backfill our existing Singapore and
domestic market contracts continue
to progress. FEED has been completed
on the Bison, Iguana and Gajah Puteri
projects and an investment decision
on these projects is targeted for the
fourth quarter of 2016.
Evaluation of the potential
development scenarios for the 2014
Kuda/Singa Laut discoveries on
the Tuna Block, offshore Natuna
Island remains ongoing. Premier is
conducting a farm-out process with
a view to reducing its 65 percent
equity interest in the block in order to
manage its exposure going forward.
Romel S. Gurky
GSA2
GSA5
Anoa
Gajah Baru
2015
133
-
2014
141
-
2015
77
2014
79
2015
13
2014
11
Total block A
133
141
77
79
13
11
23
156
30
171
77
79
13
11
Kakap
Total
56
field to the domestic market under a

Domestic Swap Agreement (GSA5).
In 2015, GSA5 sales were less
than expected in the first half of the
year due to competition from low
price diesel fuel, but increased in the
second half. End-users continued to
make take or pay payments in full as
per the terms of the DSA/GSA.
Gross liquids production from
the Anoa field averaged 1.4 kbopd
(2014: 1.6 kbopd) and gross liquids
production from the non-operated
Kakap field averaged 3.5 kbopd
(2014: 3.9 kbopd).
Cost reduction initiatives
have been delivered through
optimization of work programs,
reduction of discretionary spend,
efficiencies through shared services
with other operators in the area
and contract renegotiations with
existing suppliers. Based on current
production levels, Natuna A is well
placed to deliver operating costs of
US$8.0/boe into the medium-term.
The Pelikan field was successfully
brought on-stream in March within
budget, following first gas from the
Naga field in November 2014. The
Pelikan and Naga gas fields, which
contain 150 bcf of reserves, will
COMPANIES
Elnusas 2015 profit drops 11.84%
DX-listed oil and gas service company PT Elnusa Tbk

recorded Rp 375 billion in net profit in 2105, down
11.84 percent from Rp 426 billion in the previous
year.
The firm recorded a one-time revenue amounting to
Rp 87 billion from land sales in 2014. Had the one-time
revenue been deducted on the 2014 revenue, the firm
would have recorded a 10.92 percent increase in net
profit this year, the firm said in statement filed with the
Indonesian Stock Exchange recently.
The firm said it was still able to record an encouraging
financial performance in 2015 despite market downturn
The industry was faced with grave challenges in
2015 due the drop in global oil prices. To cope with the
situation, the firm did its best to improve efficiency and
effectiveness by changing work method implementing
sustainable innovation, expanding business and
penetrating new markets. The firm was able to arrest the
decline in revenue and record a relatively encouraging
growth in net profit, the firm said.
Revenue reached Rp 3.7 trillion in 2015, a 10.6 percent

decrease on the previous year.
The efficiency program carried out by the firm proved
effective, which was evidenced in the percentage of costs
against revenue, which fell to 80.96 percent in 2015, from
81.99 percent in the previous year, according to the firm.
By the end of last year, the firms cash position stood
at Rp 935 billion while cash generated from operation
reached Rp 424 billion. Meanwhile, the firms debt reached
Rp 740 billion at the end of last year.
Elnusa was still in net cash position by the end of last
year, which is a condition which only few companies in the oil
and gas sectors find themselves in at present, the firm said.
In view of this, we can say that Elnusas fundamentals
are still strong, compared to its competitors in the national
oil and gas industry, the firm added.
The firm provides a wide range of services for oil and
gas industry, including seismic surveys and drilling.
Romel S. Gurky
57
Petromindo|Khalsa
OIL & GAS
Black Platinum to forge

ahead in East Natuna
By: Godang Sitompul
espite current industry

conditions, private
equity funded Black
Platinum Energy (BPE)
announced it has plans to forge ahead
with exploration and appraisal/
development activities to prove up its
shallow gas plays in East Natuna.
The company plans to drill one
exploration well, Paus Hitam-1 in its
Sokang PSC and one or two appraisal
wells in its North Sokang PSC within
the next 12-18 months, the firm said
in statement sent to Petromindo
58
Plans for Sokang PSC

One exploration well is planned in
early 2017 targeting an unrisked mean
exploration prospect, Paus Hitam-1
of P50 878 Bcf in the Lower Pliocene
sands at a TD of 878 m. The Sokang PSC
was the site of a three well exploration
campaign (Paus S-1, Paus NE-1 & 2) in
the early 1970s which was targeting
resources in the Miocene. All three
wells penetrated gas columns with no
CO2 detected in the Upper & Lower
Pliocene and were deemed shallow gas
hazards at that time.
Judiana Ardiwinata, CEO of the

company stated that recent success
in the Upper & Lower Pliocene (in
interval above 800 meters) in the
adjacent North Sokang PSC (East Dara
gas discovery) provides a low CO2
play analogy for a Paus Hitam-1 well.
Judiana further stated that a
successful result in a Paus Hitam - 1
well along with the adjacent East
Dara gas discovery would further
boost the commercial potential of
shallow gas in the East Natuna region
and likely unlock a huge amount of
potential gas resources in the greater

Natuna Sea which were previously
deemed shallow gas hazards and not
commercially viable.
Judiana indicated that the
company is actively looking for farmin Parties to drill the Paus Hitam-1
exploration prospect but given the
recent decline in drilling costs that it
would drill the exploration well on its
own, if necessary
Plans for North Sokang
One or two appraisal wells are
planned in mid- 2017 on the East
Dara gas structure to further test/
prove up the Upper & Lower Pliocene
gas resources and move this gas
discovery into a development phase.
The company plans to drill a Dara
5 appraisal well on the West Flank of
the East Dara structure targeting the
Upper Pliocene sands with a possible
second appraisal well, Dara-6 on

the high of the East Dara structure
targeting the Lower Pliocene sands.
In November 2012, the company
completed two exploration wells on
the East Dara structure in its North
Sokang PSC. Both wells - Dara 3 & 4
targeted the Upper Pliocene sands
which were plugged and abandoned
as gas discoveries.
The Dara 3 well was drilled to a
depth of 970 meters and intersected
net gas pay of 18 meters. Dara 3 was
successfully flow tested at a rate of
9 mmscf/d with 1.9% CO2 and no
water. The nearby Dara 4 well was
drilled to a depth of 770 meters and
intersected net gas pay of 6 meters. In
2015, the East Dara gas discovery was
independently assessed by a third
party to contain 734 Bcf of gas.
The objective of drilling one or
two more appraisal wells in East Dara
is to prove the commercial viability

of the Pliocene shallow gas play,
Judiana said.
The East Dara gas discovery
was analogous to Chevrons shallow
AB gas fields in the Netherlands.
Chevron had successfully developed
the offshore Netherlands AB gas
fields despite the shallow depth
and low relief of the structures,
the unconsolidated nature of the
reservoir sands, together with
difficulties modelling reservoir
architecture and predicting water
breakthrough. The AB gas fields
were developed employing highlydeviated wells completed with
expandable sand screens after
gaining an understanding of sequence
stratigraphic and glacial controls on
sand quality and deposition, he said.
The company had
already studied a number of
59
Petromindo|Khalsa
OIL & GAS
Judiana Ardiwinata
commercialization options for the

East Dara gas field which included
a tie-in to the West Natuna pipeline
system, a new-build pipeline to
Natuna Island and a FLNG vessel,
and the Company has determined
a FLNG solution provided the best
commercial and operational results,
Juliana added.
Judiana explained the company
had completed a preliminary Plan of
Development (PoD) by a third party
for the East Dara gas field confirming
robust economics utilizing:
Up to 14 development wells
phased over field life
Four unmanned Well Head
Platforms (WHP)
Infield umbilicals and flowlines
Leased FLNG facility to support 11
years of production/throughput at
110 mmscf/d plateau with 18 year
production life
Export via LNG tanker to the
Indonesian domestic gas market
Judiana mentioned that further
60
pre-FEED/FEED work was needed to

finalize this preliminary PoD.
Judiana indicated that the
targeted gas market for East Dara gas
was the Indonesian domestic market
given the growing demand for gas,
the planned new build regas FLNG
infrastructure and the favorable
gas prices. He also mentioned that
some discussions have already been
initiated with local gas Buyers/
Offtakers.
Judiana stated that the company
was actively looking for Parties
to progress the East Dara gas
development and hoped a transaction
would be concluded soon so PreFEED/FEED and other appraisal/
development activities could be
started.
Exploration activities during a
challenging time
Commenting on the current
situation in the oil & gas industry,
Judiana said that whilst it is indeed
difficult to justify undertaking

exploration activities due to low oil
prices, at the same time it is actually
an opportune time to continue low
risk exploration activities since
service companies costs have
significantly decreased.
Judiana recognized that interministerial coordination and
involvement by the parliament would
likely be required to obtain tax and
fiscal incentives to spur exploration
and other activities which may take
some time.
Meanwhile, Judiana suggested
the Directorate General of Oil and
Gas and SKK Migas consider some
easier solutions such as revising
certain existing rules and regulations
to give companies more freedom
and flexibility in executing their
exploration activities.
Some examples cited by Judiana
included: eliminating entirely or
significantly reducing tendering
requirements under PTK 007 for
exploration activities (have a separate
procurement regulation solely for
exploration companies); allowing
exploration companies to sell its
surplus materials to recover any costs
incurred on a dry-hole/unsuccessful
well; allowing the sale and transfer
of surplus materials between PSCs at
market value rather than book value
to procure goods faster, simplifying
data access including from overseas,
and simplifying the relinquishment
process. All of these potential changes
do not require inter-ministerial or
parliament involvement and could
be undertaken quickly which in turn
may attract exploration activity whilst
the broader Government is working
on better tax and fiscal incentives.
Furthermore, none of these changes
impact the governments revenue.
OIL & GAS
Pertamina starts preparations

for Mahakam
Syamsu Alam
Petromindo|Khalsa
tate-owned oil and gas firm PT Pertamina has

begun preparations for the operation of the gasrich Mahakam block, which it will take over late
next year, The Jakarta Post reported recently.
The Post quoted Pertamina Upstream Director Syamsu
Alam as saying that setting up the work plan earlier would
help the company carry out a smooth transition in the
blocks operatorship from current operator Total E&P
Indonesie.
We expect to settle all matters regarding data transfer,
covering surface and subsurface data, by mid-year.
Thereafter, we will start planning programs and budget,

Syamsu said.
Total E&P Indonesie holds a production-sharing
contract that will end in late 2017. Under the contract,
Total holds 50 percent interest in the block while its
partner Inpex owns the other 50 percent.
Pertamina will own 100 percent stake in the block in
early 2018. However, it is allowed to divest its ownership
to partners by up to 30 percent. Involving the current
contractors, which have experienced managing the block,
is the top option so that there is no massive decline in
production following the change in operatorship.
However, Pertamina, Total and Inpex have yet to reach
a deal on future partnership.
We dont care about the candidate partners. The work
plan and budget planning will go on. If in the meantime
we reach a deal, we will share down the 30 percent at a
certain price, Syamsu said.
The drafting of the work plan and budget is expected
to be concluded before mid-2017, when the Upstream Oil
and Gas Regulatory Special Task Force (SKKMigas) starts
preparations to carry out discussion with oil and gas
contractors for respective working areas.
Totals president director, Hardy Pramono, said his
company would continue to evaluate whether it would
maintain its presence in the block.
We have a head of agreement [with Pertamina] and
we are heading to a transfer agreement. We will see the
details in the transfer agreement in June or July, Hardy
said.
He added that his company had yet to discuss valuation
matter on the 30 percent stake Pertamina may offer. The
essence is that Pertamina will be the operator starting in
2018. We have to prepare for how Pertamina can be ready
for that, Hardy said.
In late December last year, Pertamina signed a
production-sharing-contract for the block after 2017.
Mahakam PSC will be operated under Pertaminas newly
established arm, Pertamina Hulu Mahakam, starting on
Jan. 1, 2018. Pertamina will operate Mahakam for 20 years
until 2038.
61
OIL & GAS
Pertamina to build Rp 2.5t

infrastructures
212 billion; three LPG refill depots

in East Nusa Tenggara, Maluku,
and Papua with combined capacity
of 6,000 Mt and total investment
of Rp 870 billion; and a fuel to gas
conversion program for 5,000
fishermen with budget of Rp 71.25
billion.
Wianda said that Pertamina has
also been assigned to build a Rp 42.8
billion mini LNG with engineering
phase to enter this year; gas pipelines
in Jakarta and Bekasi worth Rp 120
billion, household gas networks in
Prabumulih, Cilegon, and Balikpapan
worth Rp 605 billion; distribution
converter kit for transportation
sector worth Rp 31 billion; and
gas refill stations in Bekasi and
Prabumulih worth Rp 95 billion.

Pertamina through subsidiary
PT Pertamina Gas (Pertagas) has
operated city as network in a
number of cities including Jambi,
Sengkang, Prabumulih, Bekasi and
Sidoarjo linking to a total number
of household consumers of about
21,000.
Wianda said that in line with
assignment from the government,
this year Pertamina will distribute
gas to households in Sidoarjo (second
phase), Organ Ilir, Subang, and
Lhokseumawe.
Pertamina said once the city gas
network has been fully operated, the
company will manage gas network
covering 102,000 households.
Petromindo|Khalsa
tate-owned oil and gas

firm PT Pertamina said it
has been assigned by the
government to develop
oil fuel, LPG and natural gas
infrastructure facilities with total
investment of Rp 2.5 trillion to help
ensure energy supply across the
country.
Pertamina Vice President for
Corporate Communications Wianda
recently that the projects will be
funded via the state budget.
She explained that there will be
15 oil fuel terminals to be developed
in eastern part of Indonesia with
combined capacity of 72,000 kilo
liters and estimated investment of Rp
62
COMPANIES
Manhattan eyes at least 51%

of Kariangau Power
Petromindo|Boim
GX-listed Manhattan Resources Limited (MRL)

announced recently that it has signed a nonbinding memorandum of understanding (MOU)
with Energy Resource Investment Pte. Ltd. (ERI)
to acquire a majority stake of at least 51 percent shares in
PT Kariangau Power (KP).
KP owns and operates a coal-fired steam power plant in
the Kariangau industry area of Balikpapan, East Kalimantan.
The proposed acquisition is expected to allow MRL to
tap into the opportunities arising from the rising demand
for electricity in Indonesia, especially in eastern Indonesia
where demand is forecasted to grow at 11.2 percent per
annum, the firm said.
PT Perusahaan Listrik Negara (PLN), the state-owned
enterprise of Indonesia that supplies public electricity,
is targeting to increase Indonesias electrification ratio
from 83 percent in 2014 to 98 percent by 2022. In East
Kalimantan alone, projected production is expected to
more than double to 6,702 GWh from 2014 to 2022.

MRL believes that the signing of the MOU is another
step in the diversification efforts to build a stable earning
base, and will present an opportunity for MRL to leverage
on the rising demand for electricity in Indonesia and the
electrification plans of Indonesia as the country heads
towards further industrialization.
The terms of the proposed acquisition set out in
the MOU and all other rights and obligations of such
transaction are subject to the execution and delivery of
the definitive agreements to be negotiated and mutually
agreed to by MRL and ERI.
According to news reports, PLTU Kariangau has a
capacity of 2x15 MW. Kariangau Power is a subsidiary
of coal firm PT Gunung Bayan. The power plant was
inaugurated in the middle of last year. The power plant
supplies power to the Kariangau industrial area of
Balikpapan.
63
Petromindo|Boim
OIL & GAS
Hendi Prio Santoso
PGN to build gas connections

to 110,000 houses
DX-listed state owned gas

distributor PT Perusahaan Gas
Negara (PGN) Tbk said recently
that it will build gas connections
to 110,000 houses using its own
funds from this year through 2019.
The new gas connections will
bring the firms household customers
to 217,000 from 107,000 at present,
PGNs President Director Hendi Prio
Santoso said in a statement
This is part of our commitment
to expand the utilization of natural
gas which is efficient, clean and
environmentally friendly energy,
Hendi said.
Hendi said PGN is a gas company
which has the most complete segments
of customers. Aside from households,
PGN also supplies natural gas to big
industrial and power plant sectors
where its customers now total 1,529.
64
PGN also channels gas to

small and medium enterprises and
customers in the commercial sector
such as hotels, hospitals and malls,
which now total more than 1,850,
Hendi said.
Hendi said aside from expanding
network to household customers,
PGN will also build 1,680-km
pipelines in 216-2019. At present, the
firm operates 6,980 km of pipelines,
which account for 76 percent of the
domestic downstream pipelines.
Aside from building pipelines,
PGN will also build mini LNG system
in central and eastern Indonesia and
build more CNG stations for land
transportation. As of 2019, we shall
build 60 more CNG stations, he said.
Hendi said all the projects the
development of new pipelines, gas
connections to houses, mini LNG
system and new CNG stations will

increase the domestic gas utilization
by 1,902 mmscfd.
The increase in gas consumption
volume shall result in (energy)
efficiency for PGN customers
amounting to Rp 110.9 trillion.
Last year, PGNs gas supplies to
its customers resulted in national
(energy) efficiency worth Rp 88.03
trillion, Hendi said.
Aside from its own pipelines, PGN
is also entrusted by the government
to manage gas connections to 43,337
households that have been built
in 11 mayoralties and regencies
using state funds. The government
has also assigned PGN to build
gas connections to 49,000 houses.
Combined with these, PGN will
have a total of 309,300 household
customers.
POWER
PLTU Lontar gets loan from JBIC
As Japans policy-based financial institution, JBIC

will continue to financially support the export of
infrastructure-related facilities as well as the overseas
business deployment of Japanese companies, by drawing
on its various financial facilities and schemes for
structuring projects, and performing its risk-assuming
function, JBIC said
PLN says in its website that at present there are three
power units already in operation at PLTU Lontar, each
with a capacity of 315 MW or a combined capacity of 945
MW.
The new power unit will be builat on a area of 11
hectares the PLTU Lontar site in Lontar village, Kemiri
district, Tangerang regency. On Sept. 18, 2015, PLN signed
an EPC contract with a consortium comprising Sumitomo
Corporation, Black and Veatch International Company
and PT Satyamitra Surya Perkasa. The construction of the
power unit is projected to be completed in 42 months after
the effective date of the contract.
Power from PLTU Lontar is channeled via a 150 kV
transmission line over a distance of 22 km to the Teluk
Naga substation and over the same distance to the New
Tangerang substation.
Petromindo|Boim
he Japan Bank for International Cooperation

(JBIC) signed a loan agreement on March 14
in buyers credit (export loan) totaling up to
approximately 9.8 billion yen and USS107
million (JBIC portion) with PT Perusahaan Lsitrik
Negara (PLN) (Persero), Indonesias state-owned power
company..
The loans are co-financed with Sumitomo Mitsui
Banking Corporation (SMBC), bringing the total cofinancing amount to approximately 16.4 billion yen
and $179 million, with Nippon Export and Investment
Insurance (NEXI) providing insurance for the portion cofinanced by SMBC, JBIC said in a statement.
The loan is intended to provide financing for
PLN to purchase a complete set of facilities for ultrasupercritical coal-fired power plant, including steam
turbine and generator (Toshiba Corporation) and boiler
(IHI Corporation) from Sumitomo Corporation and other
entities for the expansion of the 315 MW Lontar coal-fired
power plant in Banten province.
In order to respond to the countrys surging electricity
demand which has risen in line with continued economic
growth, the Indonesian government has committed to
promote its 35 GW power plants development plans for
the five years from 2015 to 2019.
The Lontar coal-fired power plant is part of this
power development plan. Through JBICs support for
the export of power generation equipment by Japanese
companies, this loan is expected to support Indonesias
economic development by realizing steady power supply,
and, at the same time, will contribute to maintaining
and strengthening the international competitiveness of
Japanese industries.
65
OIL & GAS
BP opens Tangguh Train 3

onshore EPC commercial bids
P Berau Ltd., a unit of

British energy giant BP Plc,
has recently opened the
onshore EPC commercial
bids for the Tangguh Expansion
Project (Train 3) in West Papua.
We can confirm that the Tangguh
Train 3 onshore EPC commercial bids
were opened recently. The process will
continue with a period of compliance
checks and bid validations, Head of
Country BP Indonesia Dharmawan
Samsu told Petromindo.
Additional details, including
commercial information, are
confidential, he said.
We continue to work closely
with the Tangguh partners and
the Indonesian government as we
progress towards the Train 3 project
final investment decision, Dharmawan
said, adding that his firm will make an
announcement of the winning bidder
at the appropriate time.
66
Last December, two consortia

which were appointed to carry out
the onshore Front End Engineering
and Design (FEED) works for the
US$12 billion Tangguh Train 3
project submitted the technical FEED
to BP.
The first consortium comprises PT
Tripatra Engineers and Constructors
(as the leader), PT Tripatra
Engineering, PT Chiyoda International
Indonesia, PT Saipem Indonesia, PT
Suluh Ardhi Engineering and Chiyoda
Corporation Consortium. The second
consortium consists of PT. Rekayasa
Industri/Rekind (as the leader), JGC
Corporation, PT KBR Indonesia and
PT JGC Indonesia Consortium.
An official of Tripatra said that the
commercial submission of the FEED
was also made on Feb. 4, 2016.
The Train 3 will be built on the
safe and reliable operations of the
two existing liquefaction trains at
the Tangguh site, which is located

in Teluk Bintuni Regency in West
Papua province. The project will add
3.8 million tons per annum (mtpa)
liquefaction capacity to Tangguh,
bringing total capacity to 11.4 mtpa.
Tangguh is operated by BP Berau
Ltd on behalf of the other production
sharing contract parties, as contractor
to SKK Migas. BP Berau Ltd and its
affiliates in Indonesia hold a 37.16
percent interest in the project. Other
Tangguh production sharing contract
partners are MI Berau B.V. (16.30%),
CNOOC Muturi Ltd. (13.90%),
Nippon Oil Exploration (Berau),
Ltd. (12.23%), KG Berau Petroleum
Ltd and KG Wiriagar Petroleum Ltd
(10.00%), Indonesia Natural Gas
Resources Muturi Inc. (7.35%), and
Talisman Wiriagar Overseas Ltd.
(3.06%).
Febry Silaban
Infrastructure
MEMR signs energy-related

infrastructure projects
Petromindo|Dasir
resident Joko Widodo (Jokowi) and Minister of

Energy and Mineral Resources Sudirman Said
witnessed on Feb. 29 the signing of contracts
covering 133 strategic projects at the Ministry of
Energy and Mineral Resources (MEMR) including energyrelated infrastructure projects, worth a combined Rp 3.04
trillion to be financed by the 2016 state budget.
Twenty to thirty years ahead, there will be
competition for energy and food resources. Therefore
starting from now, we must make grand strategy, to focus
on food and energy, and develop the necessary supporting
infrastructure facilities, Jokowi said in his speech.
The energy-related infrastructure project contracts
signed today include projects on gas refilling station, gas
pipeline network, mini hydropower plant, solar power
plant, waste to energy power plant, and biogas power plant.
The largest of the projects are the Prabumulih gas
network in South Sumatra (worth Rp 493 billion) and the
2 MW solar power plant in Manokwari, West Papua (worth
Rp 57 billion).
Aside via tender mechanism, some of the projects
are assigned directly to several state-owned and statecontrolled companies including oil and gas firm PT
Pertamina (Persero), gas distribution firm PT PGN
(Tbk), engineering and construction firms PT Adhi
Karya (Persero) Tbk and PT Hutama Karya (Persero),
engineering and manufacturing firm PT LEN Industri

(Persero), surveyor company PT Sucofindo, PT INTI
(Persero), engineering and construction firm PT Wijaya
Karya (Persero) Tbk, surveyor company PT Surveyor
Indonesia, engineering and construction firm PT Nindya
Karya (Persero), engineering company PT Rekayasa
Industri, dan PT Energi Manajemen Indonesia (Persero).
Sucofindo said in a statement that the agreement it
signed with the ministry assigns the firm to oversee the
development of power plant and gas distribution projects
in the country.
Sucofindos President Director Bachder Djohan
Buddin said the projects are scattered across the country.
The power plant projects are located in 142 locations,
including mini hydropower, solar power, wind power
projects in Papua, North Maluku, East Nusa Tenggara,
West Nusa Tenggara provinces and other provinces in
Sulawesi, Kalimantan and Sumatra.
In the gas sector, the firm will oversee the development
of city gas networks and CNG stations. For this year, it
will oversee the development of city gas networks in
Balikpapan and Jabodetabek (Jakarta and surrounding
areas) and the development of CNG stations in Prabumulih
and Bekasi.
Godang Sitompul
67
POWER
Insecure coal supply

for power plant projects
68
Petromindo|Khalsa
uture coal supply for

coal-fired power plants
to be developed under
the governments crucial
35,000 MW power generation
program is at risk as existing coal
reserves at the countrys mines may
deplete sooner than anticipated,
according to a recent joint survey by
Indonesia Coal Mining Association
(ICMA) and consultancy firm
PricewaterhouseCoopers (PwC).
The survey, which involved
25 major coal mining companies,
concluded that the countrys mineable
coal reserves reached only about 7.3
billion to 8.3 billion tons per end of
last year, much lower than the data of
the Geological Agency at the Ministry
which showed proven reserves of 32.3
billion tons as per 2014.
Our preliminary projection
indicates that the coal reserves will
deplete by 2033 to 2036, or sooner
than the lifetime of the power
plants said PwCs President Director
Advisory Mirza Diran.
The current administration has
launched an ambitious program to
develop a total of 35,000 MW power
plants over a five-year period until
2019, of which about 20,000 MW will
be coal-fired power plants, which will
have a lifetime of 25-30 years, which
means that the plants may last up until
2049 if theyre completed in 2019.
The lingering downturn in coal
price has forced many coal miners
to halt exploration activities to find
new coal reserves. The weak price
environment has also forced miners
to reduce stripping ratio as part
of cost-cutting measures, which
means that future coal deposits will
Courtesy of PWC
By: Tri Subhki Rakhmatullah
Mirza Diran
be largely located in deeper areas

costly to extract, or not economically
feasible if price remains weak,
translating into less mineable
reserves. Some miners have also
started suspending production at
certain mines deemed to be no longer
economically feasible given the low
price environment.
Based on the current coal prices,
there is a possibility of insufficient
coal supply for the 20,000 MW coalfired power plants for the next 25 to
30 years, Mirza said.
According to the survey, coal
miner earnings before interest, tax,
depreciation and amortization had
dropped by 60 percent to US$2.6
billion in 2014 from $6.5 billion in
2011. It is expected to decline by 16
percent in 2015.
The fall in earnings had led to
decreasing capital expenditure of
coal mining companies by as much as
79 percent from $1.9 billion in 2012
to $0.4 billion in 2015. The survey
also indicates further decline of
capital expenditure by as much as 10
percent to 20 percent in 2016. Thus,
69
POWER
Coal requirement post-realization of 35,000 MW
Coal Requirement Next 5 years
Domestic
Capacity
Coal Cons p.a
Existing Coal Fired PP (30 Sept 2014)
22 MW
76 mln
Estimated Under 35 GW
20 MW
~75 mln
Total
42 MW
~150 mln
Export
300 350 mln ton
Total
456 506 mln ton
Source: ICMA
Forecast Indonesia coal production

500
474
450
400
254
287
200
150
198
345
402
382
349
332
332
295
248
214
199
87
101
118
133
2016E
2017E
Production (MT)
2018E
56
65
2009
2010
Source: ICMA
66
67
2011
2012
Export (MT)
72
Cost of insurance
ICMA and PwC in their study
proposes some solutions to help
tackle the future shortage of coal
supply for coal-fired power plants
among others long term coal price
system and a cost of insurance.
These solutions are aimed to
safeguard the sustainability of the
76
2013
2014
Domestic (MT)
exploration activity to find new coal

reserves has been relatively halted,
Mirza said.
The average stripping ratio (SR),
according to the survey, also shows
a decline from 9.7x in 2011 to 7.5x in
2014, and is estimated to keep going
down this year.
70
154
215
100
50
332
2015
178
2019E
35,000 MW power generation project.

The government should
consider formulating cost-based
pricing system for coal dedicated to
35,000 MW project, said Pandu P.
Sjahrir, Chairman of ICMA, which
has 160 members accounting for
about 80 percent of the countrys
coal production. He suggests that
the pricing formula for mine-mouth
power plant can be applied to all coalfired power plants.
The survey states that as a
consequence of the cost-based pricing
system is that the government should
pay cost of insurance for about 1
percent of Rp1,400/kWh power tariff
for new coal-fired power plants or 3
Petromindo|Khalsa
250
280
APBIs Forecasts
382
353
350
300
458
412
percent for existing coal-fired power

plants.
Pandu warned that if the coal
reserves have been depleted, Indonesia
will eventually have to import coal to
feed domestic coal-fired power plants.
The cost of insurance will guarantee
coal supply sustainability for power
generation projects, he said.
In addition, the cost based pricing
system can be a protection for the
government from any power tariff
increase if coal price increases in the
future. The current government coal
reference price is largely based on
international indices.
ICMA-PwCs survey notes that
there is also inadequate domestic
project financing to develop the 35,000
MW projects, and as consequence,
foreign power producers are
increasingly expected to dominate the
development of the power projects.
Pandu said that domestic pension
funds, insurance institutions and
state-owned enterprises should
be actively involved in the project
financing for megaproject. There is
$30 billion to $40 billion of financing
capacity from those institutions, he
said.
Pandu P. Sjahrir
petrochemical
Wison, Lion complete FS

for coal gasification
Pertamina is also involved as the off-taker. Pertamina will

be the off-taker of gasoline product, he said, but did not
say when the project will be completed.
Headquartered in Shanghai, the Wison Group
maintains offices in Beijing, Hong Kong, Nanjing and
several other cities in China. Moreover, the Group also
has established overseas subsidiaries in Singapore,
Khobar, Saudi Arabia and Houston, Texas, USA. The Wison
Group currently employs approximately 3,000 personnel
worldwide.
With more than a decade of technology and project
management experience, the Wison Group has grown to
encompass eleven member companies that span across
four major business sectors, including Engineering
Services, Offshore & Marine, Clean Energy and Investment
Businesses (Energy Investment and Telecommunication).
The Wison Groups principal activities focus on
facilitating basic energy resources closely linked to socioeconomic progress such as coal, oil and natural gas.
Cepi Setiadi
Petromindo|Boim
hina-based EPC company Wison Engineering

Ltd stated that the company and PT Lion Power
Energy have completed feasibility study (FS) for
a planned coal to petrochemical plant project in
Muara Enim, South Sumatra.
Sidik Darmawan, Business Development Manager
of Wison Engineering told Petromindo recently that
currently the company is conducting environmental
study for obtaining the so-called environmental AMDAL
license.
We expect to obtain the AMDAL license by April
2016, he said, adding that financial closure is also
expected in April.
By second semester of this year, we expect to
commence the front engineering design for the project,
he said. Sidik revealed that the project will have total
investment of US$ 3 billion.
Sidik explained that the petromchemical plant is
targeted to have an annual output of 300,000 tons of olefin
and 600,000 tons gasoline from 4 million ton of coal as
the feedstock. In this project, state-owned oil and gas firm
71
POWER
PLN has signed PPAs

for 19,000 MW
By: Cepi Setiadi | Photos: Lucky
ublic utility PT Perusahaan

Listrik Negara (Persero) has
signed power purchasing
agreements (PPAs) for
19,287 MW power plant projects,
which are part of the 35,000 MW
program.
As of the end of 2015, PLN had
signed PPAs for around 17,340 MW.
In the last two month, there were
around 2,000 MW projects which had
their PPAs signed, Minister of Energy
and Mineral Resources Sudirman Said
said during a press conference.
72
Sudirman claimed that the

35,000 MW projects have thus far
been progressing well, citing that
around 5329 MW of the projects,
owned by 24 independent power
producers (IPP) have achieved
financial closing.
Overall the progress is good.
Every problem that emerges will be
solved by PLN and IPP, he said.
Sudirman held a gathering on
March 3 with 91 IPPs which have
signed PPAs with PLN, in order to
update the progress of the 35,000
MW projects. It was the third meeting

that the ministry has so far held
with the IPPs and associations in
the industry. Also present at the
gathering were officials from PLN.
During the meeting, Sudirman
underlined that the 35,000 MW
program was devised based on
realistic economic assumptions.
The 35,000 MW figures did not
come out of the blue. The figures
came as a result of careful calculation
based on economic growth and
population growth assumptions.
35,000 MW is not only a target but a

need, he said.
The IPPs expressed appreciation
for the gathering
We really appreciate this
initiative. This is a very good
opportunity to check whether the
policies that have been issued by
the government pay off or not.
Furthermore, business players can
directly inform (the government)
about obstacles on the field, M. Riza
Husni, Chairman of Hydropower
Developers Association, said.
The government is committed to
facilitating efforts to solve problems
faced by IPPs and PLN, Sudirman
said.
During the gathering, the ministry
and the IPPs also signed documents
in which the latter promised to fulfill
all requirements (technical, legal
and financial) for their respective
projects so that financial closing can
be achieved on time.
In order to accelerate the

development of 35,000 MW projects,
President Joko Widodo on Jan. 8,
2016 signed Presidential Regulation
No. 4/2016, which stipulates that
PLN and IPP will get supports in the
form of guarantee, speedy licensing
and non-licensing process, primary
energy provision, spatial affairs, and
land acquisition.
Dozens of power plants with a
capacity of 42,370 MW will be built
under the program, consisting of
35,000 MW new power projects and
7,370 MW power projects which had
been planned or under construction
by the time the President launched
the program last year. Although the
total capacity has risen to above
42,000 MW, the government keeps
naming the mega project 35,000 MW
program.
Coal fired power plant, known
in Indonesia by the acronym PLTU,
makes up the largest group of power
plants to be built under the 35,000

MW program. Of the 42,370 MW
capacities to be built under the mega
project, 23,839 MW will be coal fired
power plants or 60 percent of the total,
followed by gas fired power plants
with a total capacity of 13,453 MW.
Most of the companies or
consortiums that will build coal
fired power plants are coal mining
companies or affiliated with coal
mining companies. They recently
complained about the low price for
the coal set by PLN for the commodity.
Sudirman stated that the ministry
will review the current coal price for
power plants as part of efforts to help
make the commodity more appealing
for miners to continue exploration
and production activities.
Going forward there must be
a new price equilibrium, which is
deemed economically feasible for
miners (to carry out exploration and
production), but also economical for
power producers, Sudirman said.
He said that the review of the coal
price for power plants will involve
PLN, coal mining association, and the
IPPs.
Sudirmans statement comes
following a proposal from the
Indonesia Coal Mining Association
(ICMA) to increase the selling price
of electricity produced by coal-fired
power plants to allow for a higher
price of the coal by including a 1-3
percent insurance cost on top of the
electricity selling price.
ICMA says that the additional
insurance cost would not cause heavy
burden for the power producers as
the selling of electricity from coalfired power plant is quite low at 5
US cents per kwh, compared to 25
US cents per kwh for electricity from
diesel-fired power plant.
73
PLN, Jakarta sign agreement
ublic utility PT Perusahaan

Listrik Negara (PLN) signed
recently a cooperation
agreement with the Jakarta
administration to build more power
infrastructures in order to strengthen
power supplies in the capital.
The agreement was signed by
PLNs President Director Sofyan
Basir and Governor Basuki Tjahaja
Purnama, PLN said in a statement.
Under the agreement, PLN will
build more power infrastructures,
such as substations and transmission
lines, while the Jakarta administration
will facilitate the provision of licenses
and land for the projects.
This cooperation comes as
responses from both parties
to the needs to upgrade power
infrastructures in the capital. The
power needs in Jakarta are very high.
As such, there must be a reliable
power system, Sofyan said.
At present, Sofyan said, Jakartas
74
substations and transmission lines

are suffering from overload. As such,
PLN needs to build more of such
facilities in the capital. Power load in
the capital now reaches 6,500 MW at
night and 7,300 MW during the day.
There are 11 high-voltage substations
with a voltage of 500 kV and interbus
transformer (IBT) capacity of 500
MVA. With such high load, the IBT
transformers between high-voltage
substations carry 80 percent above
their normal capacity, even 90 percent,
which is an overload situation.
PLN plans to build new highvoltage substations in five locations
with 500 kV to 150 kV IBT and a
minimum capacity of 500 MVA. They
are expected to come onstream in
2018-2019.
At the same time, PLN, through
uprating program, will install new
transmission lines and underground
cables, while replacing conductors
with new ones with new technology
that is better in transmitting power.

500 kV high voltage transmission
line will be built over a distance
of 48.8 km from Kembangan high
voltage substation through Duri
Kosambi high voltage substation to
PLTGU Muara Tawar power plant.
This project needs a total of 169
power towers. PLN will upgrade 108
of its existing towers in the capital
for the project by upgrading them
into 500 kV towers, combined with
150 kV conductors. Since these are all
assets of PLN, the firm does not need
to secure lands for the towers.
The firm however needs to
secure lands for the locations
of 61 new towers. The firm has
identified potential locations for
the new towers, which are situated
in residential and industrial areas
or plots belonging to the Jakarta
administration. As such, PLN asked
the Jakarta administration to help
acquire the lands.
Petromindo|Khalsa
POWER
INTERNATIONAL
Cheniere starts exporting LNG from US
heniere Energy Partners, L.P. announced on

Feb. 24 that the first commissioning cargo with
liquefied natural gas (LNG) produced from the
first liquefaction train (Train 1) of its Sabine Pass
liquefaction project in Cameron Parish, Louisiana, will
depart imminently.
The LNG is loading on the LNG carrier Asia Vision,
chartered by Cheniere Marketing, LLC and will be heading
to Brazil.
Today we will finish loading the first commissioning
cargo of LNG from our Sabine Pass LNG terminal. This
historic event opens a new chapter for the country in
energy trade and is a significant milestone for Cheniere as
we prepare Train 1 for commercial operations, said Neal
Shear, Chairman of the Board and Interim Chief Executive
Officer of Cheniere Partners.
This accomplishment would not have been possible
without many years of hard work by our employees,
our construction partner, Bechtel, other contractors
and thousands of workers at the Sabine Pass site. We
especially want to thank our federal, state and local
agencies, elected officials and community leaders from
across Louisiana and the United States for their continued
support and contributions during development and
construction.
Through our wholly-owned subsidiary, Sabine
Pass LNG, L.P., Cheniere Partners owns 100 percent of
the Sabine Pass LNG terminal located on the SabineNeches Waterway less than four miles from the
Gulf Coast. The Sabine Pass LNG terminal includes
existing infrastructure of five LNG storage tanks
with capacity of approximately 16.9 billion cubic feet
equivalent (Bcfe), two docks that can accommodate
vessels with nominal capacity of up to 266,000 cubic
meters and vaporizers with regasification capacity
of approximately 4.0 Bcf/d. Through its whollyowned subsidiary Cheniere Creole Trail Pipeline, L.P.,
Cheniere Partners also owns a 94-mile pipeline that
interconnects the Sabine Pass LNG terminal with a
number of large interstate pipelines.
Cheniere Partners, through its subsidiary, Sabine Pass
Liquefaction, LLC (SPL), is developing and constructing
natural gas liquefaction facilities at the Sabine Pass LNG
terminal adjacent to the existing regasification facilities.
Cheniere Partners, through SPL, plans to construct over
time up to six liquefaction trains, which are in various
stages of construction and development.
Each liquefaction train is expected to have a nominal
production capacity of approximately 4.5 million tons per
annum (mtpa) of LNG. SPL has entered into six third-party
LNG sale and purchase agreements (SPAs) that in the
aggregate equate to approximately 19.75 mtpa of LNG and
commence with the date of first commercial delivery of
Trains 1 through 5 as specified in the respective SPAs.
75
OIL & GAS
Light at the end of the tunnel?
nternational crude oil prices have

recovered remarkably in recent
weeks. From a nadir of $28.5
per barrel in mid-January Brent
crude is now trading around $40 per
barrel. This should not, however, be
taken as a definitive sign that the worst
is necessarily over. Even so, there are
signs that prices might have bottomed
out, the Paris-based International
Energy Agency (IEA) said in its March
2016 oil market report.
The factors cited in this report that
currently support higher prices include:
possible action by oil producers to
control output; supply outages in Iraq,
Nigeria and the UAE; signs that non-
76
OPEC supply is falling; no reduction in

our forecast of oil demand growth; and
recent weakness of the U.S. dollar.
Later this month some oil
producers are expected to meet to
discuss a possible output freeze. We
cannot know what this might be and
in any event it is rather unlikely that
an agreement will affect the supply/
demand balance substantially in
the first half of 2016. Before any
production freeze or cut is agreed,
we have seen supply disruptions in
Iraq, Nigeria and UAE. Production
from these countries fell in February
by 350 kbpd. Meanwhile, Irans
return to the market has been less
dramatic than the Iranians said it

would be; in February we believe that
production increased by 220 kbpd
and, provisionally, it appears that
Irans return will be gradual.
The focus is on non-OPEC
countries to see if high-cost output is
falling. There are already signs that
this is happening: in the US, we expect
production this year to fall by 530
kbpd, and we have downgraded our
2016 outlook for Brazil, Colombia and
others. For the non-OPEC countries
we now expect production to fall by
750 kbpd: our view last month was
that this number would be 600 kb/d.
Of course, there is no guarantee that
World oil demand

97.5
mb/d
95
92.5
90
87.5
85
this trend will continue, but there are

clear signs that market forces - ahead
of any production restraint initiative
- are working their magic and higher
cost producers are cutting output.
We have warned in earlier
Reports that the risks to global oil
demand growth are almost certainly
on the downside. For now, we have
left unchanged at 1.2 mbpd our
estimate for growth in 2016. Many
reports claim that strong demand for
US gasoline is a factor behind recent
price bullishness but they overlook
weakness in other products e.g.
middle distillates. Our view is that
total demand in the worlds biggest
market will be flat in 2016, but if
prices maintain their recent upward
momentum there could be further
1Q2013
3Q2013
1Q2014
3Q2014
weakness. In the worlds second

biggest demand market, China, we
maintain our view that growth this
year will be only 330 kbpd, well
below the ten-year average growth
rate of 440 kbpd. We expect India
and other smaller non-OECD Asian
economies and the Middle East to
provide most of the 2016 growth.
The foundations for global demand
growth are sound, but not rock-solid.
The impact of the changing value
of the US dollar on oil markets is
thought by some to be a major driving
force in the recent price recovery.
Where this factor leads us in the next
few months depends on how well
commodity-dependent economies
and net oil-importing economies have
adjusted to lower prices; whether
commodities prices have truly
bottomed out as some believe; and on
changes to interest rates.
We have looked at stocks data for
both the OECD - where commercial
stocks levels increased in January
to yet another record high - and
non-OECD. It is clear that China
has added significant volumes to
both commercial and strategic
stocks during 2015 culminating in
an apparent build of 1.4 mbpd in
December. We have also re-analyzed
1Q2015
3Q2015
1Q2016
3Q2016
our data for floating storage and oil

in transit and further reduced the
uncertainty in the supply/demand
balance that is described as missing
barrels. The figure usually described
as such is now 0.8 mbpd, well within
the normal range considering the
vagaries of oil data.
In this report we present an
essentially unchanged picture for
the overall oil supply/demand
balances. For the first half of 2016,
the implied surplus of supply over
demand remains high at 1.9 mbpd
in the first quarter and 1.5 mbpd in
the second quarter. To the extent the
oil price is forward-looking, comfort
will be taken from our view that
in the second half of 2016 the gap
between supply and demand narrows
significantly to 0.2 mbpd in both third
quarter and fourth quarter.
For prices there may be light at
the end of what has been a long, dark
tunnel, but we cannot be precisely
sure when in 2017 the oil market will
achieve the much-desired balance. It
is clear that the current direction of
travel is the correct one, although with
a long way to go. Without an increase
in demand expectations high cost oil
suppliers will continue to bear the
brunt of the market-clearing process.
77
Courtesy of Wikimedia
Environment
Fatih Birol
CO2 emissions stall as

renewable energy surges
lobal energy-related
carbon dioxide emissions
(CO2) the largest source
of man-made greenhouse
gas emissions stayed flat for the
second year in a row, according to
analysis of preliminary data for 2015
78
released recently by the Paris-based

International Energy Agency (IEA).
The new figures confirm last
years surprising but welcome news:
we now have seen two straight
years of greenhouse gas emissions
decoupling from economic growth,
said IEA Executive Director Fatih

Birol. Coming just a few months after
the landmark COP21 agreement in
Paris, this is yet another boost to the
global fight against climate change.
Global emissions of carbon
dioxide stood at 32.1 billion tons in
2015, having remained essentially flat

since 2013. The IEA preliminary data
suggest that electricity generated
by renewables played a critical role,
having accounted for around 90
percent of new electricity generation
in 2015; wind alone produced
more than half of new electricity
generation. In parallel, the global
economy continued to grow by more
than 3 percent, offering further
evidence that the link between
economic growth and emissions
Global energy-related CO2 emissions
growth is weakening.
In the more than 40 years in
which the IEA has been providing
information on CO2emissions, there
have been only four periods in
which emissions stood still or fell
compared to the previous year. Three
of those the early 1980s, 1992
and 2009 were associated with
global economic weakness. But the
recent stall in emissions comes amid
economic expansion: according to the
International Monetary Fund, global
Gt 35
Global economic
downturn
30
25
20
Second
oil shock
Dissolution of
Soviet Union
15
10
5
1975
1980
1985
1990
1995
2000
Courtesy of Mitchelltech
IEA analysis for 2015 shows renewables surged, led by wind, and improvements
in energy efficiency were key to keeping emissions flat for a second year in a row
2005
2010
2015
GDP grew by 3.4 percent in 2014 and

3.1 percent in 2015.
The two largest emitters, China
and the United States, both registered
a decline in energy-related CO2 in
2015. In China, emissions declined
by 1.5 percent, as coal use dropped
for the second year in a row. The
economic restructuring towards less
energy-intensive industries and the
governments efforts to decarbonise
electricity generation pushed coal use
down. In 2015, coal generated less
than 70 percent of Chinese electricity,
ten percentage points less than four
years ago (in 2011). Over the same
period low-carbon sources jumped
from 19 percent to 28 percent, with
hydro and wind accounting for most
of the increase. In the United States,
emissions declined by 2 percent, as
a large switch from coal to natural
gas use in electricity generation took
place.
The decline observed in the
two major emitters was offset by
increasing emissions in most other
Asian developing economies and the
Middle East, and also a moderate
increase in Europe.
More details on the data and
analysis will be included in a World
Energy Outlook special report on
energy and air quality that will be
released at the end of June. The
report will go beyond CO2 emissions
and will provide a first in-depth
analysis of the role the energy sector
plays in air pollution, a crucial
policy issue that today results in 7
million premature deaths a year. The
report will provide the outlook for
emissions and their impact on health,
and provide policy makers with
strategies to mitigate energy-related
air pollution in the short and long
term.
79
international
Chevron celebrates first LNG

production at Gorgon
80
and create shareholder value for

decades to come, said Chairman and
CEO John Watson. The long-term
fundamentals for LNG are attractive,
particularly in the Asia-Pacific region,
and this is a significant milestone for
all involved.
Chevron is positioned to become
a major LNG supplier by 2020. In
particular, Chevrons Australian
projects are well located to meet
growing demand for energy in the

Asia-Pacific region and more than
80 percent of Chevrons Australian
subsidiaries equity LNG from the
Gorgon and Wheatstone projects
is covered by sales and purchase
agreements and heads of agreements
with customers in the region.
We congratulate the Gorgon
workforce on this achievement,
Watson continued. This is the result
Courtesy of Lngworldnews
S energy giant Chevron

Corporation announced
recently it has started
producing liquefied natural
gas (LNG) and condensate at the
Gorgon Project on Barrow Island
off the northwest coast of Western
Australia. The first LNG cargo is
expected to be shipped in mid-March
We expect legacy assets such as
Gorgon will drive long-term growth
Gorgon project
February 2016
Jansz-lo Field
Location
Gorgon Field
Gorgon
Plant Site
Dampier
Karratha
Barrow Island
Onslow
Dampier to Bunbury
Natural Gas Pipeline
Australia
of the collaboration of hundreds of

suppliers and contractors and many
tens of thousands of people across the
world during the project design and
construction phases.
The Gorgon Project is supplied
from the Gorgon and Jansz-Io gas
fields, located within the Greater
Gorgon area, between 80 miles (130
km) and 136 miles (220 km) off the
northwest coast of Western Australia.
It includes a 15.6 MTPA LNG plant
on Barrow Island, a carbon dioxide
injection project and a domestic gas
plant with the capacity to supply 300
terajoules of gas per day to Western
Australia.
The Chevron-operated Gorgon
Project is a joint venture between the
Australian subsidiaries of Chevron
(47.3 percent), ExxonMobil (25
percent), Shell (25 percent), Osaka
Gas (1.25 percent), Tokyo Gas (1
percent) and Chubu Electric Power
(0.417 percent).
Gorgon is only expected to reach
its full capacity of 15.6 million tons
a year by about mid-2017 after
the second and third production
units start and ramp up. Chevron,
Courtesy of Dailyrepublic
Exmouth
the operator, is expected to look to

maximize throughput to extract a
further 10-15 percent beyond the
rated capacity, Sydney Morning Herald
reported.
At full capacity an LNG tanker will
load every 2-3 days, shipping fuel to
Japan, China, India, and elsewhere
around Asia. Osaka Gas, Tokyo Gas
and Chubu Electric Power, which own
small stakes in the project, are among
customers of Gorgon, the newspaper
said.
John Watson
The project together with other

new LNG projects starting production
in the 2014-17 period should ensure
Australia overtakes Qatar as the
worlds biggest exporter of the fuel by
about 2019, the newspaper added.
The construction of the project
took more than six years with $54
billion of investment. Approved
in September 2009, Gorgon was
expected to cost US$37bn and
ship its first gas in 2014. But it
suffered cost blowouts and delays
as a US$180bn wave of LNG projects
under simultaneous construction in
Australia caused a shortage of skilled
labor. A strengthening Australian
dollar and the environmental
challenges of delivering the project
on Barrow Island, a class-A nature
reserve in a remote location, were
also factors, Financial Times reported.
Despite the ballooning cost and
the slump in LNG prices, Chevronis
confident Gorgon will generate profits
for the company and its partners.
About 80 per cent of gas produced at
Gorgon and Wheatstone is already
contracted, leaving 20 per cent to be
sold on the spot market where prices
are at record lows.
Some analysts warn that even
long-term contracts, such as those
agreed for Gorgon with Japanese and
Chinese utilities, may face pressure
for renegotiation.
Mike Wirth, Chevrons Executive
Vice President, Midstream and
Development, however downplayed
concerns over existing gas contracts.
Its not in our interests to have
customers in financial distress nor
is it in the interests of customers to
have suppliers in financial distress,
he told Financial Times, noting
that these contracts have proven
themselves over time.
81
refinery
Mini refinery projects

attract investors
he mini refinery projects

proposed by the
government seem attractive
for investors.
As of early March, the Ministry
has received notices from several
companies expressing their interest
in mini refinery projects. The
companies include PT Tri Wahana
Universal, the owner of a 16,000
bpd refinery in East Java, Director
for the Management of Downstream
Business Setyorini Tri Hutami.
The government proposed the
projects in order to increase the
national oil fuel production efficiently
using crudes from maginal fields.
At present, marginal fields have
high production costs because, aside
from producing a small amount of
output, the operator of the fields
have to take their output to floating

storages, which are sometimes located
hundreds of kilometers away. If the
output is taken to floating storage,
the production process is considered
as an upstream scheme with the
transportation cost considered as
part of cost recovery. If the output is
taken at the wells site, it is considered
as a downstream scheme with zero
transportation costs.
Rather than taking the production
to floating storages hundreds of
kilometers away, it would be better
to build refineries near the well so
that the output can be immediately
processed into products, Director of
Oil and Gas Program Oversight Agus
Cahyono Adi said in February while
anouncing the mini refinery projects.
The government proposed the
projects to be built in eigh clusters,
namely North Sumatra (Cluster 1),

Selat Panjang Malaka (Cluster 2),
Riau (Cluster 3), Jambi (Cluster 4),
South Sumatra (Cluster 5), South
Kalimantan (Cluster 6), North
Kalimantan (Cluster 7) and Maluku
(Cluster 8).
However, data provided by
Setyorini indicates that invstors
are also interested to build mini
refineries outside the proposed
clusters.
IGN Wiratmaja said the ministry is
is drafting a regulation on the mini
refinery projects. The regulation will
contain among others aspects such
as pricing formula, crude supply
certainty and incentives, Wiratmaja
said.
Godang Sitompul
Companies interested in mini refinery projects

No
82
Cluster
Locations
Name of Companies
Status
Cluster I
North Sumatra
Cluster II
Strait of Malacca
Cluster III
Riau
Cluster IV
Jambi
PT Jambi Indolaguna Internasional (regional govermnent owned enterprises or BUMD) Apllying for Principle Permit
Cluster V
South Sumatra
Cluster VI
Tanjung
Cluster VII
Tarakan
Cluster VIII
Maluku
PT Tri Wahana Universal
Submitting field data
Non Cluster
Palembang
PT DEX Indonesia
Having import crude IUS
10 Non Cluster
Jambi
PT Serumpun Pseko Sarulangun (BUMD)
KSO of Pertamina EP DWP

Meruap
11 Non Cluster
PT Indonesia Energy Solusindo
Halmahera Island
PT Indo Kilang Prima
Having IUS
PT Bumi Kampar Sarana Energi
Applying for Principle Permit
OIL & GAS
Petromindo|Dasir
RI, Iran agree to boost oil cooperation
IGN Wiratmaja Puja
ndonesia is strengthening its bilateral cooperation

with Iran particularly in the oil and gas sector
following the recent removal of sanctions on Iran,
one of the worlds biggest oil producers, The Jakarta
Post reported recently.
During a bilateral meeting in Bogor, West Java, on Feb.
3, the two countries agreed to cooperate in the upstream
oil and gas sector, and data and technology exchange.
The paper quoted the Energy and Mineral Resources
Ministrys oil and gas director general IGN Wiratmaja Puja
as saying that Iran offered to supply crude oil, condensate
and liquefied petroleum gas (LPG) as well as to develop
refineries in Indonesia. In addition, the two countries also
agreed to develop human resources as well as conduct
research and development together.
All of those will be conducted through businessto-business deals. Pertamina will hold a meeting with
Iranian firms so that the purchase of crude and LPG can be
realized soon, Wiratmaja said following the meeting.
He said Irans crude oil would meet the specifications
needed for Cilacap and Balongan refineries, whose supplies
are now mostly fulfilled by Saudi Arabians oil. Saudi
Arabias Saudi Aramco is currently also in cooperation with
Pertamina to upgrade the Cilacap refinery in Central Java.
Meanwhile, Iran is also seeking to take part in the

construction of an integrated refinery and petrochemical
complex in Indonesia. The refinery capacity will be about
300,000 barrels per day.
The total investment will reach US$14 billion,
including the petro-chemical industry, but only $8 billion
without it, Wiratmaja said.
Wiratmaja said earlier as reported that the government
offered investors from Iran to build an oil fuel storage
with a capacity of 45 million barrels in a bid to increase
the countrys buffer reserves to 30-day of supply, from the
current average of 21-day.
The international sanctions against Tehran were
officially lifted in January after the UN nuclear watchdog
the International Atomic Energy Agency (IAEA)
released a statement saying Iran had fulfilled all of the
measures required under its deal with six world powers.
The Post said that in the meeting, Iran also offered
Indonesia to take advantage of the growing business
opportunities in the countrys tate-owned oil and gas
company Pertamina, Saka Energy the subsidiary of
another state firm Perusahaan Gas Negara, and Jakartalisted Medco Energi Internasional are among those that
were offered the opportunity to develop the upstream oil
and gas sector in Iran.
There are 29 blocks that Iran is offering us. The blocks
are conventional, Wiratmaja said.
Energy and Mineral Resources Minister Sudirman Said,
who is also the liaison officer between Indonesia and
the Middle East, revealed that a further meeting in Iran
would be scheduled in two or three weeks to seek more
opportunities both for Indonesian and Iranian firms.
There are nine or 10 opportunities that can be
explored further. Iran has many hydro power plants,
which we will study, as well as twin turbine plants,
Sudirman said.
In past years, contacts at both government-togovernment and business-to-business levels had been
formed between Indonesia and Iran in an attempt to
secure a partnership. However, the planned partnership
fell through due to the implementation of international
sanctions on Iran.
Pertamina and Iranian firms once planned to establish
a new refinery in Banten but nothing came of the plan.
83
Courtesy of Worldnews
oil & gas
EWC confirms Sengkang project delays
SX-listed Energy World

Corporation (EWC)
confirmed there have
been some delays in the
development of its Sengkang LNG
plant project in South Sulawesi, thus
postponing its onstream schedule from
the initial plan of 2015 to this year.
We had experienced some delays
in the project development timetable
due to the time delay in gas allocation
and the subsequent impact on the time
to close on the project financing for
the transaction, which also requires us
to secure on offtake for the LNG, EWC
said in a statement recently.
The gas allocation for the
Wasambo gas to be utilized for the
Sengkang LNG Project was granted on
Oct. 20, 2015.
Recently, good progress has
been made for the initial LNG offtake
discussion which are ongoing with
PLN, and when these have been
concluded, we can close out our
project financing discussions, the
company said.
84
Subject to these events,

we anticipate to complete the
construction of the first train and
associated works and undertake
commissioning and commence
operations within this calendar year
ending 31 December 2016, it added.
EWC said in March of last year it
expected to complete and commission
the first train of the Sengkang LNG
project in South Sulawesi during the
year. A source who had visited the
project site late last year, said the
Sengkang LNG plant was expected to
come onstream in mid-2016.
Elsewhere, EWC said in the
statement that if the development
of gas resources justifies (which is
not known at the present time), it
envisages expanding the capacity of
the Sengkang LNG Project up to 5
mtpa through a phased development
of additional 0.5 mtpa modular LNG
trains in the long term.
EWC said this project is
now well advanced with key
equipment, including four cold-
boxes, compressors and ancillary

equipment already installed on site.
The LNG storage tank has been fully
slipformed and is now subject to fit
out. Jetty works have been finalised
and loading arms have been installed.
The interconnecting pipework and
the installation of the control and
instrumentation systems are being
completed.
The company is developing the
Sengkang LNG project on the South
Sulawesi coastline, in the same region
as its Sengkang contract area and
PLTGU Sengkang combined cycle
power plant, to monetize additional
gas reserves and contingent
resources in the Sengkang contract
area in excess of the fuel requirement
for PLTGU Sengkang. The project
consists initially of (i) one modular
LNG train with a capacity of 0.5 mtpa,
with the three additional trains,
depending on gas field development,
for a potential total LNG capacity of 2
mtpa, (ii) an LNG storage facility and
(iii) an LNG loading facility.
power
Global geothermal power

projected to double
potential. Still, only 6-7 percent of the worlds estimated

geothermal potential is being harnessed.
The U.S. had approximately 3.7 GW of installed
nameplate capacity by the end of 2015, bringing online
a total of 70 MW. An additional 1,250 MW was under
various stages of development. Despite legislative
challenges like on-again, off-again tax incentives, several
new laws passed in 2015 could create new opportunities
for geothermal companies operating in America, such
as a 100 percent Renewable Portfolio Standard (RPS)
in Hawaii, a 50 percent RPS in California, a 50% RPS in
Oregon and the EPAs new Clean Power Plan, under which
states may choose to develop their geothermal resources
as part of their compliance options.
Globally geothermal power is trending up, but the US
market outlook is clouded due largely to federal and state
policies that either dont recognize the value of geothermal
power or dont treat it with parity, noted Karl Gawell,
GEAs Executive Director.
According Ben Matek, author of the report, global
growth could be stronger, but permitting delays and
trouble obtaining financing have slowed construction.
But, as climate change looms and the global community
becomes increasingly aware of the benefits of renewable
energy, geothermal power could emerge as a significant
and reliable electricity producer, well-suited for many
regions of the world as a reliable baseload power source.
The Geothermal Energy Association (GEA) is a trade
association comprised of U.S. companies that support the
expanded use of geothermal energy and are developing
geothermal resources worldwide for electrical power
generation and direct-heat uses.
Petromindo|Dasir
he global geothermal power market continued

to grow forward according to the 2016 US and
Global Geothermal Power Production Report
released recently by the US Geothermal Energy
Association.
With an operating capacity of 13.3 GW in 24 countries,
the market had new capacity under development in 82
countries. This new capacity would add 12.5 GW of new
power capacity, approximately doubling current output.
Globally geothermal power is trending up, but the US
market outlook is clouded due largely to federal and state
policies that either dont recognize the value of geothermal
power or dont treat it with parity, the statement said.
Overall, 2015 was a promising year for geothermal in
the US and abroad, crowned by the launch of the Global
Geothermal Alliance during the Paris Climate Talks in
December, in which dozens of developed and emerging
nations committed to geothermal development.
The United Nations and IRENA pledged a fivefold growth in the installed capacity for geothermal,
supporting the prediction that global geothermal
capacity could reach 32 GWs by the early 2030s if
countries follow through on geothermal investment
and development pledges. The new geothermal market
report, the Global Geothermal Alliance and more will
be hot topics at the US and International Geothermal
Showcase being held at the Ronald Reagan International
Trade Center on March 17.
Some of the rising stars of the geothermal industry
include Kenya, which generates half of its electricity
from geothermal power, and Indonesia, whose island
archipelago harbors the worlds largest geothermal
85
INDUSTRY NEWS: POWER
State-owned oil and gas firm

PT Pertamina and a consortium of
PT Optima Nusantara Energi and
Enel Green Power S.p.A. have first
passed the first round document
evaluation in the bid for the Wai
Ratai geothermal working area in
Lampung.
This was announced by the
Directorate General of New and
Renewable Energy at the Ministry
recently. No further details were
provided by the directorate.
The 70,710-ha Way Ratai
geothermal working area, which
spans over Pesawaran, Tanggamus,
and South Lampung regencies and
Bandar Lampug city, has estimated
reserves of 105 MW, and planned
development capacity of 55 MW.
Ceiling price for the project is set
at 14.6 US cents per kWh, with
commercial operate date target of
2022.
BMC continues talks with PLN

over power plant project
ASX-listed Indus Coal Limited
said that its 38 percent coal mining
subsidiary PT Berlian Mahkota coal
(BMC) is continuing discussions
with the Indonesian state owned
electricity utility Perusahaan Listrik
Negara (PLN) in relation to a revised
submission to construct a coal fired
steam power plant (CFSPP) in Jambi.
BMC was required to engage
highly skilled and well credentialed
consultants to assist with a significant
reassessment of its submission
following PLNs decision to revise the
scope of the CFSPP, Indus said in a
statement recently, adding that it will
86
Petromindo|Dasir
Pertamina, Optima
consortium compete for Way
Ratai geothermal area
provide an update once the outcome

of the revised submission to PLN is
known.
BMC has signed a MoU with a Tier
1 Chinese power plant engineering
and construction company to develop
a new mine mouth power plant on
Block 9 in Jambi province.
BMC is the 100 percent owner of
the Blok 9 coal concession in Central
Tebo District, Tebo Regency, Jambi.
The concession has an estimated
JORC resource of 94,000,000 tons of
thermal coal.
Elsewhere, Indus said that
whilst the debt restructure of the
existing two bond issues has not
yet completed, the company was
able to draw down A$120,000 of a
facility of up to $500,000 provided by
clients of CPS Capital Group Pty Ltd
to meet the immediate outstanding
costs associated with the companys
corporate office.
The Board is continuing its
dialogue with third party creditors to
manage outstanding payables, Indus
said.
The company said that its
securities remain suspended at the
request of the Company pending

the release of an announcement
regarding the debt restructuring and
outcome of BMCs PLN submission on
or before June 15, 2016.
Jatigede hydropower project

progressing well
State-owned electricity company

PT Perusahaan Listrik Negara (PLN)
said the development of Jatigede
hydropower plant project with
capacity of 2x55 MW in Sumedang
regency, West Java province has been
progressing well.
The access road to the project
has been complete, PLNs Senior
Manager for Public Relations Agung
Murdifi told Petromindo recently.
Meanwhile, the progress of
main construction works has
reached around 6.53 percent with
engineering process around 0.84
percent, procurement 1.2 percent and
constructions 4.49 percent, he said.
Agung revealed that the US$
224.4 million project is expected to
be on stream in May 2019. Jatigede
hydropower plant project is located at
Cijeunjing village, Jatigede district.

PT PLN inaugurated on Friday the
operation of the Lebak Barang 7
MW micro hydro power plant in
Pekalongan, Central Java.
PLN Business Director Nasri
Sebayang said that the power plant
will provide electricity to some 7,000
households the area.
The power plant, developed
by PT Hidro Rizki Ilahi, channels
the electricity to the Central Java
interconnection system via a 20 kV
transmission line.
PLTU Jawa-7 project

undermined by coastal
reclamation
The planned PLTU Jawa-7 coalfired power plant project is being

undermined by nearby coastal
reclamation project, Bisnis Indonesia
reported recently.
The paper quoted Agung
Wicaksono, Deputy Head of
Electricity Development Program
Implementing Unit (UP3KN) said that
the reclamation project may hamper
key water access for the planned
2x1,000 MW coal-fired power plant.
PT Pembangkitan Jawa Bali (PJB)
and China Shenhua are teaming up in
the power plant project.
Acting President Director of PJB,
Muljo Adji said that the investors are
hoping an upcoming meeting, facilitated
by the Office of the Coordinating
Minister for Maritime Affairs, would be
able to seek ways so as the reclamation
project would not hamper water access
to the power plant, so that a planned
groundbreaking end April or early May
could be realized.
PJB holds a 30 percent interest in
the estimated US$2 billion project,
while China Shenhua holds a 70

percent stake.
Agung said that acquisition of
the required 172 hectares land for
the project, which is targeted to
be completed in 2019, has been
completed.
Adaros power unit to achieve

financial closing in H1 2016
PT Tanjung Power Indonesia
(TPI), a subsidiary of IDX-listed coal
and power firm PT Adaro Energy
Tbk, is targeting financial closing for
its 2x100 MW coal fired power plant
project in South Kalimantan in this
first semester of 2016.
Adaros Head of Corporate
Communication, Febriati Nadira told
Petromindo recently that currently
TPI is in the process of achieving
financial closing (FC) for the project.
The FC for this project was
initially targeted to be achieved
in October 2015, but it has been
delayed until now. Now, we expect
to sign the FC in this first semester
of this year, she said, without
Petromindo|Dasir
PLN inaugurates micro hydro

power plant in C. Java
elaborating the reason behind the

delay.
TPI, established in August 2013, is
a consortium of PT Adaro Power (65
percent) and PT EWP Indonesia (35
percent). The latter is a subsidiary of
Korea East-West Power Co., Ltd.
This power plant will use
circulating fluidized bed (CFB)
technology and, as fuel, will use
approximately 1 million tons of
coal per annum, the majority of
which will be supplied by Adaro
Energy. In October 2014, TPI
signed the PPA for the project with
public utility PT Perusahaan Listrik
Negara (PLN) (Persero) for 25
years.
The investment is estimated
at US$450-$550 million, most of
which will be project-financed using
non-recourse debt. This project is
included in PLNs fast-track program
project phase 2, with a build, own,
operate and transfer (BOOT) scheme
guaranteed by the government in the
form of a business viability guarantee
letter.
87
President Joko Widodo has issued

a new regulation to accelerate the
development of waste-based power
plants in several major cities in a
bid to resolve the mounting waste
problem and increase the supply of
electricity.
The Office of the Cabinet Secretary
said in a statement last week that
the presidential regulation, which
was signed on February 13, aims to
accelerate the development of waste
to energy plants in a number of
cities including Jakarta, Tangerang,
Bandung, Semarang, Surakarta,
Surabaya, and Makassar.
According to the regulation, city
administration-owned companies
can appoint private companies to
help develop the plants that would
produce electricity from wastes.
The regulation also stipulates
that state-owned power firm PT
PLN is obliged to buy the electricity,
and is required to sign the power
purchase agreement within 35 days
after the city administrations appoint

developers of the projects.
Bekasi Power completed

study for Kendal project
PT Bekasi Power (BP), a wholly

owned subsidiary of PT Jababeka
Tbk, has completed the pre-feasibility
study for developing a coal fired
power plant with the total capacity
of 2x300 MW in industrial estate
Kendal, Central Java.
Erwin Loebis, Primary Energy
Senior Manager of PT Bekasi Power,
told Petromindo recently that the
power plant will be developed to
support the operation of the 2.700 ha
industrial estate.
We have completed the prefeasibility study. Currently, we are
still in land acquisition stage, he said.
Erwin revealed that the project
is expected to achieve commercial
operation date (COD) by 2019. The
first unit is expected to achieve COD
by 2019, followed by the second unit
in 2020, he said.
The company will develop
the project a joint venture with
Sembawang Corporation Utility of

Singapore with an investment cost of
US$ 1.2 million per MW.
Atlas hopes to have power

plant in five years
IDX-listed coal mining firm PT Atlas

Resources hopes to be able to build at
least one or two mine mouth power
plants within the next five years.
President Director Andre Abdi
said that the huge coal reserves at the
companys coal mines at Mutara Hub
and Oku Hub in South Sumatra will
support the companys diversification
plan into power generation.
He added that Atlas has signed
agreements to partner with Japans
Toyota Tshusho and Spains Gas
Natural Fenosa to develop mine
mouth power plant project with
capacity of 600-1,200 MW at the Oku
Hub, which is estimated to have coal
reserves of 200 million tons.
Andre said that the company is
also seeking to form partnership with
Chinas Yudean Group to develop
similar project with potential capacity
of 300 MW at the Mutara Hub.
Petromindo|Khalsa
President issues new ruling

to accelerate waste to energy
plant projects
Andre Abdi
88
Petromindo|Boim
Crompton Greaves receives

proposals to acquire assets
NSE-listed Crompton Greaves
Limited (CG) announced recently it
had received non-binding proposals
from interested parties to acquire
the European, North American and
Indonesian activities of the power
segment division of the company.
In continuation to the above
communication, the company had
informed to the Stock Exchanges
vide its letter dated Feb. 4, 2016
that discussions with the potential
buyer were on, to explore reaching an
agreement on the outstanding issues
to enable the Board to accept the
offer, the firm said.
The company further said it
has now received and accepted a
revised binding letter of offer for
the acquisition of the aforesaid
businesses by First Reserve
International Limited, a US Private
Equity Fund, for an Enterprise value
of 115 million euros. The offer is
subject to regulatory, shareholders
approvals and signing of definitive
share purchase agreement.
Benny said that electricity sales to

large industries increased by 10.74
percent in February, while sales to
medium-scale industries rose by 3.53
percent.
The higher sales was attributed
to the lower tariff and acceleration
in the countrys economic growth,
Benny said.
Meanwhile, Senior Manager for
Public Relations at PLN, Agunung
Murdifi said that sales in March is
expected to increase again by 8-10
percent.
Pertamina, Marubeni
sign technology
agreement with GE
The sale will enable the company
to reduce debt and focus on its
faster growing Indian businesses.
The company continues to actively
examine its other international B2B
businesses with a view to monetize
these businesses to enhance
shareholder value.
In Indonesia, the firm, through
PT.CG Power Systems Indonesia
operates a transformer manufacturing
plant in Cileungsi, Bogor, from which it
supplies various types of transformers
to local and global markets.
PLN reports higher

February electricity sales

PT PLN said that electricity sales in
February of this year increased by
10.41 percent to 16.52 TWh from
the level in the same month of last
year.
PLN Head of Commercial Division
Benny Marbun was quoted by Kontan
as saying that sales in the JanuaryFebruary period of this year reached
34.09 TWh, an 8.91 percent increase
year-on-year.
A consortium of state-owned
oil and gas firm PT Pertamina and
Japans Marubeni has signed an
exclusive agreement with General
Electric (GE) for the latter to supply
a combined cycle gas turbine
technology to the formers upcoming
power plant project.
Pertamina Vice President
for Communications Wianda
recently that the exclusive
agreement with GE forms part
of a plan by the consortium to
participate in the Jawa-1 PLTGU
combined cycle power plant project
with capacity of 1,600 MW to be
held by state-owned electricity firm
PT PLN.
She said that GE has agreed to
provide the most advanced combined
cycle gas turbine technology in the
world.
She said that PLN is expected to
open tender for the project in May of
this year.
The consortium has earlier named
Samsung C& T as the EPC contractor
for the project.
89
Petromindo doc.

in Indonesia, Geo Energy said in a
statement.
Geo Energy said the subsidiary has
an authorised capital of Rp 12 billion
and an issued and paid-up capital of
Rp12 billion. The companys subsidiary,
PT Geo Energy Coalindo, holds 99.92
percent of the capital of Geo Tebo while
the remaining 0.08 percent is held
by Huang She Thong (the Executive
Director of the Group and a brother of
the Companys Executive Chairman,
Charles Antonny Melati) in order
to comply with the relevant laws in
Indonesia which require a minimum of
two shareholders.
The commissioner of Geo Tebo is
Huang She Thong and the director is
Junanto (the Head of Marketing of the
Group).
PLN to build solar power

plants in remote areas
Japanese firm plans to
develop mini hydro power
plants in RI
A Japanese energy company has
expressed interest to develop mini
hydro power plants in 15 locations
in Indonesia with estimated total
investment of US$75 million.
This was said by Chairman of
the Investment Coordinating Board
(BKPM) Franky Sibarani as quoted by
detik.com recently.
Franky did not disclose the name
of the company, but said that in the
first stage, construction will focus on
developing two mini hydro power
plants in North Sumatra, each with
a capacity of 7.8 MW and 8.2 MW,
with combined investment of $15
million.
He said that the Japanese firm is
currently in talks with state-owned
power company PT PLN for the
90
required power purchase agreement

(PPA).
Once the PPA has been signed,
the Japanese firm is expected to start
construction of the North Sumatra
plants this year, Franky said.
Geo Energy sets up new RI

subsidiary
SGX-listed Geo Energy Resources

Limited announced recently that
the Group has received an approval
from the Indonesian Ministry of
Law and Human Rights under its
decree Number AHU-0012647.
AH.01.01/2016 that a new subsidiary
in Indonesia, namely, PT Geo Tebo
Power Inti, has been incorporated on
March 8, 2016.
The subsidiary is domiciled in
North Jakarta, Indonesia and will
engage to explore an opportunity
in the power generation business
State-owned electricity firm

PT PLN is expected to obtain
government capital injection worth
Rp 3 trillion this year to finance the
development of solar power plants in
less developed areas particularly in
eastern part of Indonesia.
PLN Corporate Planning Director
Nicke Widyawati said last week that
there are currently 12,500 villages
that have yet to get proper electricity
supply.
She said that of the Rp 3 trillion
budget, about 300 billion will be
allocated for the free electricity
program in less developed villages,
which forms part of the governments
Indonesia Bright Program.
Nicke said that the government
will also invite independent power
producers to participate in the
Indonesia Bright Program, aimed at
providing power supply in remote
regions.
Petromindo|Khalsa
Energy security fund requires

budget of up to Rp 260t
The proposed energy security
fund program to among others
promote the development of
renewable energy in the country will
require total budget of up to Rp 260
trillion for 10 years, Bisnis Indonesia
reported recently.
Resources Sudirman Said stated at
a Renewable Energy and Energy
Conservation Leadership Forum
in Bandung recently that the funds
will be among others use to finance
the development of infrastructure
facilities, subsidy, and the
development of renewable energy
sources.
He said that the 2016 state
budget, which is set to be revised mid
this year, is expected to help finance
the the funding requirement for the
energy security fund program.
Sudirman said that other funding
sources include loans and grants from
international donors.
He said that the ministry will
receive whatever amount of funds
to be allocated by the revised
state budget, and stressed that the
government would not collect funds
from the public amid the current

economic slowdown.
New power plant projects

require up to 50 mtpa coal
supply
New coal-fired power plant
projects, whose construction will
start this year and are expected to
be completed in 2019, will require
40-50 million tons per annum of coal
supply, boosting domestic demand
for the commodity.
This was said by Supangkat Iwan
Santoso, Procurement Director at
state-owned electricity company PT
PLN.
As reported earlier, a total of
10,000 MW power plant projects,
most of which are large-scale coalfired power plants, are expected to
break ground this year. Construction
process is expected to take between
three to four years to complete. The
projects, both to developed by PLN
and private power companies, are
part of the governments ambitious
35,000 MW power plant development
projects.
So, when the power plant
projects are completed by 2019, they
will require at least about 40 million
tons of coal per year, he said, adding

that among of the coal-fired power
plant projects to break ground this
year among others are PLTU Java IV
in Tanjung Jati (Central Java), PLTU
Cirebon Expansion (West Java), PLTU
Cilacap Expansion (Central Java),
PLTU Java VII in Banten, and PLTU
Java III in Cirebon (West Java).
Medco hopes to win PLTGU

Jawa-Bali tender
PT Medco Power Indonesia, a

subsidiary of integrated energy
company PT Medco Energi
Internasional Tbk, hopes to win
tender for the development of PLTGU
Jawa-Bali 3 with capacity of 500 MW
combined-cycle power plant project
held by state-owned electricity firm
PT PLN (Persero).
This was said by Medco Power
President Director Fazil Erwin Alfitri
to Petromindo.
But I can not tell you much
(about the project) because it is still
in the bidding process, Fazil said.
According to a report of PLNs
General Manager E. Haryadi, a copy of
which was obtained by Petromindo,
the PLTGU Jawa-Bali 3 is targeted to
be onstream in 2017.
91

Pertamina will develop a combined
1,000 MW solar power plants in
areas with low electrification ratio
particularly in the eastern part of
Indonesia.
This was revealed by Minister
Sudirman Said recently at a
renewable energy forum in Bandung,
West Java province.
Pertaminas commitment will
help strengthen efforts to develop
renewable sources of energy in
areas particularly in eastern part of
Indonesia which have yet to enjoy
electricity supply, Sudirman said,
but did not provide details about the
planned projects.
Sudirman said that in the
near future, Pertamina will sign a
cooperation agreement with stateowned power firm PT PLN to develop
a 50 MW solar power plant in the
Mandalika special economic zone, in
West Nusa Tenggara Province.
He added that Pertamina will
92
build the plant and PLN to purchase

the output.
Meanwhile, the statement quoted
Pertamina President Director Dwi
Sutjipto as saying that the company
is committed to develop renewable
energy sources which he described as
the energy of the future.
He added that for the planned
1,000 MW solar power plants, total
investment is estimated at about
US$2 billion.
PJB to develop 2x100 MW

mine mouth power plant
in Katingan
PT Pembangkitan Jawa Bali

(PJB), a wholly-owned subsidiary
of state owned electric company PT
Perusahaan Listrik Negara (PLN)
(Persero) has proposed to PLN a mine
mouth power plant project in Katingan,
Central Kalimantan province.
Muljo Adji, acting President
Director of PJB, told Petromindo
recently that the company will
cooperate with PT Prima Multi Artha
to develop the 2x100 MW mine
mouth power plant at the latters coal
mine. Muljo said that the company

has conducted pre-feasibility studies
for the project.
We are still waiting for response
from PLN to our proposal, he said.
Waskita unit obtains loan to

complete power plant project
IDX-listed engineering and
construction company PT Waskita
Karya Tbk said its subsidiary PT
Waskita Sangir Energi has obtained
a US$175 million loan to complete
construction of a power plant project
in West Sumatra.
The company said in a statement
that Waskita Sangir is in the process
of completing a 2x5 MW micro hydro
power plant project in Sangir, South
Sulok, West Sumatra.
It said that construction progress
of the Rp 256 billion power plant
project has reached 95 percent,
with commissioning operation date
targeted in June, a two-month delay
from the original plan.
Waskita Karya owns 85 percent of
Waskita Energi, with the remainder
held by PT Shalawat Power.
Courtesy of LEN
Pertamina to develop 1,000

MW solar power plants
Petromindo|Boim
Welcron to soon sign PPA

for biomass power project
in Central Kalimantan
PT Welcron Power Kalimantan is
scheduled to sign a power purchase
agreement (PPA) with public utility
state owned firm PT Perusaaan Listrik
Negara (PLN) (Persero) this month
for a biomass power plant project in
Central Kalimantan province.
Head of Renewable Energy
Division of PLN Syah Darwin Siregar
told Petromindo that the project will
be developed in Kutawaringin Barat
regency, Central Kalimantan province
with a total capacity of 10 MW.
Some administrative formalities
still need to be completed. Once it
is been completed, the PPA will be
signed, he said adding that the power
plant will use calliandra (Caliandra
calothyrsus) plants as feedstock.
Welcron is a consortium
comprising PT Egreendo Energi Asia,
PT Welcron Hantec Co., Ltd and PT
Sarabau Mas.
PLN completes transmission

line in W. Sumatra

PT PLN said it has completed the
construction of a 96.7 km high

voltage elevated transmission power
line in Pesisir Selatan Regency, West
Sumatra.
The completion of the power
line has allowed the operation of the
Kambang relay station six months
earlier than scheduled, PLN said in a
statement recently.
PLN said that the new
transmission line channeled
electricity from the 21 MW Teluk
Sirih coal-fired power plant to the
Kambang relay station.
The power plant provides
electricity for consumers in the
Pesisir Selatan region, and replaces
the role of diesel-fired power plants
in area, thus allowing PLN to save
cost as coal is cheaper than diesel
fuel.
Government to allow BUMDs

to manage electricity supply

Resources Sudirman Said stated
that the government is preparing
a mechanism to allow six local
administration-owned companies
(BUMDs) in eastern part of Indonesia
to manage electricity supply in their
respective areas to help accelerate

power development in the region,
Kontan reported recently.
The six BUMDs are located in
Papua, West Papua, Maluku, North
Maluku, West Nusa Tenggara, and
East Nusa Tenggara.
Sudirman, however, said that the
policy would not curtail the role of
state-owned electricity company PT
PLN in developing power plant and
supporting facilities in the regions.
Funding scheme for the
development is still being discussed,
Sudirman said, adding that under the
plan, the BUMDs can cooperate with
private power producers.
He also said that the government
would provide subsidy for low
income households in the regions to
purchase electricity.
PLN to develop high voltage

relay station in Banten

PT PLN plans to develop a 500 KV
extra high voltage relay station
in Lengkong, Tangerang Regency,
Banten Province, to help improve
electricity supply in the Java-Bali
system particularly Banten, Investor
Daily reported recently.
The paper quoted Dwi
Wibihandoko, a manager at PLN,
as saying that the construction of
the Lengkong relay station with a
capacity of 2x500 MVA, is expected
to start this year so that it could be
completed next year.
He added that the project is part
of the PLN 2015-2024 electricity
supply general plan.
Our target is for the Lengkong
relay station to be able to start
operation in 2017, said Dwi on
the sidelines of a land acquisition
signing.
93
eVENTS
GAS SUMMIT
Photos: Dasir
The inaugural Gas Indonesia Summit & Exhibition (GIS),
officially supported by the Ministry of Energy and Mineral
Resources, and powered by Gastech, took place at the
Shangri-La Jakarta, Indonesia from March 15 to 17, 2016.
The GIS provided a central platform for dialogue between
regional and international energy players on investment
and infrastructure development opportunities across
Asias and Indonesias gas and LNG markets.
94
Agus Cahyono Adi
95
STATISTICS
Indonesian crude price (November 2015 February 2016)
60
Indonesian crude price (US$/bbl)

BENCHMARK CRUDE
Feb-15
Jan-16
Feb-16
50
1.
2.
3.
4.
5.
6.
7.
8.
54.11
53.69
56.36
53.69
55.10
53.91
57.57
57.33
26.63
27.36
29.17
26.46
24.87
26.58
30.44
33.40
28.66
28.56
30.82
28.71
26.51
28.86
32.17
33.60
40
SLC
ARJUNA
ATTAKA
CINTA
DURI
WIDURI
BELIDA
SENIPAH (C)
41.44
35.48
30
OTHER CRUDE
ANOA
ARUN (C)
BADAK
BEKAPAI
BELANAK
BENTAYAN
BRC
BULA
BUNYU
CAMAR
CEPU
GERAGAI
GERAGAI (C)
HANDIL MIX
JAMBI
JATIBARANG
JENE/SERDANG
KAJI
KERAPU
KLAMONO
COMP. PLB. SLT.
LALANG
LANGSA
LIRIK
MADURA
MENGOEPEH
MESLU
MUDIMIX
NSC/KATAPA/ARBEI
PAGERUNGAN (C)
PAM.JUATA/SANGA2 MIX
PANGKAH
RAMBA/TEMPINO
RIMAU/TABUHAN
SANGATTA
SELAT PANJANG
SEPINGGAN YAKIN MIX
SOUTH JAMBI (C)
TANJUNG
TAP
TIAKA
UDANG
WALIO MIX
WEST SENO
10
Nov-15
Dec-15
Arjuna
Duri
Senipah (C)
Feb-15
Jan-16
Feb-16
56.76
57.33
56.36
56.36
48.73
52.15
55.39
54.60
54.11
54.07
49.05
54.30
55.13
53.84
54.30
54.11
54.11
54.51
57.23
54.60
51.95
54.16
55.96
54.00
53.82
54.30
53.19
53.39
56.25
56.58
54.21
52.39
54.30
54.01
54.11
54.11
53.69
55.39
54.30
52.16
52.10
54.19
51.64
55.71
29.57
33.40
29.17
29.17
22.40
24.67
34.60
24.37
26.63
27.74
22.72
26.82
34.34
27.51
26.82
26.63
26.63
27.03
30.10
24.37
25.62
26.68
28.77
26.52
27.49
26.82
26.00
27.06
29.06
32.65
26.73
26.06
26.82
26.53
26.63
26.63
27.36
31.46
26.82
25.83
21.87
26.71
25.31
28.52
31.22
33.60
30.82
30.82
23.60
26.70
31.88
26.01
28.66
28.94
23.92
28.85
31.62
28.71
28.85
28.66
28.66
29.06
31.83
26.01
26.82
28.71
30.42
28.55
28.69
28.85
27.65
28.26
30.71
32.85
28.76
27.26
28.85
28.56
28.66
28.66
28.56
31.66
28.85
27.03
23.51
28.74
26.51
30.17
Source: Directorate General of Oil and Gas at the Ministry of Energy and Mineral Resources
96
28.92
Jan-16
Feb-16
20
SLC
Cinta
Belida
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
27.49
Attaka
Widuri
ICP
INDONESIAN OIL, GAS & POWER
JOKOWIS DECISION: ONSHORE LNG FOR MASELA
VOLUME 60 | MARCH 28 - APRIL 28, 2016

OGE 60 Small

Caricato da

Informazioni sul documento

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

OGE 60 Small

Caricato da

Copyright:

Formati disponibili

INDONESIAN OIL, GAS & POWER

JOKOWIS DECISION: ONSHORE LNG FOR MASELA

VOLUME 60 | MARCH 28 - APRIL 28, 2016

PETROMINDO MARCH 28 APRIL 28, 2016

PETROMINDO MARCH 28 APRIL 28, 2016

PETROMINDO MARCH 28 APRIL 28, 2016

PETROMINDO MARCH 28 APRIL 28, 2016

OIL & GAS

PETROMINDO MARCH 28 APRIL 28, 2016

83 OIL & GAS

74 PLN, Jakarta sign agreement

76 OIL & GAS

I nsecure coal supply for

Future coal supply for coal-fired power plants

Overseas advertising representative

PETROMINDO MARCH 28 APRIL 28, 2016

PETROMINDO MARCH 28 APRIL 28, 2016

Finally, a decision on Masela

Advertising inquires contact

PETROMINDO MARCH 28 APRIL 28, 2016

fter months-long debate among the public whether the government

PETROMINDO MARCH 28 APRIL 28, 2016

Masela block development state

he long debated issue of

PETROMINDO MARCH 28 APRIL 28, 2016

securing permits. Also, a survey

projects that are important for

product that will be the source of loan

regard to the myriad contractual

might include, for example, power

PETROMINDO MARCH 28 APRIL 28, 2016

The CE and PP arbitration

case involving oil activities. The two

PETROMINDO MARCH 28 APRIL 28, 2016

PLN had breached the agreements

projects has been requested by the

Pertamina cuts fuel prices

Medco plans 2D seismic

IDX-listed PT Medco Energi

PETROMINDO MARCH 28 APRIL 28, 2016

INDUSTRY NEWS: OIL & GAS

The block is 100 percent owned

State-owned oil and gas firm

Brand, automotive diesel, Pertalite

Santos to spud two wells

ASX-listed Santos Ltd is scheduled

PETROMINDO MARCH 28 APRIL 28, 2016

INDUSTRY NEWS: OIL & GAS

UK-based firm Ophir Energy Plc

PETROMINDO MARCH 28 APRIL 28, 2016

completed prior to the gas price being

Pertamina targets $100m

State owned oil and gas firm

of $91.7 million in crude and fuel

Nusantara Regas awaits

Courtesy of SKK MIGAS

Ophir completes construction

PT Nusantara Regas, a joint

PETROMINDO MARCH 28 APRIL 28, 2016

INDUSTRY NEWS: OIL & GAS

Six cargoes of LNG from

Tangguh Train-1 to undergo

Tangguh LNGs Train-1 will

PETROMINDO MARCH 28 APRIL 28, 2016