[Discussion Report] The 3rd Panel of Mining and Energy Expo 2017 – Theme: Oil and Gas

Figure 1. Ir. Tunggal, MSc. (Director of Upstream Oil and Gas Business Development, Ministry of Energy and Mineral Resources) discussed gross split in the oil and gas business industry. Other speakers: Dr. Ego Syahrial (the current General Director of Oil and Gas, Ministry of Energy and Mineral Resources), Ir. Sukandar (Vice President of SKK Migas) and Dr. Gigih Prakoso (Director Planning, Investment & Risk Management of PT. Pertamina (PERSERO))

As the first speaker, Dr. Ego Syahrial discussed the Directorate General of Oil and Gas, Ministry of Energy and Mineral Resources plans to overcome oil and gas development problems in Indonesia. He updated the condition of oil production in Indonesia which decreased significantly without any discovery of oil reserved. This has questioned many given that Indonesia has about 128 basins, but only 20 basins are in production status. While about 71 basins have never been explored, 40 of them have never been explored by the seismic method to find out about the structure or the potential of oil and gas. Most of these basins lied on the eastern part of Indonesia in greater depth which makes it hard to be explored and costly as well. In addition to that, the regulation about data sharing in Indonesia is biased making it harder for investors to map its potential further. Learning from another country such as Norway, which has an open data system, Dr. Ego Syahrial tried to make the process data easier to be accessed. He also claimed that the Directorate General of Oil and Gas, Ministry of Energy and Mineral Resources, simplifies the permitting process to develop the oil and gas industry. To overcome this problem is to conduct a massive oil exploration, and the government to provide simplicity in permission from the Directorate General of Oil and Gas. In overall, there are three plans in the future: 1) Preparing for the open data system; 2) Allowed joint studies to increase the production effectively and efficiently, and 3) Simplify the permission administration process to investors.

The next speaker, the Director of Upstream Oil and Gas Business Development, Ministry of Energy and Mineral Resources, Ir. Tunggal, MSc. explained about several misunderstandings about the gross split in the oil and gas industry. As a government official, it is hard to determine the cost needed to develop the sector in oil and gas. The cost is highly dependent on technology and field condition. So only the investors, whom directly manage the field, knows how much cost needed and spent on the oil and gas production in their specific field. With the new regulation, the government can focus on analyzing its program. He underlined that the most important is not how many costs they spent on maintaining the field, but what matters most is the efficiency. Especially when the oil price is decreasing recently, government and investors need to focus on how to produce oil efficiently. While it is crucial to increase the production and to decrease the dividend while maintaining efficiency, the  Ministerial Decree No. 52, 2017 was composed.

Figure 2. Oil and gas field projects map on 31st August 2017

Ir. Sukandar, the third speaker, showed the map of the newly developed field in oil and gas in Indonesia. The Jangkrik field was already producing 450 MMSCFD and will reach an estimate of 600 MMSCFD soon. He reported that the total production will be up to 4,000 MMSCFD. With some new developments in the oil field, he is certain about the future of the oil and gas industry in Indonesia. The most important thing is how fast oil and gas sector can achieve the optimum result. As the government representative for oil and gas contract making, SKK Migas attempts to work fast and efficiently. Also, he appreciated the government for opening new oil working areas and for composing gross split system as they think it is an effective, fair, and reasonable system for both investors and government.

The last speaker was Dr. Gigih Prakoso, as PT Pertamina (PERSERO) representative. Working as Planning, Investment & Risk Management Director, he explained opportunities and challenges of PT Pertamina (PERSERO) facing from upstream to downstream sectors. Due to the complex and high maintenance in almost every sector, the great amount of investation and high-risk business, Pertamina needs to cope with a great challenge on how to keep the business running smoothly. Despite PT Pertamina (PERSERO) as the biggest state-owned corporation in Indonesia,  PT Pertamina (PERSERO) is one of the smallest oil and gas companies in revenue, net income, and the total productions. PT Pertamina is even smaller compared to PETRONAS (the Malaysian oil and gas state-own corporation). Some government ordinance is also must to be followed by PT Pertamina (PERSERO) such as one price fuel and infrastructure development. The biggest challenge to PT Pertamina (PERSERO) is coming both from external and internal. From the external, the decreasing of oil price is giving the biggest impact to almost all oil and gas industries including PT Pertamina (PERSERO). Another factor is the land permit. The higher declination rate in some mature field, the need to speed up the gas commercialization, and infrastructure development to expand the distribution area, especially in the eastern part of Indonesia. On the financial aspect, PT Pertamina (PERSERO) as a state-owned corporation is responsible to manage the fair dividend to the government while also maintain the company financial capability. In addition, to increase the oil production, PT Pertamina (PERSERO) is starting to do exploration abroad. To get the best result, it is important to have a strong finance, and also credible experts and partners. To resolve some of the current problems, PT Pertamina (PERSERO) has opened opportunities to do joint ventures and welcome new partner to work together either in Indonesia or overseas.

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