Indonesian Deepwater Exploration:

Challenges and Opportunities

Jakarta, October 26 2016

R. Gunung Sardjono Hadi

PT Pertamina Hulu Energi

Bangkitkan Energi Negeri

Presentation on National Seminar IMSCO
Gedung Balaikota Semarang
AGENDA
1. EXPLORATION OIL & GAS CHALLENGES
INDONESIA
2. PERTAMINA OFFSHORE EXPOSURE
3. CHALLENGES & OPPORTUNITIES
AGENDA
1. EXPLORATION OIL & GAS CHALLENGES
INDONESIA
2. PERTAMINA OFFSHORE EXPOSURE
3. CHALLENGES & OPPORTUNITIES
Presenter PT Pertamina Hulu Energi
R. Gunung Sardjono Hadi
Direktur Utama PT Pertamina Hulu Energi

Semarang, 23 Januari 1963

Menikah, 3 orang anak

Pendidikan:
• Teknik Kimia UNDIP (Lulus 1987)
• Magister Teknik UI (Lulus 2000)

Pengalaman Kerja:
• 2015 Jun – Sekarang Direktur Utama PT Pertamina Hulu Energi
• 2013 Des – 2015 Mei SVP Development & Technology, PT Pertamina (Persero)
• 2013 Sep – 2013 Nov SVP Corporate Share Service, Pertamina General Affair
• 2010 Sep – 2013 Agt Presiden Direktur PT Pertamina Gas
• 2009 Nov – 2010 Jul SVP Planning & Evaluation Upstream
Roles of Oil & Gas Industry
NATIONAL SUSTAINABLE DEVELOPMENT

1 2 3 4
Source of
Domestic Industry Multiplier
STATE
Fuel Feedstock Effects
Revenue

OIL AND GAS INDUSTRY

High
High Capital High Risk
Technology
Challenges on Energy Sector by 2030

Indonesia energy demand per capita expected to grow inline with other economies
▪ Overall energy growth in region, growing overall energy demand by 63% by 2030.

Widening import gap to 1.9 mmbd by 2030 will require additional infrastructure and
▪ Crude and oil product signing of new long-term supply contract.

Import gas expected to reach ~ 4 bcfd by 2030, as domestic supply will decline and
▪ Gas demand grow by ~ 4% p.a., creating need for gas import.

Strong growth in power demand will creates opportunities in creating new geothermal
▪ Power and coal fired power capacity.

▪ Petroleum products Gap will widen as mismatch between refining capacity and product demand will
continue, unless RDMP, GRR are sanctioned.

▪ Biofuel Indonesia has ambitious biofuels mandates, but implementation will be challenging
mainly due to lack of available stock.

▪ Growth by sector Power generation and transportation seeing strongest growth.

Source: Woodmackenzie 2015

Crude Gap in Indonesia by 2030
Widening import gap to 1.9 mmbd by 2030 will require additional infrastructure and signing of
new long-term supply contract.
(Thousand barrels per day)
Indonesia crude supply and demand balance

Indonesia supply gap is

expected to widen to 1.900 kbpd
by 2030, as a result of declining
domestic production and growth
in domestic demand of 2.1% p.a.

Assuring access to long-term

supplies in global market and
the adding of infrastructure to
support accelerating shift.

Source: Woodmackenzie 2015

Crude Gap in Indonesia by 2030
Import gap expected to reach ~BCFD by 2030, as domestic supply will decline and demand grow
by 3.8% p.a., creating need for gas imports.
(mmscfd)
Indonesia natural gas supply and demand balance

Indonesia is expected to
become increasingly import
dependent out to 2030, as
domestic demand grow 3.8% p.a.
but domestic supply will flatten

80% of export contract will

expire by 2030 potentially
opening up for LNG re-routing to
domestic market if upstream gas
Is added to existing plants.

US contract will supply 0.5 bcfd

from 2020 creating requirement of
additional 3.5 bcfd of imports to be
sourced.

Source: Woodmackenzie 2015

Oil and Gas Reserves
In other side, the oil reserves tend to decline. Although gas reserves are slightly growth, it would be shortage in few
years due to growth in domestic gas demand

Source: SKK Migas 2014

Oil and Gas Reserves Replacement Ratio
Current Portrait: oil reserves 7.4 BBO (3P) and gas reserves 149 TCF (3P)

Gas Reserves (TCF) Oil Reserves (MMBOE)

Oil Reserves: Gas Reserves:

P1 : 3,642 MMBO P1 : 100 TCF
P2 + P3 : 3,751 MMBO P2 + P3 : 49 TCF
Total 3P : 7,375 MMBO Total 3P : 149 TCF Reserve Replacement Ratio – Last 5 Years
RRR Oil (%) RRR Gas (%)
• Annual production rate: oil 0.3 BBO, gas 3.12 TCF. 309
• With only 3.6 BBO (P1) reserves and reserves replacement ration
(RRR) far less than 100%, the oil reserves will be exhausted in 130 127
around 11 years. 69 82 90
63 52 47
23
• RRR gas is better than oil (most of recent discoveries are gas) but it
still hard to overcome the growth of gas demand in the near 2009 2010 2011 2012 2013
future.
Source: SKK Migas 2014
 Long term supply from global market
or from oil & gas producing countries

How to fill National Own Company (NOC) expansion

the Gap? to the prospective countries around

the world (ex. China strategy)

Optimizing the domestic oil & gas potential,

through exploration activities, especially
in eastern area and deepwater
Sedimentary Basins
To date, only 16 producing basins in Indonesia, the others are remains challenging to be explored

Source: ESDM 2010

Exploration Potential
Wide of Basin versus Block in Indonesia: 75% are open areas
(in percentage)

Block/Contract Area

25%
675,040 km2

75%
2,001,561 km2

Basin

Source: Andang Bachtiar, 2012

Exploration Activities and Investments in Indonesia
Exploration activities tend to decline since 2011. Success ratio was 31% on average.

Exploration Drilling and Its Success Ratio Exploration Expenditures (USD million)

2,120
-13%

1,356 1,391
1,240
1,850 1,105

1,204 1,242
922 1,100

270 152 149 183 140

2011 2012 2013 2014 Plan

2015
Exploration Cost (USD million)
G&A (USD million)

Source: Renstra KESDM 2015-2019 Source: SKK Migas 2014

Current Exploration Challenges

Subsurface
1 Needs new concepts, new strategies and risk management
Challenge

Speculative surveys in open areas (include deep water) are

Lack of Data 2 needed, driven by Government

Fiscal Term Block-basis (instead of POD basis) terms would encourage

(Ring Fencing) 3 contractors to explore new area or prospects in the block

Low Oil Price 4 Required an economic oil price to stimulate exploration

Non Technical
Issues 5 Permit, RTRW, social problem, lack of infrastructure and access
AGENDA
1. EXPLORATION OIL & GAS CHALLENGES
INDONESIA
2. PERTAMINA OFFSHORE EXPOSURE
3. CHALLENGES & OPPORTUNITIES
 PHE’s Working Areas: 56 Contract Areas onshore & offshore
51

1 2 Western Area 18
36 Eastern Area & Deep Water
19
37

38
52 4
3 39
5
6 20
44 49
7 34 35
9
8 33 40 45
22 48
32 41

10 21 23 42

12 24 47
43
11 25
13
31 29
14

15
30 28
16
26
27 46
17
50

1 Blok Gebang North Sumatera Papua

13 Blok Air Benakat I
2 Blok West Glagah Kambuna 29 Blok WMO
23 Blok Muara Enim III 38 Blok Bukat 47 Blok Semai II
3 Blok MNK Sumbagut 14 Blok Ogan Komering
30 Blok Abar 39 Blok Simenggaris Blok Salawati Basin
15 Blok Tanjung Enim 24 Blok Suban I 48
4 Blok Siak
25 Blok OSES 31 Blok Anggursi 40 Blok Tengah K 49 Blok Salawati
16 Blok Muara Enim
5 Blok Rokan CPP 41 Blok Makassar Strait
17 Blok Muara Enim I 51 Blok NSO Kalimantan
6 Blok South Jambi 42 Blok East Sepinggan
18 Blok A Natuna Sea 52 Blok NSB 32 Blok Tanjung IV
7 Blok Jabung
19 Blok Kakap Natuna 33 Blok Tanjung II
Sulawesi
8 Blok Jambi Merang Jawa
20 Blok Air Benakat II 34 Blok Sangatta I 43 Blok Karama
9 ARUN NGL Operator
21 Blok Muara Enim II 26 Blok ONWJ 44 Donggi Senoro LNG
Blok Corridor 35 Blok Sangatta II
10
Blok Suban II 27 Blok Tuban 45 Blok Tomori
Non Operator
11 Blok Raja Tempirai 22 36 Blok Nunukan
Blok Babar Selaru Proses M&A
50 Blok MNK Sakakemang 28 Blok Randugunting 37 Blok Ambalat 46
12 Blok Air Benakat III
 Pertamina’s Offshore Operations
Domestic and overseas offshore operation in the last ten years

5 Experts >2000 Experts

Java Libya Qatar

Kalimantan Vietnam Kalimantan
Papua Sudan (Karama-2013)
Malaysia (2004-2013) (2009- 2013)
(Semai - 2013)
(2004-2014)

PHE operates the following …and holds participating

offshore blocks: interest in the following areas:
 ONWJ (2009)  Kakap
 WMO (2011)  Makassar Strait
 Abar (2015)  Karama (relinquish)
 Anggursi (2015)  Babar Selaru
 Nunukan (2013)  Semai
 NSO (2015)  OSES
 Salawati (1992)  SK-305 (Malaysia)
 East Ambalat (2016)  Vietnam Block 10-11
 Qatar
 Sudan

SUMBER: Eksplorasi Hulu Q1 2015

 Experience on Deep Water Operation in Eastern Indonesia
KARAMA PSC:
Petroleum system menunjukkan kualitas reservoir yang tidak bagus dan serta hidrokarbon tidak cukup matang

Status: Proses Relinquishment

• Partner Statoil 51% (operator)
Pertamina 49%
• Water Depth sampai 2200 m
• Total Expenditure > 300 MUSD

Karama Block

SUMBER: Eksplorasi Hulu Q1 2015

 Experience on Shallow to Deep Water Operation in Eastern Indonesia
SEMAI – 2 PSC:
Frontier offshore di area pantai Barat Papua sebagai komitmen eksplorasi Pertamina di area frontier

Status SEMAI 2: Relinquishment Process

• Komitmen Eksplorasi (2 wildcat wells)
 Bawang Putih-1 (June 2014)
 Serai-1 (Akhir 2014 – Awal 2015)
• Disimpulkan temuan tidak komerisal
• Murphy Oil & Consortium (PTTEP, INPEX) 85% (operator)
Pertamina 15% (Indonesia Privilege)
 Area lebih dari 3,379 km2
 Kedalaman target 2290m dari seabed dan
kedalaman air 90 m
• Bawang putih-1
 Total biaya pengeboran 45 MUSD
 Safe & Efficient Operation

SUMBER: Eksplorasi Hulu Q1 2015

Ongoing Shallow – Deep Offshore Projects in Eastern Indonesia
1. Nunukan & Easy Ambalat PSC
A. Purpose
Monetisasi migas di Nunukan PSC sejak Desember
2014, semula 4,900 km2, menjadi 1,721 km2. PHE
memiliki 64.5% sebagai Operator. Partner: Videocon
(23%) & BPRL,BV (12.5%)
B. Scope of Works
• 3 exploratory wells and G&G Studies at USD 20.9
Mn
• Reprocessed 5,400 KM 2D Seismic
• Purchased 1,600 KM2 3D Seismic license (2011)
• Other various G&G Study
Status: Ongoing
2. Simenggaris PSC 3. Other Projects
A. Purpose List selected projects
Monetisasi migas dari lapangan di area Simenggaris
• JOB Pertamina-Petrochina in Salawati Kepala
(JOB Pertamina & Medco Tomori) dengan total area
Burung PSC (Pertamina-50%, PetroChina-
547 Km2. Pertamina memiliki share 37.5% dengan
16.8%, RH Petrogas-33.2%)
partners Medco (41.5%) dan Salamander Energy
• JOB Pertamina-Petrochina in Salawati Basin
(21%)
PSC (Pertamina-10%, PetroChina-30%, RH
B. Scope of Works Petrogas-60%)
• Blok Ambalat PSC
• Pengeboran sumur appraisal di south Sembakung • Blok Bukat PSC
(2 sumur sebagai final komitmen) • Tengah Kalimantan PSC
• Production & Distribution Facility : • PGE PLTP 2x20 MW Lahendong Unit 5&6
• Central Processing Facility (CPF)
• Pipeline 30 inch, 23 km
• Mini LNG
Status: Ongoing Development
AGENDA
1. EXPLORATION OIL & GAS CHALLENGES
INDONESIA
2. PERTAMINA OFFSHORE EXPOSURE
3. CHALLENGES & OPPORTUNITIES
Challenges and Opportunities

• Geological aspects: lack of data, need more

studies
• Technical Aspect: Water depth, slope rugosity,
high pressure environment (hydrostatic)
• Commercial aspects: more time from discovery to
first commercial production (8-10 years)
• Services & supporting industry: Worldwide deep
water drilling rig availability is limited
• Global oil & gas industry’s crisis

Challenges
Challenges and Opportunities

• Big upside potential

• Strong government support:
 Better PSC split for high risk block
(65/35 for oil; 60:40 for gas)
 No exploration well in the firm
commitment
 Exemption of import duty
• Less competition

Opportunities
PHE’s Commitment to Support the Industry
Pertamina tetap berkomitmen untuk mencapai Aspirasi 2030 : Optimum Production

• MENINGKATKAN AKSES PADA SUMBERDAYA DAN CADANGAN BARU

• Pengelolaan Aset dari Barat ke Timur Indonesia, Onshore ke Offshore,
Shallow Water ke Deep Water
• Fokus pada blok-blok domestik yang habis masa kontrak dengan konsep
dioperasikan oleh Perusahaan 100% Milik Negara (National Flagship
Energy Company)
• Inorganic Business pada Aset Produksi di dalam dan luar negeri (take over
operatorship, chip-in, merger & acquisition)
• Joint study dengan mitra yang bernilai tambah
• Fokus pada aset produksi dan bernilai strategis di luar negeri
• Fokus pada cekungan yang belum dikembangkan dengan baik
(Technology and Capacity Enhancement)

• MEMBERIKAN NILAI TAMBAH PADA ASET

• Intensif pada aktivitas eksplorasi, pengembangan dan optimasi produksi
terpilih
• Eksplorasi secara selektif untuk sumberdaya yang signifikan serta
implementasi konsep Development While Exploration (DWE)
• Pengembangan usaha pada sumberdaya hulu untuk energi baru dan
terbarukan

• PENGEMBANGAN TEKNOLOGI & SDM PROFESIONAL

• Pendidikan dan pengembangan SDM – Pengiriman karyawan untuk
belajar di pusat pendidikan terbaik
• Pengembangan Karyawan sebagai Global Professional
• Menerapkan organisasi Upstream Global Solution
Conclusions

• Oil & gas sector has important roles to support the national
sustainable development
• Indonesia is now facing the oil gap and the gas gap in the
near future (2020-2022?) due to the growth of domestic
demand. These gap would be around 1.9 mmbopd and 4
bcfd in the 2030.
• The oil reserves replacement ratio (RRR) in the last 5 years
were less than 100% - the oil gap must be getting worst in
the near future.
• In other side, oil & gas potential is still huge. Eastern
Indonesia and deep water areas are considered to be (the
current and) the next exploration target.
• A collaborative action among all stakeholders are of utmost
important to unlock hydrocarbon potential in deep water
area.
Deep Water Exploration Drilling in Indonesia

Source: ESDM 2012

Deep Water Development in Indonesia

Source: ESDM 2012