Indonesia selects members for new energy board

Eric Watkins

Oil Diplomacy Editor



LOS ANGELES, Sept. 25 -- The Indonesian House of Representatives' Commission VII, which oversees energy affairs, has approved eight members for the country's newly established National Energy Board.

The members include: Rinaldy Dalimi, professor of electrical engineering at University of Indonesia; Tumiran, professor of electrical engineering at Gajah Mada University; Eddie Widiono, chairman of a national team on energy saving; Herman Darnel Ibrahim, energy analyst; Widjajono Partowidagdo, technology engineering expert; Mukhtasor, environmental expert; Agusman Effendi, representing consumers; and Herman Agustiawan, representing consumers.

Under Indonesia's Energy Law, approved in July, 2007, the government is required to set up the NEB, which is to be chaired by the president and to have 15 members, including seven ministers.

The Energy Law aims generally to guarantee energy stockpiles based on domestic sources and imports, as the Southeast Asian nation struggles with regular power outages and declining oil output.

Under the law, the NEB is charged with monitoring the implementation of national energy policy and determining the steps needed to overcome possible obstacles and the threat of future energy crises.

"With the approval of this energy law, we will encourage people to use more renewable energy instead of fossil fuel in future," said Energy Minister Purnomo Yusgiantoro.

Indonesia, which recently withdrew from the Organization of Petroleum Exporting Countries, has seen a continued decline in its production of crude oil (OGJ Online, Sept. 12, 2008). The country is making an effort to shift some of its energy demand to more abundant natural gas or coal and biofuel.

Indonesia seeks higher price for LNG exports

Eric Watkins
Senior Correspondent

LOS ANGELES, July 17 -- Indonesia, which confirmed that the BP-led Tangguh LNG project is now 93% complete, is considering delays to first cargoes to China and South Korea in an effort to renegotiate existing price agreements.

"We are renegotiating the price with LNG buyers from China and South Korea, said Edi Purwanto, deputy chief of BP Migas, the country's upstream oil and gas regulator. "We want a better price from what we have now. We want to change the pricing formula.

"If we cannot agree on a new price, then we might delay delivery from Tangguh," he said. "If needed, we are willing to pay a penalty until a new price has been agreed."

Last week, Purwanto said the selling price of LNG from Tangguh should be raised in accordance with prevailing international rates, saying that the crude oil price in the world market has risen to $150/bbl.

Tangguh already has contracts to supply 3.5 million tonnes/year to Sempra Energy, 2.6 million tonnes/year to China's CNOOC, and 1.1 million tonnes/year to South Korean buyers K-Power and Posco.

However, the price agreed upon with CNOOC when the 2002 contract was signed was $2.4/million btu based on the crude oil price of $25/bbl. Industry sources now say Indonesia wants the price to be at least the same as agreed with Japan in March.

At that time, Indonesia and Japanese buyers agreed on a price increase along with the extension of LNG contracts that were due to expire in 2010-11. According to Pertamina, the price at that time was about $16/million btu, based on crude oil prices of $100/bbl.

News of the demand for price renegotiations coincided with reports that the Tangguh plant is 93% complete and on track to meet its 2008 production target.

"After we finish the checking, it will start producing LNG by the end of this year as scheduled," said BP Migas spokesman Amir Hamzah. However, he said the government and some of the project's foreign buyers had yet to reach an agreement on the selling price of LNG produced at the plant.

"We're negotiating for the most lucrative price, thanks to the global oil prices," he said, adding that this would help the government acquire more revenue.

Niko Karen, executive vice-president of human resources and relations at BP, said he hoped the price agreement could be reached immediately. "I expect the negotiation to be done quickly so that it will not delay our plan to export the LNG in the first quarter of next year," said Karen.

BP-led Tangguh is expected to produce 7.6 million tonnes/year from two trains at the project, about 3,000 km east of Jakarta.

Project operator is BP Berau Ltd, the local unit of BP Group, which also owns a 37.16% stake in the project. The other owners are China's CNOOC 16.9%, MI Berau 16.30%, Nippon Oil Exploration of Japan 12.23%, KG Berau 10%, and LNG Japan Corp 7.35%

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Oil and Gas Downstream Investment Dropped Behind
Monday, 30 June 2008, 14:50:45 WIB, ( Hits: 4 )

Jakarta,

Compared with its upstream, oil and gas downstream investment is far left behind after the stipulation of Law No 22 of 2001 about Oil and Gas. At 2007, oil and gas downstream investment was only about US$ 534,7 million whereas the total investment for oil and gas upstream and downstream reached US$ 10,083 million.

This was stated by Minister of Energy and Mineral Resources Purnomo Yusgiantoro in the national seminar on Indonesian oil and gas downstream business competition, held by Business Competition Supervising Commission (KPPU) at Borobudur Hotel, Monday (30/6).

At 2006, downstream investment reached US$ 785,3 million and US$ 139,4 million at 2005. While the total investment for both upstream and downstream reached US$ 9,662 billion at 2006.

Oil and gas downstream investment consist of 4 business activities, which are oil and gas processing, transporting, storage, and trading.

For 2007, oil and gas storage drew the highest investment among other sectors, US$ 273,4 million. At second position, oil and gas trade investment was US$ 177,17 million. Transporting investment reached US$ 49,3 million and the lowest was investment on processing.

The lack of investment in the oil and gas downstream, among much, is caused by the limited amount of oil refineries. The total amount of refineries in Indonesia is about 1.157 MBSD. Most of them belong to PT Pertamina.

Actually, continued Purnomo, the license given by the Government to establish refineries are quite large but because of the high investment must be given, the establishment was obstructed. For refineries with the capacity of 100.000 barrel per day, the expense needed is Rp 10 trillion.

"To manage it, the Government could give it through APBN but it is not easy because refineries are not prioritized program,” he added.

[ Copyright by Ditjen Migas , ]

Tangguh Price Re-Negotiated
Monday, 30 June 2008, 17:29:23 WIB, ( Hits: 2 )

Jakarta,

Along with the raising of world`s oil price, the Government has done oil and gas trade contract re-negotiation for Tangguh Block with 4 buyers, which are CNOOC (Fujian), Sempra (USA), K-Power and POSCO (Korea Selatan).

Minister of Energy and Mineral Resources Purnomo Yusgiantoro in a meeting with Commission VII, Monday (30/6), explained that for CNOOC (Fujian) contract, amendments have been done, including about price change. However, the execution of price observation clause can only be done after the gas is in Fujian.

While for Sempra contract, there is no chance for price re-negotiation considering gas Price for Sempra is related directly with the market price in the US. However, there is a chance to raise the price through diversion right by 50% from the total contract.

For K-Power and POSCO contract, the section used as the basic for negotiating is the clause about "charge of circumstance" which is some change of material happen and may not be anticipated before; causing one of the parties suffers detriment. However, the seller must prove the conditions categorized as charge of circumstances, based on the K-Power and POSCO contracts.

The four companies are stated as the Tangguh gas buyer through tender.

[ Copyright by Ditjen Migas , ]

26 /05 /08 15:31:17
Emergence of the new oil price paradigm
Oleh Administrator

Has the world seen the last of sub /bbl oil? What is guiding the new crude price? Do we really know how to forecast or do we rationalize after the fact? In today’s world of + crude and the recent oil bust still relatively fresh, questions like these abound in the minds of the average consumers, companies that depend on oil for their business, nations across the world and the global intelligentsia. It would not be an egregious mistake if we rate energy and consequently oil price as one of the top topics in the world today at par with world peace and global warming. While much has been said and continues being contemplated about the future direction of the oil price, this article focuses on the underlying factors that drive oil price. More precisely, we explore the changing global business dynamics of oil or what we call here the oil price “stakeholders” and their impact on the underlying price factors. We investigate how the underlying price factors have behaved traditionally and the departure from their traditional behavior responding to the changing global business dynamics behavior of the oil price as it shifts from its past equilibrium range to the new paradigm.

Historical and current trends

Before discussing the behavioral changes of the underlying oil price factors, let us explore the changing global oil business dynamics or oil price stakeholders that have spurred these changes. Growing demand of oil. We present the composite effect of this changed behavior of the underlying price factors and how that has prompted the movement towards a new Oil Price Paradigm. The new Oil Price Paradigm discussed in the article does not predict a certain future price of oil but demonstrates the new ecosystem and equilibrium range in which the oil price is projected to reside. The article also presents the transitional behavior of the oil price as it shifts from its past equilibrium range to the new paradigm.

Source : ogj.com

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ExxonMobil lets Singapore plant engineering, management
March 14, 2008

HOUSTON, Mar. 12 -- ExxonMobil Asia Pacific Pte. Ltd. authorized John Wood Group subsidiary Mustang Engineering to proceed with detailed engineering design and construction management for the process control of a second world-scale steam cracker complex in Singapore.

The project will be integrated with the existing Singapore site, providing feedstock, operating, and investment synergies with both the chemical plant and refinery.

The petrochemical project will employ ExxonMobil's latest proprietary technologies, enabling a broad range of feedstocks to be processed and converted into higher-value products.

The project will include a world-scale, 1 million tonne/year ethylene cracker, two 650,000 tpy polyethylene units, a 450,000 tpy polypropylene unit, a 300,000 tpy specialty elastomers unit, an aromatics extraction unit to produce 340,000 tpy of benzene and an oxo-alcohol expansion of 125,000 tpy. Project start-up is expected in early 2011.

Mustang also was awarded the upgrade of the process controls of the existing steam cracker complex. In 2006, Mustang completed the front-end engineering design contract for process control, which has been used to launch the detailed design of this project.

Natuna D-Alpha gas field development pact nears
(January 3, 2008, 4:12 PM)

Eric Watkins
Senior Correspondent

LOS ANGELES, Jan. 3 -- Indonesia and ExxonMobil Corp. are nearing an agreement to renew their contract for development of Natuna D-Alpha gas field in the Natuna Sea, about 140 miles east-northeast of Natuna Island.

The two sides are now finalizing the wording of the agreement under which the government is set to secure a production split, according to Energy and Mineral Resources Minister Purnomo Yusgiantoro.

Under the former contract, ExxonMobil had a 100% production split (OGJ, Nov. 21, 1994, p. 30). However Purnomo said the government will seek a greater share for state-owned PT Pertamina. He did not say how much the government is seeking.

According to Indonesian state media, the Natuna Block is believed to have reserves amounting to 46 tcf of recoverable gas.

Source: ogj.com

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Indonesia to sign $10 billion in oil, gas contracts

LOS ANGELES, Oct. 26 -- Indonesia will sign $10 billion worth of contracts next week at the Asia Pacific Oil & Gas Conference & Exhibition 2007 (APOGCE), according to a senior official.

Energy and Mineral Resources Ministry Sec. Gen. Waryono Karno said the contracts, to be witnessed by President Susilo Bambang Yudhoyono, would cover the financing and development of oil and gas projects, along with electric power projects and gas sales.

Waryono also said the government would offer 26 oil and gas blocks for tender, following a delay brought by discussion of cost recovery arrangements in the country's oil and gas industry.

The highest value deal to be signed involves sales agreements for gas worth an estimated $5.5 billion, while $1.2 billion will go on development of the Oyong and Ujung Pangkah oil and gas fields in East Java.

The Oyong field, operated by Santos Ltd., is expected to produce 6,000 b/d of oil, while Ujung Pangkah, operated by Hess Corp., is to produce 6,000 b/d of oil and 10 MMcfd of gas.

"We will also see the signing of the second-stage loan agreement for the Tangguh project which is worth $884 million," Waryono said, adding that the loan will be provided by a consortium of lenders led by China's Fujian Bank.

Earlier this year Kardaya Warnika, chairman of Indonesia's upstream oil and gas executive agency BP Migas, said construction on the Tangguh LNG facility was 70% complete, and startup is expected by fourth quarter 2008, if operator BP Indonesia receives further financing for the project (OGJ Online, Mar. 1, 2007).

A few months later, Indonesian state-owned banks Bank Mandiri and Bank Negara Indonesia were said to be seeking to join a new syndicate of lenders that intend to fund the remaining construction costs for the plant (OGJ Online, May 11, 2007).

Following that in June, Talisman Energy Inc. said it would challenge CNOOC Ltd. in a Texas court over the Chinese firm's 17% stake in the Tangguh project, which is expected to begin commercial LNG production in 2008-09 (OGJ Online, June 14, 2007).

Meanwhile, during APOGCE, state-owned electricity company PLN also expected to sign five power purchase agreements with independent electric power producers and agreements for the construction of five coal-powered plants.

The five new plants are in North Sumatra, 400 Mw, Lampung, 200 Mw, North Sulawesi, 50 Mw, Gorontalo, 50 Mw, and West Nusa Tenggara, 50 Mw.

Eni aims to increase Longhorn gas reserves

LONDON, Oct. 26 -- Eni SPA expects to increase the estimated reserves of the deepwater Longhorn gas discovery in the Gulf of Mexico after testing its last appraisal well, but it did not indicate by how much.

The well found 127 m of net pay in multiple sands after reaching a TD of 4,228 m. Eni said it encountered a stratigraphically deeper zone than in two exploratory wells drilled in 2006. "The initial analysis indicates good reservoir quality," it added.

Longhorn will be developed via a subsea tie-back to a host platform with first production scheduled for 2009. Eni plans to sanction the Longhorn development by December 2007.

Eni holds additional interests in other leases in the "Greater Longhorn Area," which is one of its core areas in the gulf, and has scheduled further exploration activity in 2008.

Longhorn is 195 km southeast of New Orleans in Mississippi Canyon Block 502.

Eni is the operator with a 75% working interest and Nexen Petroleum Offshore USA Inc. holds a 25% working interest.