PHE menuju perusahaan kelas dunia…
(dari milis migas / petromindo)
Interview: PHE seeks to become world-class firm
The following are the excerpts of the interview with Dwi Martono, International Venture Director of Pertamina Hulu Energi (PHE) by Petromindo.com’s reporter Bernard Lubis. The interview was held on Nov. 10, 2009
Question: We want to know PHE’s strategy of business development. PHE has made three acquisitions over the past one year. What is PHE’s strategy for growth in the future?
Answer: With regards to portfolio policy, it is up to Persero (PHE’s parent company PT Pertamina Persero) to decide. As the strategic operational arm of Pertamina, PHE handles the operation and manages the assets acquired by the Persero. With regards to expansion plan, it has been clearly stated by the Persero. We want to become a world-class oil and gas firm by 2023. There are many standards used to classify an oil company as a world-class one. In Iraq for example, a company must produce a minimum of 250,000 bpd to be categorized a world-class company. Only companies with such a production level are allowed to become an operator in Iraq.
How much oil you are now producing?
Ranging from 47,000 to 50,000 bpd
PHE’s production target on the short term?
Until 2013, our production target is 210 mmboe
Between 106 and 110 mmboe
From where are you going to get the additional production?
From our assets which are being explored. For instance, those in Vietnam, Malaysia, Sudan, Libya and Iraq. The one in Malaysia hopefully will be producing first oil in the end of this year.
All will come into production in 2013?
Not all. The most possible is the one in Malaysia. Other additional production will come from acquisition plan. Thus, it will be organic and non-organic growth through acquisitions.
Basker-Manta- Gummi (field in Australia)?
It is now producing.
Talking about acquisition, what type of assets is PHE interested in?
In my view, there should be a balance between production assets and exploration assets. Production assets will increase production level, whereas exploration asset is important to support R-to-P (Reserve-to- Production) ratio. If consideration is only focused on the high level of production, while R-to-P is low, so the lifetime will be short.
Ideally, how many years?
According to best practice, it’s 14 years. Off course, there are other standards with longer R-to-P ratio. But, based on what I know from big corporations, the moderate R-to-P is 14 years.
How long is the lifetime of PHE’s assets?
Shorter, it’s now less than 14 years but We plan to increase it to 16 years by 2013.
Meaning, you are seeking additional reserve and additional production?
That’s right. There must be a balance.
How much will your asset in Malaysia contribute in the next three years?
Our production target is 20,000 bopd. Since our share is 30 percent, our net production will be around 6,000 bopd.
Thus, you are still looking for another 100,000 bopd?
Yes and it will be (achieved) through acquisition.
Are there core areas you are going to acquire?
That’s the domain of Pertamina’s Upstream Directorate, they know better. They already set target areas, priorities such as Middle East and North Africa and Asia.
I don’t know much about it. But, domestic acquisition plan has been fixed. Ibu Karen (Pertamina’s President Director Karen Agustiawan) has made a clear statement. We want (a stake in) Mahakam and West Madura (blocks). Together with Petronas, we are carrying out joint exploration in West Glagah Kambuna. These aim to increase our production and reserves. Thus (we shall go to) wherever there is an opportunity both technically and economically viable.
How much will PHE spend in capex in 2010?
For what will most of it be spent?
Mostly for drilling (exploration and development) , production facilities projects, such as the JOB project in Jambi Merang, Simenggaris and Tuban. Also, for project in Malaysia.
With regards PHE’s biggest asset, ONWJ, it is said that the main reason for the acquisition is to acquire whole resources. Could you explain?
The target in the ONWJ acquisition is not only the asset, but other resources, mainly the human resources, the people. Why? Because we are going to play a lot in offshore areas in the future. Pertamina still lacks of human resources with competence in offshore areas. Most of our assets outside Indonesia are located offshore. We already placed people there. Thus, we have started playing offshore. We want to be able to play in any depth. In Sudan, we play deep enough, more than 300 meters. In Libya, the depth is about 250 meters and in Malaysia, we play in shallow sea. Thus, that is the target we want to achieve. We want the asset, the reserve and the people. For your information, of the 403 workers of ONWJ, only two have quitted (after Pertamina acquired the firm from BP Plc).
Thus, the whole resources will be used to drive PHE forward?
Right. We started taking action today. We are sending some of them to Malaysia.
So, you are moving offshore?
Nowadays, big reserves/assets are located offshore, except for areas such as Iraq and Middle East. It’s time for us to play offshore.
How much do you expect ONWJ to produce in 2010?
Next year, we expect it to increase to 25,000 bopd. Gas production is expected to reach 215 mmscfd, meaning a stable production.
ONWJ will experience a decline naturally. What will PHE do to cope with the situation?
The field’s natural depletion rate is around 19 percent. There has been no work over and in-fill drilling there for quite some time. We are going to do it in 2010. We shall intensify such activities. We hope to at least maintain the P2 reserve to become a P1.
Is there an exploration drilling plan?
Yes, there is, but not for 2010. We will carry out exploration activities starting in 2010, first with study followed by seismic survey in 2011 and then drilling exploration around 2012.
It is said that PHE, Pertamina (Persero) plan to acquire listed companies?
No. I don’t know about it yet (laughing). It is still off the record.
How’s about the future of CPP?
PHE has started supporting CPP by evaluating its potentials as part of exploration (plan). Only through exploration we hope its production to increase. We shall first review all the system, including production facilities, before we carry out exploration.
It is said that Sakakemang field will be acquired?
It has been returned to the government. I don’t know if Pertamina will take it back. It is up to the Persero.
Of all PHE assets outside Indonesia, are there those at which it will carry out major activities, such as drilling, in the near future?
Only one exploration well.
That means you are not aggressive yet?
It solely depends on the initial commitment of the contract. Furthermore, we have to see the geological structure. If there is only one structure, we shall only drill one well.
Is there drilling plan for next year?
In Malaysia and Vietnam. Maybe, in Libya too. Sudan in 2011. As a matter of fact, the field in Malaysia will be on development phase next year. The one that has been fixed is the drilling in Vietnam. In Libya, maybe one, offshore.
How’s about Randugunting, the tripartite block?
There will be drilling there in 2010. One well, a wildcat.
Will Randugunting be handled by PHE?
Yes, it will. It is being transferred from Persero to PHE. PHE will manage it.
Under the tripartite agreement, who will become the operator?
In the case of the block in Vietnam, Vietnam is the host country. It receives 40 percent while the others (Pertamina and Petronas) get 30 percent each. They are obliged to establish a non-profit joint venture that serves as the operator. The same holds true for (blocks in) Malaysia. In the case of Indonesia, the system that is applied is the normal PSC. It is called Randugunting PSC.
Pertamina’s CBM portfolio is also managed by PHE. What is PHE’s strategy?
Under the existing regulations, (oil and gas firms are entitled to develop) (CBM) assets within (their) PSC areas. The CBM (assets) that we are handling are located in the PSC areas of Pertamina EP. Thus, we work together (in handling the CBM assets).
You mean working together with Pertamina EP?
I mean Pertamina EP and Pertamina (Persero) work together in assigning the CBM assets to be handled by PHE. In the future, (PHE) will cooperate with other companies to develop the CBM assets. We and the companies may take turns being the operator.
You shall share risks with partners?
Including in investment?
There are not many companies that have the technology for CBM development. However, It seems that the technology is not very complicated.
Is there a CBM working area PHE is proposing to develop?
There is one more area. But, it is not finished yet. The proposal has been submitted to the Directorate General of Oil and Gas.
Where is the working area located?
In South Sumatra
Has it been put into tender?
It seems it is not going to be put into tender, but a joint study.
I don’t remember
One of the clauses in the ONWJ purchasing agreement is that Pertamina and BP will cooperate in developing CBM. How is it going?
We are still doing a study and looking at some areas in South Sumatra and Kalimantan.
When are you going to start?
They (BP) hope to get a clear picture by next year. They need first to look for the gas prospect.
The cooperation is for the development of CBM in all Pertamina working areas, right?
How does the cooperation scheme look like?
Not fixed yet. What is clear is that they (BP) are interested in developing CBM.
When do you expect to start producing?
Maybe in 2012. I don’t know yet the mechanism.
When will the drilling campaign start?
Next year, 2010, at three of our CBM working areas.
How much is the investment needed?
The budget for 2010 is $3.2 million.
Pertamina bought only 10 percent in the Basker-Manta- Gummy block. What is the reason?
It’s corporate strategy to start with 10 percent. This is because we see opportunities in Australia. There are a lot of oil and gas assets there, many of which are idle. The system there is different. There is no PSC, no special supervision body. Our obligation is only paying taxes.
So, it is a stepping stone into Australia.
Exactly. If we can add assets there, it’s good, isn’t it?
Does it mean that Australia is on the list of acquisition priorities?
It is. We become a sort of business intelligence who gathers information to the parent company. That’s what we are doing now. Other firms do the same thing.
How many assets does PHE have?
The reserve book is currently under assessment, not finished yet.
Is there a listing plan for PHE?
To be listed or not, it’s the domain of the shareholder (Persero). What we (PHE board of Director) are doing now is managing the firm based on industry best practices and ultimately to meet the shareholder expectations.
Making it ready to go public?
Again, it’s depending on the shareholder’ s policy.
If PHE wants to get loans, can the firm do it on its own or should it apply for the loans through the parent company?
Through parent company.
Will it be always like that?
That is the system that holds now.
What do you think about partnership?
All nation oil companies (NOC) worldwide are on the rise. The trend is that international oil companies (IOC) are approaching, cooperating with NOC. That’s what I see. There’s nothing wrong with it. Partnership is not a taboo to talk about. But, we want to become the operator. This will enhance our dignity, our capability.
Like Total, they offered their assets in Australia to Pertamina. How is it now?
No deal yet. We are still making evaluation.
What has Pertamina offered (to Total) in Indonesia?
To Total, there is nothing we have offered. But, we have offered (joint operation) to StatOil and Petronas.
You want to have an equal position as player.
That’s right. That’s the way to become a world-class firm. It is hard to play on your own. As a matter of fact, in the upstream sector, we have become a world-class firm. What we need to do now is looking for additional production. We are carrying Pertamina’s flag, meaning we are carrying Indonesian flag. Our dream is to become the champion of Indonesian Incorporated.