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Note: This report uses an exchange rate of 1 USD = Rp 10,500
Mass Power Outage Hits Java and Bali
On August 18, broad swaths of Java and Bali were powerless as grid
failure forced several power plants to go temporarily offline. The Java-Bali grid experienced an electricity deficit of
around 11,400 MW or almost 80 percent of the customary total supply of
14,655 MW, for up to 12 hours in certain areas.
Although investigators have yet to find the actual cause of the
disruption, a PLN press release stated the failure was due to
malfunction of the protection system relay on the Cibinong-Saguling
high voltage transmission line in West Java.
The outage heavily impacted power supply to Jakarta and Banten
Province, disrupting traffic lights and railway operations. PLN
announced that in an effort to compensate customers for the outage, it
would offer 10 percent discount from August electricity bills.
There is currently only one high voltage transmission line connecting
East and West Java, the northern transmission line, making the grid
susceptible to disruption. Construction of a southern transmission
line is underway but is not expected to be complete until the end of
2005 or later. Following the completion of the transmission line, the
Government of Indonesia (GOI) hopes that additional power supply of
around 2,650 MW will come online in 2006 through the completion of
three new power plants, Cilacap, Tanjung Jati B and Cilegon.
Blue Sky Refinery Inauguration
On August 28, President Yudhoyono inaugurated Pertamina’s Balongan
Blue Sky refinery project in Indramayu, West Java.
The project, which is an extension of the existing Balongan
refinery, took 27 months to finish from its March 2003 start date, and
cost approximately USD 228 million.
The refinery has production capacity of 47,000 barrels of
unleaded Premium per day and 200 tons of LPG per day.
According to MEMR Minister Purnomo, the refinery will help
Indonesia save around USD 1 billion in annual fuel imports or
approximately 12 million barrels.
The GOI’s 1996 Blue Sky program monitors and controls
emissions from vehicles and encourages the utilization of fuel gas,
low-sulfur and lead-free fuels. Indonesia currently has 9 refineries
with an installed capacity of 1.05 million barrels per day (bpd).
However, with current consumption at approximately 1.4 million
bpd, Indonesia has been forced to import increasing quantities of
refined fuel products. Most
analysts believe the country urgently needs more investment in new
refineries to reduce its reliance on fuel imports.
Direct Offer Tender Winners Announced
On
August 4, the Ministry of Energy and Mineral Resources (MEMR) announced nine tender winners for
the July 2005 direct offer bidding round. Among the winners were
ConocoPhillips and Indonesian oil firms Energi Mega Persada (EMP) and
Star Energy. ConocoPhillips won the Amborip VI block offshore Papua,
which the MEMR first offered in 2002.
MEMR reported signatory bonuses of USD 7.9 million from the
nine winners and an estimated exploration commitment of USD 102.5
million over the first three years.
Four of the 13 blocks offered remain unsold-- North East Madura
V, North Bali II, Taritip and Amborip V.
Indonesia offered 27 blocks in July this year through regular
and direct offer tenders. The
MEMR will announce winners in the regular tender process in November
2005.
Table 1: 2005 direct offers bidding round results
No.
|
Block
Offered
|
Location
|
Status
|
1
|
Lhokseumawe
|
Onshore/Offshore Aceh
|
Awarded to Zaratex NV
|
2
|
West Kampar
|
Onshore Central Sumatra
|
Awarded to PT Sumatera Persada Energi
|
3
|
Bungamas
|
Onshore South Sumatra
|
Awarded to PT Erry Guna
|
4
|
Bengkulu
|
Onshore/Offshore Bengkulu
|
Awarded to PT Commissioning Services
Indonesia
|
5
|
Citarum
|
Onshore West Java
|
Awarded to PT Bumi Parahyangan Ranhill
Energia
|
6
|
NE Madura V
|
Offshore Madura
|
Unsold (2004)
|
7
|
North Bali II
|
Offshore East java
|
Unsold
|
8
|
East Kangean
|
Offshore East Java
|
Awarded to PT Energy Timur Jauh
|
9
|
Taritip
|
Makassar Strait
|
Unsold
|
10
|
Sebatik
|
Onshore/Offshore East Kalimantan
|
Awarded to PT Star Energy
|
11
|
Amborip-VI
|
Offshore Papua
|
Awarded to ConocoPhillips
|
12
|
Amborip-V
|
Offshore Papua
|
Unsold
|
13
|
Wailawi
|
Onshore East Kalimantan
|
Awarded to BUMD Benuo Taka*
|
Note: * Owned by
the Government of East Kalimantan Province.
Pertamina Raises Fuel Prices for Industrial Users
State-owned oil and gas company Pertamina raised fuel prices by an
average of 13 percent for its industrial customers on August 1, the
third time it has raised prices in 2005.
Pertamina also broadened the range of industries required to
buy fuel at market prices. Apart
from oil and gas contractors and the mining industry, the new prices
also apply to large industries with over 500 kiloliters of monthly
fuel requirements, Independent Power Producers (IPP) not selling
electricity to PLN, large fishing boats, industries located in bonded
zones, and “industries switching to oil”. (Note: Pertamina did not
specify the meaning of the term “industries switching to oil.”) Pertamina claimed that the price increases are intended to
reduce domestic consumption, which has significantly exceeded quotas
for subsidized fuel set by Parliament.
Table
2: Development of Industry Fuel Prices--2005
(Prices
in Rp; increases in percentage)
Fuel
Type
|
1-Jan
|
1-Mar
|
1-Jul
|
1-Aug
|
Increase*
|
Premium
|
2,100
|
2,870
|
4,060
|
4,640
|
14.3
|
High Speed Diesel
|
2,100
|
2,700
|
4,740
|
5,480
|
15.6
|
Diesel Oil
|
2,050
|
2,660
|
4,560
|
5,240
|
14.9
|
Kerosene
|
2,200
|
2,790
|
4,940
|
5,490
|
11.1
|
Fuel Oil
|
1,600
|
2,300
|
2,900
|
3,150
|
8.6
|
Note:
* Percentage increase from July prices
Medco Farms out Asahan PSC
On
August 15, Medco Energi signed a “farmout agreement” with Asia
Petroleum Development (APD) to sell its 15 percent interest in the
Asahan Production Sharing Contract (PSC) offshore North Sumatra.
APD is a wholly owned subsidiary of Canada’s Serica Energy
Corporation. The agreement follows Serica’s agreement with Duinord
Petroleum Inc to buy Duniord’s 25 percent interest in Asahan.
With the combined transactions, Serica will now own a 55
percent interest in the block through its APD subsidiary and remain as
operator. The MEMR first
awarded the Asahan PSC to Risjad Salim Petroleum in 1996.
The PSC surrounds the Kambuna gas prospect, which is estimated
to contain 24 million barrels of oil equivalent of reserves.
PLN Signs Flare Gas Agreement
On August 19, PLN signed a six-year Heads of Agreements (HOA) to buy
flare gas from the Tuban block, jointly owned by Pertamina, Medco
Energi and Petrochina. The
contract will begin in 2006 and cover the sale of 5-7 million British
Thermal Units (MMBTU) per day at USD 1.10 per MMBTU.
PLN plans to utilize the flare gas for a planned 20 MW power
plant in East Java. Head
of the Upstream Regulatory Authority (BP MIGAS) Kardaya Warnika,
reportedly said that PLN has the potential to save up to Rp 9 billion
(approximately USD 865 thousand) per month from using flare gas
instead of diesel oil. Currently
30 percent of PLN’s power plants operate on diesel or fuel oil.
However, the company hopes to shift away from oil-fired power
plants and hopes to generate 32 percent of power through gas fired
plants by 2007.
IPA Holds Thirtieth Annual Convention
President Yudhoyono, Minister of Energy and Mineral Resources Purnomo
Yusgiantoro, Chevron Chief Executive Officer David O’Reilly, and
James Slutz, Deputy Assistant Secretary for Oil and Gas, U.S.
Department of Energy, spoke at the Indonesian Petroleum
Association’s 30th annual convention and exhibition in Jakarta. In
their speeches, the President and the Minister acknowledged that
Indonesia is faced with the challenges of declining oil production,
surging domestic demand and an increasingly untenable fuel subsidy
policy. Thus Indonesia needs investment and cooperation between all
stakeholders, including the government, civil society and business
community. In addition, the President encouraged energy conservation and
diversification, including the use of gas and other renewable energy
sources.
The convention has been Indonesia’s premier oil and gas event since
1972. This year
convention theme, “The Urgency of Building Competitiveness to
Attract Oil and Gas Investment in Indonesia,” reflects Indonesia’s
recent slip to a net oil importer and the GOI’s target of boost oil
production back to 1.3 million bpd by 2009. Indonesia’s oil
production peaked in 1995, when production reached 1.6 million bpd,
but has since declined to approximately 1.1 million bpd in 2004.
According to the IPA, issues influencing investment in the oil and gas
sectors include regulatory uncertainties
and delays in Value Added Tax (VAT) reimbursement. Over 2,500
delegates participated in the convention.
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