Petroleum Economic

Jakarta
August 4th 2010
World Oil Demand
Decline :
• Oil embargo,
197
• Revolution
in Iran, 1979
• Economic
crisis in Asia
1997-98
Increments in Oil Consumption by
Region

Largest
increase
Share of World’s Oil 2008
Share of World’s Gas 2008
Indonesia Oil Production and Consumption
Significant events in the history of
Indonesia’s Oil and Gas sector
 Indonesia Resources and Production

Indonesia’s Oil Industry

 Indonesia Resources and Production

Indonesia’s Gas Industry

Indonesia Major Oil Producers
Indonesia Major Gas Producers
 CONTRACT MODEL
• PSC (Production Sharing Contracts)
• TAC (Technical Assistance Contract)
• JOB (Joint Operating Body)
 SKEMA KONTRAK BAGI HASIL MENURUT
UU No.22 /2001

REVENUE

COST FTP
RECOVERY
EQUITY TO
BE SPLIT
SEMUA
BIAYA BAGIAN BAGIAN
KONTRAKTOR PEMERINTAH

BIAYA OPERASI
DMO
BP MIGAS

PAJAK

CASHFLOW KONTRAKTOR CASH-IN PEMERINTAH

 Ketentuan Umum PSC
• Semua minyak dan gas yang diproduksikan
kontraktor menjadi milik pemerintah
• Pertamina bertangggung jawab atas manajemen
operasi
• Kontraktor melaksanakan operasi sesuai dengan
program kerja yang sudah disetujui
 Ketentuan Umum PSC
• Kontraktor menyediakan seluruh dana dan
teknologi yang dibutuhkan dalam operasi
• Kontraktor menanggung biaya dan resiko operasi
• Kontraktor akan menerima seluruh biaya operasi
setelah produksi komersial
 Ketentuan Umum PSC
• Produksi yang telah dikurangi biaya produksi dibagi
antara Pemerintah dan kontraktor yaitu sebesar 85 % :
15 % untuk minyak bumi dan 70 % : 30 % untuk gas.
• Kontraktor diizinkan mengadakan eksplorasi selama 6
sampai 10 tahun dan eksploitasi 20 sampai 30 tahun .
• Kontraktor membuat program dan anggaran tahunan
yang disetujui oleh BP Migas.
• Kontraktor wajib mengembalikan wilayah kerjanya
pada Pemerintah.
Equity Share Oil History
Equity Share Gas History
 Ketentuan Umum PSC
• Seluruh barang operasi atau peralatan yang diimpor dan
dibeli kontraktor menjadi milik Pemerintah setelah tiba
di Indonesia.
• BP Migas memiliki seluruh data yang didapatkan dari
operasi.
• Kontraktor wajib mengalihkan 10 % interestnya setelah
produksi komersial kepada pihak swasta nasional yang
ditunjuk BP Migas.
 Technical Assistance Contract (TAC)
GROSS REVENUE
R

Non Shareable Oil Shareable Oil (SO)

( NSO ) Recoverable Cost (REC)
Investment Cost
Equity To Be Credit Recovery
Split, ES

Pertamina Share Contractor Share

(1 - SH/(1-T))*ES (SH/(1-T))*ES

Pertamina Diff. Price DMO Taxable Income

Income DDMO

Prorata

Prorata Fee
(Cost/bbl+US$1,5)/bbl
Tax Net Contr. Share
Income
Before Obligation

Obligation
TOTAL CONTRACTOR SHARE
60%

Pph Cost
PERTAMINA Pertamina
TAKE Contractor Cash Flow

INDONESIA TAKE
Technical Assistance Contract (TAC)
Bentuk kerjasama ini berupa usaha meningkatkan
produksi sumur-sumur Pertamina yang sudah
tua, yang produksinya sudah mulai menurun.
Kegiatannya berupa Secondary Recovery atas
ladang-ladang minyak yang sudah tua oleh
kontraktor yang bekerja sama atas TAC dengan
Pertamina.
Technical Assistance Contract (TAC)
Yang akan dibagi adalah jumlah yang merupakan
penambahan dari produksi sebelum dilakukan
Secondary Recovery (biasa disebut non shareble oil)
dan tambahan produksi sesudah dilakukan Secondary
Recovery (biasa disebut shareble oil). Pembagian
shareble oil tersebut pada dasarnya adalah sama
dengan cara pembagian menurut PSC.
Technical Assistance Contract (TAC)
Dalam kontrak model ini segala kegiatan dan
biaya dilakukan dan ditanggung sepenuhnya
oleh kontraktor yang bersangkutan. Kalau
sudah berhasil (dalam arti telah terjadi
peningkatan produksi dari sumur-sumur atau
ladang-ladang minyak tersebut), maka barulah
dilakukan pembagian hasi produksi antara
Pertamina dengan kontraktor.
 Joint Operating Body (JOB)
Gross
Revenue

Pertamina Contractor
50% 50%

Repayment of
Pre Dev. Cost Investment
FTP Credit
Repayment of (%)
Cost Recovery Cost
Income Recovery
Pertamina
Equity To Be
Split
Prorata
Indonesia Contractor
Prorata Fee Share (%) Share (%)
(OC + US$ 1,5/bbl)
DMO

Income Before
Obligation DMO Fee

Obligation Taxable
60% Income

Tax
Pertamina
Take
Net Income

Indonesia Contractor
Take Take
 Joint Operating Body (JOB)
• Di dalam kontrak model JOB Pertamina dan
kontraktor bekerja sama untuk mengusahakan suatu
lapangan migas dengan porsi saham 50% Pertamina
dan 50% kontraktor. Dengan demikian Pertamina
mendapat bagian sebesar 50% dari gross revenue
dan sisanya sebesar 50% dibagi lagi antara Pertamina
dengan kontraktor sebagaimana halnya dengan
perhitungan kontrak model PSC – FTP.
 Documentation Required
• Plan of Development (POD)
• Authorization for Expenditure (AFE)
• Work Program and Budget (WP & B)
• Financial Quarterly Report (FQR)
 Plan of Development
• POD cover the – Field Development
information : Facilities
– Executive Summary – Project Schedule
– Geological Findings – HSE & Community
development
– Development incentives
– Abandonment
– Reservoir Description
– Project Economics
– EOR Incentives
– Conclusion
– Field Development
Scenario
– Drilling Result
 Plan of Development
• POD revision could be performed if the
following condition applied
– Changes in Development Scenario
– Significant Changes of Oil and Gas Reserves to
Initial POD submitted
– Changes in Investment cost
 Authorization for Expenditure
• An AFE should include the following
information :
– Project Information in sufficient detail for BP
Migas analysis and evaluation
– Total Budgeted Cost
– Total Cost that have been incured
 Work Program and Budget
• WP & B covers the following:
– Exploration (Seismic and Geological Survey)
– Production and effort to maintain its continuity
– The cost allocated for those program
• Exploration
• Development drilling
• Production fasilities
• etc
 Financial Quarterly Report (FQR)

• Comparison between budgeted and actual

revenue and expenditures
 End of slide

Questions and Answer

 Latar Belakang
• Tujuan Utama bisnis perminyakan
adalah mencari keuntungan yang merupakan
fungsi dari produksi, harga, biaya, dan
pendapatan pemerintah.
• Untuk mempertahankan produksi, suatu bisnis
perlu mempertahankan stock-nya. Stock di
bisnis hulu perminyakan adalah cadangan
terbukti (proven reserves).
 ECONOMIC EVALUATION
• ECONOMIC INDICATOR
• RISK ASSESMENT
• DECISION TREE MODEL
 METHODES OF MEASURING
PROFITABILITY INDICATORS
1. Parameters have to be accurate in giving comparison and
classification of resposibility to produce profitability from
opportunities of investments.
2. Parameters should be able to show time value of invesment
from companies,
3. Parameters should able to show profit eventhough
insignificantly amount.
4. Parameters should cover quantitative risk
5. Parameters should describe other related factors such
combination of risk and property of a company
 Economic Analysis
• Parameter
– NPV
– Rate of Return
– Profitability Index
– Pay Out Time
• Regulation: Indonesia
 MARR
MARR : Minimum Attractive Rate of Return, a level
of desired minimum return, depends on
purchasing invesment, environment, types of
activity, objective, and organization policy, degree
of risk from each project
 Net Present Value
Consider time value of money, and could
consider risk, it is calculated using discount rate
equal to MARR.
 Rate of Return
A trial & error method, consider time value of
money, not depend on an absolute cash flow,
could be multiple, cannot be calculated if all flow
+ all flow – , or the investment has not paid back,
and the initial cash flow is dominant.
 Factors Influencing MARR
a. If the company is operated using invesment loan,
the MARR interest should be greater than then
interest of the loan.
b. If the investment comes from many resources,
determination of average investment is used for
MARR basis estimation.
c. Dont for get, the objective of a company is
growth of total aseet with a pre-determined
growth rate.
 Factors Influencing MARR
d. For a given probabilistic of failure risk (Expected Monetary
Value), the risk is not included in MARR (for successful projectl),
on the other hand, for a deterministic calculation, the risk is
included in risked MARR.
For example, exploration and exploitaion activites have higher
MARR (15-20 5) then processing acivities (12%).\

e. More bonafide companies usually have higher MARR since they

have to pay divident more and bigger profit margin eventhough
they get lower loan interest due to more trustworthy.
 How to determine MARR
1.  Based on total cost
MARR = Capital Cost + profit margin + risk premium
Profit margin is be higher for a bonafide company,
whereas risk premium is lower for a high risk project
 2. Basen on opportunity cost
Determined from intersection of Supply and Demand
investment curves. The more investment, the more
money. So that marginal profit will be lower, and the
marginal cost will more expensive.