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 RECOVERY EQUITY TO BE SPLIT BAGIAN KONTRAKTOR DMO PAJAK CASHFLOW KONTRAKTOR CASH-IN PEMERINTAH BAGIAN PEMERINTAH BIAYA OPERASI BP MIGAS FTP

SEMUA BIAYA

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 ( NSO )

Shareable Oil (SO) Recoverable Cost (REC) Investment Cost Credit Recovery

Equity To Be Split, ES

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

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

Pertamina Income Prorata Prorata Fee (Cost/bbl+US$1,5)/bbl

Diff. Price DMO DDMO

Taxable Income

Tax Income Before Obligation Obligation 60% Pph Pertamina

Net Contr. Share

TOTAL CONTRACTOR SHARE Cost Contractor Cash Flow

PERTAMINA TAKE

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 50% Repayment of Pre Dev. Cost Repayment of Cost Recovery Income Pertamina FTP (%)

Contr tor 50%

Equity To Be Split Prorata Prorata Fee
(OC + US$ 1,5/bbl)

Indonesia Share (%) DMO Income Before Obligation

Obligation 60% Tax Pertamina Take

Indonesia Take

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Investment Credit Cost Recovery

Contractor Share (%)

DMO Fee Taxable Income

Net Income

Contractor 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 information :
± ± ± ± ± ± Executive Summary Geological Findings Development incentives Reservoir Description EOR Incentives Field Development Scenario ± Drilling Result ± Field Development Facilities ± Project Schedule ± HSE & Community development ± Abandonment ± Project Economics ± Conclusion

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. Parameters should be able to show time value of invesment from companies, Parameters should able to show profit eventhough insignificantly amount. Parameters should cover quantitative risk

2.

3.

4.

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.