PT. Dataindo Inti Swakarsa makes no representation to any other person with regard to the completeness or accuracy of the data or information contained herein, and it accepts no responsibility and disclaims all liability (save for liability which cannot be lawfully disclaimed) for loss or damage whatsoever suffered or incurred by any other person resulting from the use of, or reliance upon, the features, functions, tools, data or information contained herein. Information provided is not financial product advice. This report contains general information only. It is not intended as financial product advice and must not be relied upon as such. You should consider obtaining independent advice tailored to your specific circumstances before making any financial decisions. Copyright in this publication is owned by PT. Dataindo Inti Swakarsa. The publication is sold on the basis that the purchaser agrees not to copy the material contained within it for other than the purchasers own purposes. In the event that the purchaser uses or quotes from the material in this publication - in papers, reports, or opinions prepared for any other person - it is agreed that it will be sourced to: PT. Dataindo Inti Swakarsa
Definition
Petroleum and Gas Mining in Indonesia consists of firms mainly engaged in producing crude oil and condensate, and in treating these products on site to produce liquefied petroleum gas (LPG) and liquefied natural gas (LNG).
Activities
The primary activities of firms in this industry are :
- Crude oil mining.
- Condensate production.
- Natural gas mining.
- Natural gas purification.
- Liquid natural gas production
- Liquid petroleum gas production
Outlook
The bright economic growth in 2006 and a better forecast in 2007 seem to have little effect on the investment climate in the oil and gas industry, notably for foreign direct investment. The industry seems not conducive yet due to inconsistencies in government regulations and policies. This can be seen from oil and gas investment, which has been declining since 2000 until 2005 while the rest of the world, is enjoying windfall investments and profits. The regulation relating to this industry was not encouraging to new investors. For example, investors are subject to tax and retribution during exploration. They are also subjected to luxury goods tax and high import duty for heavy equipment. In addition, bureaucracy problems since the autonomy regulation has caused investors not only face the central government, but also local government 'fees'. These all bring increasing administration cost.
To anticipate an investment slowdown the government has applied new splits to attract new investors. Prior, the composition was divided into 85 percent for the government and 15 percent for investors. Currently, with the new regulation, it splits to 75 percent for the government and 25 percent for investors.
These splits in regulations are expected to attract investors and hopefully in the near future oil and gas exploration investment will increase. The other obstacle faced by this industry is lack of technology, which has resulted in less oil production.
Exports of crude oil are expected to continue declining due to lower production and increasing domestic demand. As a result, crude oil imports are expected to increase. At the same time gas exports are expected to remain strong but decline overall. Japan, Korea and China still dominate the market for crude oil and gas exports, while the imports are still dominated by Saudi Arabia, Nigeria and Malaysia. From 2005 to 2008, Pertamina (which operates Arun) must defer 6 cargoes to Japanese and Korean buyers due to the GOI requirement to provide low-cost natural gas to national fertilizer plants. The GOI has a policy to support fertilizer plants with subsidized gas.
The cost of the GOI policy to support the national fertilizer industry is high. Arun's six-cargo deferment last year cost Indonesia about $ 130 million in LNG revenues. The GOI wants Arun to supply gas instead to two Aceh fertilizer plants at a subsidized price of $ 2.30/mmbtu, about one-third its LNG value. The combined effect of declining production and support to the fertilizer industry could lead Indonesia to defer, or spot purchase, as many as 14 Arun cargoes in 2006 and 28 Arun cargoes in 2007.
At Bontang, the costs of GOI support to the fertilizer industry are even higher. Although there is no gas supply agreement between Pertamina and the petroleum companies (Unocal, Total and VICO), it diverts 400-450 mmcfd of gas from LNG production for sale to the fertilizer industry. That gas volume is the equivalent to 40-45 LNG cargoes, or the same number of Bontang cargoes that Indonesia will cancel to its Asian buyers this year. The value of the cancelled cargoes is estimated at $800-900 million, of which the GOI would have netted half. Instead, Pertamina will sell the gas domestically to the fertilizer industry for under than $2.50/mmbtu, less than half the average Bontang LNG contract price.
Producers from the manufacturing industry, of which the natural oil and gas industry is a part of, are expected to maximise their production capacity to satisfy an expectation of demand growth internationally. Additionally, this growth is encouraged by the fact that the world demand for natural oil and gas products will remain strong and exporters' accesses in financing and other essential infrastructures will remain open.
In Indonesia, oil-mining companies mainly consist of Pertamina and its subsidiaries. Private companies with production sharing contract projects (either domestic or foreign company) play a lesser role.
Most contracts signed are production-sharing contracts. At present, there are 72 PSCs covering 105 work areas on land and offshore in Indonesia. Of the 105 works areas, 60 are still in the exploration stage and 45 are already in the production stage, with the enhanced oil recovery (EOR) technique being applied in eight work areas.
Today, more than 100 companies have signed oil contracts with Pertamina, of which only 27 have been productive. This totals 22 companies operating under production sharing contracts, 4 companies under technical assistance contracts and one under a joint-operation contract.
More information of this report visit: http://www.disb2b.com/front/industryintelligencereport.php?klui=K2210
About the Author
PT. Dataindo Inti Swakarsa, Email: info@disb2b.com, Web: http://www.disb2b.com
No comments:
Post a Comment