INDONESIA JAVA SECTION DR. Ir. Djoko Siswanto

INDONESIA

www.spe.or.id JAVA SECTION April - August 2016

An Exclusive Interview with DR. Ir. Djoko Siswanto, MBA Director of Technical / Engineering, ESDM Advertisement Dear SPE Members; Contents 2 Advertisement & Contents SPE Java Section Newsletter is issued quarterly; they are printed 1,500 copies per issue, circulated 3 A Word from the Chairman among members, industry leaders, stakeholders (staff and manager), and students. 4 Membership In order to improve the content of our Newsletter, we urge you to send us an article worth sharing to 6 SPE Featured Column update and enrich our reader (at no cost to you), with application of certain technology, and/or CSR 8 Cover Story: Djoko Siswanto activity which made an impact on our industry. 16 Interview: Brod Sutcliffe We would also like to invite your Company to place an Advertorial, which serves as a showcase, 24 Technology Corner at the same time to cover the cost of printing the Newsletter accordingly to the following fee 26 Interview: Damien Dupont structure with effect July 2012: Printing Charges in USD 34 Interview: Zahra & Hendra Old Rate No. of Issue New Rate 385 1 400/issue 42 Interview: Debbie Chastity Full page 2 375/issue = 750 3 350/issue = 1,050 48 Interview: Andrew Law 4 325/issue = 1,300 5 300/issue = 1,500 53 Distinguished Lecturers 6 275/issue = 1,650 56 SPE Fish Fry - Hogfest 2016 Printing Charges in USD Old Rate No. of Issue New Rate 58 Student Chapters 220 1 250/issue 75 Board of Directors 2015-2016 Half-a-page 2 235/issue = 470 3 210/issue = 630

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2 SPE Java . Apr - Aug ‘16 A Word from the

Dear SPE Members and Readers, Indonesia’s crude oil production for 2016 is expected at around 819,000 barrels of oil per day (bopd), slightly lower than the target in the revised state budget of 820,000 bopd. Seasonal fall in production is still expected to hit us around Q3/Q4 every year. The target for next year is revised down to 740,000 to 760,000 bopd in anticipation of prolonged low oil price. It may not be the best time to boost production, when the crude oil price is still at much lower point than before. As many say, the value of hydrocarbon down there in the Earth layers is zero. Only when they are brought up and lifted, then the hydrocarbon has certain commercial values. The best commercial value is, therefore, achieved when the market price is at its best on the surface.

However, the danger in Indonesia future oil and gas – situation. In this edition, we explore some of those key and energy in a broader sense – is greater than just the factors affecting the investment attractiveness including issue of when the oil price will be stabilized up again, or the tax and legal issues that the industry has been when we need to crank up the production next. All of feeling that the greater part of government (not only you, members and friends, that walked around the 2016 those related to Energy) is not at the same speed and IPA Exhibition and Convention, will not miss the fact that wavelength. It is also fair to note that our front men and our exploration activity was greatly reduced in the first women in the Ministry of Energy and Mineral Resources half of the year, to only 10 exploratory wells drilled to have proposed some breakthroughs and innovative date (in April 2016) to 52 exploratory wells in 2015, 83 ideas. It gave us a great pleasure to talk to these sources in 2014 and over 100 wells annually from 2011-2013. from both the government and the industry on this On average, it takes around 10-15 years to develop the important matter, and deliver it to you members and exploratory finding to the first production, assuming friends. a certain level of exploration success rate – and the figure is getting longer these days. The fact that we are We also share thoughts and experience in this edition combating the natural decline in production today, and from other technology players in Indonesia, in addition we are still loosing by the way, comes from another fact to our usual technology column. Technology is the that in the last 10-15 years we had not developed large cornerstone of our society, and the most important tool enough exploratory findings into production. Hence, we that will lead to a more efficient and cost-effective ways can estimate what will happen in the next 10-15 years of exploring and producing hydrocarbon in the future. when today our exploration is probably at the lowest The other corner of our industry is our high standard of point. Many of us may not be around in the industry safety. Our featured column poses this very intriguing any longer by then, but this is the time bomb that our question, whether actually we are committed to safety or students, sons and daughters, will face. Our legacy. only to the compliance to safety? What is the difference? Have a good read. In this edition we report the last There are many reasons for this situation, but generally snapshot and news on our SPE Java memberships, can be boxed into: geological perspective and fundraising events and student chapters activities. Our investment climate. Geologically, the jury is still out quarter is still full with interesting and fun things to do. whether Indonesia will produce new Cepu, Minas, Duri, Arun, etc, but the consensus is that we still have some promising but unexplored fields, both conventional Warmest Regards. Be safe. and non-conventional hydrocarbon. The second factor, investment climate, is arguably the easiest to control, but Hasbi Lubis in reality it may or may not be responsible for the current Chairman 2015-2016

SPE Java . Apr - Aug ‘16 3 News From SPE Java Membership Dear SPE Java Members, Please see on the next page the SPE Java Membership Database information. Our figures show Professionals Members at 607 and Student Members: 3,092. We are doing quite well on recruiting new members. Our biggest struggle is to retain existing members, as can be seen from the chart we have 460 lapsed (unpaid) members. Times are difficult and these days difficult to find the money to renew. As an incentive, please be advised that SPE has an option of e-MEMBERSHIP (only available for Country Category 2 which INDONESIA is. This is USD10 per year and includes everything the same, except only ONLINE JPT only). This is limited globally. Kindly consider this option when renewing your membership. Also, current lapse Members who want to renew (will get the rest of 2016 free) PROVIDED they have not done this last year OTHERWISE it will be from September onwards (to whole of 2017). We hope this info helps.

Regards, Steven Broadmeadow Cessy Bellafania Membership – SPE Java Section

4 SPE Java . Apr - Aug ‘16 News from SPE Java Membership Java Indonesia Section

Professionals Members: 607 Affiliate Members: 21 Student Members: 3,092 Professional Member Retention: 69.41% Professional Member Growth: -18.19% 87 Professional Members needed to reach 81% retention 135 Professional Members needed to reach 3% growth

News from SPE Java Membership Java Indonesia Section

Membership by Employer (Only 12 Shown) Members Percent of Total

Undisclosed 134 2222.08 08 % SKK Migas 38 6.26 % Schlumberger 23 3.79 % PT Medco E&P Indonesia 16 2.64 % Membership by Employer (Only 12 Shown) Members Percent of Total PT Pertamina EP 13 2.14 % Undisclosed 134 2222.08 08 % VICOSKK Indonesia Migas 38 6.2613 % 2.14 % Schlumberger PT Pertamina Hulu Energi ONWJ 23 3.7912 % 1.98 % PT Medco E&P Indonesia 16 2.64 % Bandung Inst. of Tech. PT Pertamina EP 13 2.1412 % 1.98 % ConocoPhillipsVICO Indonesia Indonesia Inc. 13 2.1412 % 1.98 % PT Pertamina Hulu Energi ONWJ PERTAMINA 12 1.989 % 1.48 % Bandung Inst. of Tech. 12 1.98 % Chevron Indonesia Co ConocoPhillips Indonesia Inc. 12 1.987 % 1.15 % EMPPERTAMINA Malacca Strait S.A. 9 1.487 % 1.15 % Chevron Indonesia Co 7 1.15 % EMP Malacca Strait S.A. 7 1.15 %

Recent Graduates* Recent Graduates* Membership Status Count Membership Status Count CurrentCurrent 87 87 LapsedLapsed 229 229 *Recent Graduates are professional members who graduated within the last *Recentyear. Graduates are professional members who graduated within the last year.

Total Student Chapters Current New Renewed Lapsed Members Bandung Institute of Technology 621 110 511 247

Gadjah Mada University 68 32 36 80 Institut Teknologi Sepuluh 101 6 95 37 Nopember (ITS) Padjadjaran University 184 138 46 7 Trisakti University 315 140 175 197 Universitas Diponegoro 130 38 92 96 Universitas Indonesia 443 291 152 63 UPN "Veteran" Yogyakarta 961 614 347 260 Total count may be less than total number of students if a student has not provided an expected *Students WithoutTotal a Student 269 208 61 36 Chapter graduation date. Student Chapters CurrentTOTAL New3092 Renewed 1577Lapsed 1515 1023 Members Bandung Institute of Technology 621 110 511 247

Gadjah Mada University 68 32 36 80 Institut Teknologi Sepuluh 101 6 95 37 SPE Java . Apr - Aug ‘16 5 Nopember (ITS) Padjadjaran University 184 138 46 7 Trisakti University 315 140 175 197 Universitas Diponegoro 130 38 92 96 Universitas Indonesia 443 291 152 63 UPN "Veteran" Yogyakarta 961 614 347 260 *Students Without a Student 269 208 61 36 Total count may be less than total number of students if a student has not provided an expected Chapter graduation date. TOTAL 3092 1577 1515 1023 SPE Featured Column

In Oil and Gas is the Commitment to Safety Compliance or to Safety itself?

Robert Mathes he minute I publish this question, essentials of the Oil and Gas industry. by doing. I can hear the generalized outcry: There were none. how dare you doubt the Oil and Gas Don’t get me wrong, the organizations TIndustry’s commitment to safety! The industry went out and started that went down this path have managed hiring personnel who were qualified to improve their HSE records in a huge Allow me to elaborate my thoughts here, in Occupational Health and Safety way and management is intimately as there is substance to the question. professionals and tasked them to familiar with HSE Management, but they Let us turn the clock back 35 years to implement the “Safety Programs” as lack the one thing that would make their the time I joined the industry. Safety was dictated by the regulators. performance even better: the bottoms up never even mentioned, it was not part of progressive knowledge growth that goes the fabric of the industry like petroleum This resulted in the current approach of a with practicing your work hands on. engineering and geology are. It took greater majority of Oil and Gas Industry years more and a number of disasters players (Operators, Service Companies, In fact, this is a consequence of and countless lives lost until that fateful Contractors, etc.) who all chose to create implementing the HSE Culture in the Oil day when Piper Alpha happened and a separate discipline and organization to and Gas Industry: it is now considered authorities felt compelled to intervene. manage all things HSE. The logic behind that allowing engineers and other this decision was based on the fact that technical specialists to start at the Only after Lord Cullen published the the Industry did not have the expertise bottom of the pyramid by doing the report on Piper Alpha and the UK within its ranks. work that roughnecks and roustabouts dictated the need for the Oil and Gas do is too risky; people might get hurt Industry to adopt a serious interest in doing manual work… the safety of personnel that the industry “What I am saying is that slowly started to build up what we now we must become more But we still rely heavily on all professional all take for granted: a commitment to the roustabouts, roughnecks and other safety and wellbeing of its employees, intelligent in harnessing the laborers to do a sizeable amount of the communities in which the industry knowledge and experience manual work, as the cost involved in operates as well as protecting the of the people who actually replacing it with automation renders environment while at the same time do the work and know what many prospects unprofitable. safeguarding its assets. Words more, are the real risks involved, to words less, this is what every company We ended up creating a “Nanny State of in the industry today proclaims to be its collaborate with our HSE” that takes away the thinking part of Health, Safety, Environmental and Social HSE Experts.“ experienced hands and forces everyone Responsibility policy. to just follow the prescribed procedures and we discourage critical thinking by If we look back at the beginning, it was What happened next was that these forcing everything to fit the occupational all centered on Occupational Health HSE Management Structures lacked health and safety model. and Safety, as mandated by the diverse fundamental understanding of the Oil regulatory bodies in the developed and Gas business and it loaded all the I am not saying we should do away with countries of the western world where our responsibility of HSE Management on HSE, what I am saying is that we must industry was active and where the need these specialized organizations, while become more intelligent in harnessing to regulate in favor of personnel safety the rest of the organization all they the knowledge and experience of the was first implemented. had to do was to pledge allegiance to people who actually do the work and HSE by adopting the different mantras know what are the real risks involved, An even more telling fact was that and other attitudes that demonstrated to collaborate with our HSE Experts. the industry did not have a pool of their commitment to safety, but did At the same time, we should make professionals knowledgeable in all things not promote the deep and thorough it mandatory for our HSE Experts to occupational health and safety while understanding of HSE that is needed spend considerable time at the coal face at the same time understanding the when being accountable and responsible learning from the field hands by working

SPE Java . Apr - Aug ‘16 6 together with them, to understand what But the way in which the industry goes happened in the first place. it is we are trying to do. about the business of Risk Management (or Safety for the sake of keeping the Of course, this all happened during our Very few companies in the Industry chose traditional name for this discipline) is last super cycle of high oil prices and a different path: instead of creating a dictated by regulators who are far to money was no object. I wonder if the separate organization to manage all prescriptive and not knowledgeable industry had to work with the regulators things HSE, they chose to make HSE an enough themselves on the intricacies in today’s market environment to integral component of all members of of the industry (OSHA, EPA, BSEE, etc.) address the same issues of the Macondo the organization. Sure, they still went who tend to place layer upon layer of disaster if the end result would have and hired experts in all matters HSE but regulation every time there is a new been the same. I can envision much their role is to provide knowledge and disaster occurring. more fierce resistance to the “throw advice, but the responsibility and the money at the problem” attitude of then accountability of running all aspects If we analyze the new requirements for and perhaps we would have been able of HSE were integrated into the job offshore deep water drilling in the USA come out with something much more descriptions of each and every employee. as a consequence of the Deepwater sensible and appropriate. This approach allows for a much broader Horizon and the Macondo Well disaster, knowledge base to be developed within one can see that the fundamental It is still essential to maintain the distance the organization, as every discipline cause of this disaster was lack of proper and independence of the regulators from has to do hands on work in both their competence and skills management the industry, as otherwise we would risk operational or technical field as well as as well as people taking shortcuts on having a situation where the outside HSE. procedures and basic fundamental observer could accuse us of collusion, prudence, all for the sake of shaving but we need to set up much more So I come back to my original question: some of that expensive operational sensible cooperation and interaction that are we committed to Compliance time in such a project. But what did the leads to effective regulation, and not just with HSE Regulations, or are we really regulators do? They forced the industry another layer of significant cost in order committed to Safety, or better said, to to spend enormous amounts of money to appease public opinion. Risk Management? to set up response capabilities to be able to control a subsea blowout faster Today, I think the jury is still out on Instinctively all good managers and reduce the pollution. The industry whether our industry is committed to understand the importance of ended up with tons of hardware that at Safety Compliance as opposed to being Risk Management as the financial best are prototypes, with no real actual intrinsically committed to Safety. consequences of mistakes or negligence guarantee that they will work in case can spell the death knell for any of an emergency, extremely expensive corporation, no matter its size or to operate, instead of focusing on [email protected] standing. Therefore, management will eliminating the other shortcomings that pay attention to this subject. were the real reason why the disaster

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SPE Java . Apr - Aug ‘16 7 Cover Story Djoko

Siswanto Easier and more flexible ways of doing business, win-win relationships, and transparent contracts.

8 SPE Java . Apr - Aug ‘16 joko Siswanto is now Director of Technical / Engineering, Ministry of Energy and Mineral Resurces (ESDM). His previous position was Director ofD Upstream Oil and Gas Business, and was the person responsible for making regulations and supervising working area licensing activities, approving first Plans of Development, and all things related to the managing the upstream oil and gas business from the Ministry of Energy and Mineral Resources.

Djoko was among the first graduates from Petroleum Engineering at ITB in 1990. He was also the first Indonesian to graduate with a MBA in Oil and Gas Management from Dundee University in Scotland in 2002, a year after he obtained his first MBA from Herriot Watt University also in Scotland. Later, in 2011, he obtained his doctoral degree in Petroleum Engineering from ITB.

He assumed his current role in 2015. Prior to this, he was the Natural Gas Director at BPHMIGAS 2014-2015, Secretary General of BPHMIGAS 2013-2015, and Director of Fuel (BBM) at BPHMIGAS 2012-2013.

Recently, he has been in the spotlight with his breakthrough thinking and actions, which are very much needed to promote activity in the current industry condition. SPE visited him in his office for a very warm and interesting chat.

Can you tell us more about your Although I dropped out of big portion – for the good of the career journey? Applied Statistics and Mechanical company. Engineering, my studies turned After graduating from high school, out to be very useful. Applied The remoteness was a problem I discussed with my best friend Statistics gave a good foundation for me. I was active in student about which major we should of Mathematics that supported my organizations, and I wanted to stay take at university. At that time, I study in engineering. Polytechnic active even after I graduated from believed that the highest-paying classes such as drawing engine college. Unlike today, where we jobs were working in banks. But, schematics were also useful in can get information easily even in my friend said that the oil industry Petroleum Engineering. These remote areas, in my time even the also looked promising. As boys, helped me graduate from ITB in 4 daily newspaper needed a week most of us wanted to study at years. I was among the first people to be delivered. It meant that if I the faculty of engineering, and so to achieve this. worked in oil fields, I would not be I chose Petroleum Engineering. able to continue my passion. I was accepted into Petroleum After graduation, I focused on a Engineering after my third trial at career in the oil and gas industry. Thus, I decided to be a civil servant the SIPENMARU (the university Actually, Petroleum Engineering is where I could stay in the city and entrance exam). After my first trial, I a risky major, because graduates work shorter hours. Also, I wanted to was accepted at the Indonesia Open cannot easily get a job easily in other pay back to the country that to large University as an Applied Statistics fields. The science in petroleum extent made my study possible. major. I chose Applied Statistics engineering is very specific, to drill because it was the only major on wells, analyze reservoirs and process So in 1992, I applied, and was the menu that caught my eye. One fluids. It is almost impossible to be accepted into the Directorate year later, I re-sat the SIPENMARU used to build an office tower for General of Oil and Gas. This was the and I was accepted in mechanical example. Ironically, graduates from best compromise, as I then could engineering at the Polytechnic of other majors of engineering can get work for my country and still had Universitas Indonesia. In the third jobs in the oil industry. time to follow my passion to be year, although I was already studying connected to people and society. In Mechanical Engineering, I decided Why did you choose the civil my early days, I got off from work at to yet again re-sit SIPENMARU and service? 2 p.m. and I could use the rest of my this time was accepted to enter day to do my own projects or to be Petroleum Engineering at ITB. My My practical work experience was involved in organizations. motivation at that time was simply drilling wells, either deep in the to get a job with a high salary after I forest or offshore. I spent my On a more personal note, I was quite graduate. Hahaha… time and effort – and sometime in curious with the work of civil servant.

SPE Java . Apr - Aug ‘16 9 It was well known that civil servants of view, as well as my personal recovery limit, so the government receive a low salary, yet somehow reason wanting to know how to run always got a share. In the second some could manage to buy a house private business as a backup plan if generation of PSC’s, this limit was and car. I believed that if they could I no longer worked as a civil servant. removed, so the oil company could do it than I could do it too. So from The MBA programme had six cores, receive 100% of the revenue until the start, I decided to start side namely accounting, finance, human the project moved into profit. businesses and to encourage my resources, marketing, statistics, and Perhaps it was meant as a way to wife to work, otherwise my salary macro-economics. I was very good attract foreign oil companies to would not be enough to support our at statistics. It turned out what I had invest in Indonesia - and it worked. family. I have tried many businesses learnt in the Open University could Lots of them came and invested here like raising catfish and owning still be useful, as if everything had – but the government got very little. angkot (public transportation). Not been planned and laid out perfectly The third generation PSC introduced all of those were successful, but for me. the First Tranche Petroleum (FTP) some thrive until today, such as my that assured a share to government. car rental business. Another coincidence, the university Actually, FTP is a royalty, but we where I took my MBA had a specialty don’t want to call it royalty and You are a civil servant that is major in oil and gas management. so we name it FTP. Indonesia is hungry for knowledge. Can you When I was in college, I really the only country that has FTP in share your motivation? liked the lessons on oil and gas its PSC. It confused the common economics, which discussed a lot people as they don’t understand Actually, it was the other way about contracts and PSC’s. I found what is FTP. The fourth generation around. I was hungry for knowledge a fit and purpose in this study, PSC introduced incentives like a and so I chose to be a civil servant. which made me enjoy it very much. credit incentive and tax holiday. There were big opportunities for civil Nowadays, lots of kids study abroad They also introduced new formats servants, especially in oil and gas, to to pursue their parents’ desires, like JOB and KSO, similar to service win scholarships to continue their hence not achieving the best contracts applied by other countries, study abroad. outcome for themselves. but without a dynamic split. I have Civil servants can also switch into read and studied all of these whilst lecturer positions. Once, I was Another important thing is ‘do not abroad. offered a position as lecturer in ITB make any mistake or sin to God.’ as the first graduate in my cohort. I believe that everything happens I also know that Malaysia and However, in that period, the lecturers because God allows it to happen. Thailand have hybrid contracts were divided into distinct groups; Be rightful of your actions as God that combine PSC with a sliding the situation I never wanted to see approves them. scale with a certain percent for myself in. So I turned down the offer. exploration. In Indonesia, such Recently you expressed somewhat contracts are still in discussion and Regarding knowledge, you must progressive views on Indonesian have yet to be successfully applied. have a strong intention, even from PSC’s. We tend to use unfamiliar terms the beginning, that you will continue that people don’t understand, like your study to a higher level. When I We know that Indonesia pioneered depletion premium and petroleum finished college my lecturer told me, PSC’s. Before I went to the UK, I was fund that is similar to reforestation “Don’t forget! TOEFL, TOEFL, TOEFL!” given the well-known book by Daniel fund in Malaysia. In England, the I didn’t know what it was at the time. Johnston about PSC’s. About 80% of government fully uses its oil and gas Later on, I found out that it was one his research was done in Indonesia. tax for exploration; that’s why they of the requirements to study abroad. Other countries developed their own can find new oil resources in the PSC’s, learning from Indonesia and North Sea. As a junior civil servant, I worked modifying the PSC into something hard so that I could finish my better and more suitable to their In Indonesia we have ‘Dana workload in shorter hours, and I situation. Ketahanan Energi’ (the Energy used the rest of my time to study Sustainability Fund), yet we don’t English. When the opportunity of If we assume a PSC like a man; then understand what its main substance scholarship was eventually offered, dressing-up the man would make and usage. I was the only person in the oil and him look nicer, right? Well, the PSC gas directorate general who had in Indonesia has never been dressed The main reason TOEFL. Thus, the offer was given up for four generations. Meanwhile, why the existing to me. I took a Master of Business other countries have managed to format of PSC’s are Administration (MBA), because I develop their PSC. Actually our first no longer suitable for was interested in managing the generation PSC was on the correct Indonesia is because business from a government point track. There was a 40% of cost oil companies, in

10 SPE Java . Apr - Aug ‘16 particular local companies, aim implemented while we are still We are currently revising regulations to make money not by efficiently perfectly in harmony with existing for oil and gas, along with the operating oil and gas fields, but by laws and regulations. The advantage associated permits/approvals. cost recovery, whereby they mark-up is they don’t need all the permits Nowadays, The Coordinating Board costs and throwing everything they like a PSC. With faster bureaucracy, of Investment (BKPM) manages can into the limitless cost recovery projects can start a lot sooner, permits from all ministries. They pool. They bend the law up to the which reduces the cost. The whole have secondees from the forestry, point where they get caught and industry will become efficient by energy, human resources, finance imprisoned. Since the beginning, itself. Companies will gain profit, and and even the notary public. The I have observed that our system the government will gain revenue BKPM has a three-hour-permit allows such practices. It is shown from production and tax. program, so, all the necessary from BPK’s finding every year and permits should be finished within the issuance of Law no.79. How will ESDM simplify licenses three hours. and regulations overlapping Conversely, abroad, PSC’s work well with the Ministry of Forestry, One outstanding item is that oil and because the oil companies obey Ministry of Finance, and local gas used to enjoy a lex specialis the law - they are afraid of the law. governments? Looking back, status. Now, it is unclear. If we don’t Thus, we need to change the system. even our Presidential Decree to have the status, we have to follow all coordinate the sector failed to the regulations. What we need to do is return to perform. the original concept of the PSC- to People with revolutionary share the production. I have voiced We will fix the things that are thoughts often face resistance. this for many years, but now since under our jurisdiction first. When What is your chance of success? I am the Upstream Director with everything is fixed and settled in oil a doctoral degree, I hope that my and gas; then, we will step outside. It depends on how we measure opinion will carry more weight. success. I look at it this way. If my target is high, and I don’t quite Journalist often ask me questions get there, that’s good enough for and ask for my opinion. The media me, because I know how difficult has a power to build opinion in our it is to get there. The most society and I use it to be heard. We important thing for me is there need each other. People are not is progress. aware until the right people talk about it. So, I will continue to talk Take the Mahakam PSC as a because I know I’m right, and I do it good example. For the first for my country. time, I successfully made

What should we change in the PSC?

We need to change the system of cost recovery. If we do it right, then there will be no opportunity for corruption, and then companies will operate efficiently, even without surveillance.

Also, there are other forms of contract other than PSC that can be

SPE Java . Apr - Aug ‘16 11 the next PSC a sliding-scale, gross kerosene was used by poor people hoarded fuel. He told me that every split, and everyone accepted on a daily basis. So how to reduce month he sent money to several it. Previously, the Mahakam PSC the subsidy whilst protecting the people in the police headquarters discussion had dragged on for 8 poor? After research, we found and that one of my men was an years with no conclusion. Why? a solution in the form of LPG in accomplice. I felt like I was shot in Because the existing PSC terms were 3-kilogram tanks. This solution was the heart. I said to my superior, uneconomic. Yet, some people in not accepted without resistance. “Pak, I want to quit. I’ve been the directorate were highly unwilling Fortunately, after a long struggle, working hard yet I am betrayed by to let it go. No regulation was this solution has been widely my own friends. I’m tired with all passed to solve the problem. For implemented and accepted. of this.” Please imagine, I worked 8 years I fought, and sometimes I together with Bareskrim (police was expelled from the boardroom. After kerosene, our next big problem detectives) to catch the cheating There were lots of obstacles and was with Premium gasoline. agents. Yet, afterward, some opposition: not for good reasons, Bareskrim personnel came to me but rather because if we could BPH was a new organization at the with a bag full of money asking me make Mahakam economic, then time. We had meetings until the to let the agent go. Can you imagine lots of competing parties lost their early hours with Pertamina and how I felt? That’s mentally tiring. My opportunity. Players in our business the Ministry of Finance to set the only friend and weapon in this game are important people with power authority level of BPH. As a result is the media. The media is the only and connections. But I didn’t care. I it was agreed that BPH’s function one that can shine a light on the put myself up in front of the line. included the verification of the fuel thieves and keep the light on until volume in the market. We sent four they go to trial. Luckily, I’m pretty Another example is the Directorate people to investigate the market, close with the media, and they stand General didn’t want to sign the and we managed to save 4 trillion by me. approval to use foreign ships to rupiah. Some officials were cheating lay subsea pipelines. So I signed the government by buying fuel from What is your next plan for it, because I saw the potential for a Pertamina at a subsidized price Upstream Business? solution, progress, and cost savings. and then selling it to the market at Alhamdulillah, Minister Jonas gave normal price. In another case, an Well, I have pushed forward the his approval. official withheld kerosene from the gross split concept. Investors are market every December to force the interested. Several investors in A further example was BPM Aceh, price higher to gain more profit. The unconventional blocks such as CBM which was forced to halt operations responsible officials were all fired. have filed requests for their PSC’s to for years, waiting on approvals. be converted into gross-split PSC’s. Why so? Because some people Pak Jero (the Minister of ESDM intentionally created this situation, then) once asked the DPR to People ask “how about conventional probably to gain profit through cost revoke a letter that I had signed as PSC’s?” Well, conventional blocks recovery. That’s why I say that cost Director of Fuel Management in BPH have more difficult challenges. But recovery is the main issue here. MIGAS, prohibiting Pertamina from it can be done. Look at Mahakam, supplying (subsidized) Premium which now has a dynamic split. If it Can you share some stories in gasoline to petrol stations along proves workable, then in the future it fighting the establishment? toll roads. The background to the will be easier to implement in other letter was that Indonesia had almost blocks. I have many interesting stories, in exhausted its budgeted volume of particular during my time in BPH Premium for the year. It had only 10 Regarding exploration, everything Migas. Most of my stories involve days of Premium stock left, yet we should be facilitated. Many of the Pertamina. Pertamina is the only had to make it through December. permits should be simplified or company that has operated in the I forbid Premium to be supplied eliminated, and we are working downstream since the beginning. along toll roads, because poorer on that. We also want to remove Regulations state that Pertamina people (angkot and motorcycles for the entry tax. After all, companies is given 4 years to operate a new examples) do not use toll roads, and are bringing money in and have downstream business before another the subsidized Premium is meant no revenue. Why do we further company can be brought in. for them, right? The letter caused burden them with tax? We are a controversy, because many of the lobbying the tax authority and the The first challenge I faced was owners of those petrol stations are Ministry of Finance. I have twice met kerosene (minyak tanah), which members of the DPR. They used with the Coordinating Minister of received the highest Government many ways to revoke my letter. the Economy and the Minister of subsidy from the real price of 10,000 Forestry. to only 2,500 rupiah per liter. Yet Once, I caught an agent who

12 SPE Java . Apr - Aug ‘16 Legal issues are showing a good project audit, rather than during to account for the POD that usually trend of reduction after many the project, so there will be much needs 5+ years to gain approval years of no breakthroughs. In my less micromanagement than we and implement. At the moment, department, legal and criminal see today. We can also control the these years are part of the 20 years investigation is taken very seriously. output in the form of tax. Investors for production, which means fewer Investigators cannot investigate want to maximize their cashflow, years for the Contractor to produce without my approval. Even the KPK. so they will learn to operate more the field. This can be a big deal If they want to investigate the oil efficiently. As I already mentioned, for Contractor with major projects, and gas sector, they have to send an government will get double benefits, because payback might not occur approval request to me through a from the gross split and from tax. until near PSC expiry. confidential letter. That is the ethics The more profitable the company, according to KUHP. My target is no the bigger the income from tax will Secondly, for PSC contract extension, more legal problems, and better be. If production is good, we also our regulation mentions that coordination with other ministries, taste the benefit. contracts “…can be extended.” I especially in facilitating permits and think we should change that into tax. Regulatory bodies such as SKK “…may be extended once.” Second, MIGAS, and ESDM will enjoy a lighter we need to open the possibility for We now award blocks based upon workload with the same salary, so alternative fiscal regimes, not only an open split-bid tender. The that staff can shift their attention to PSC’s. All of these thoughts have investor is welcome to propose higher level matters. been listed in our draft. either gross-split or dynamic-split. It is up to them. Many people have complained that Talking about our President’s we have too many employees. But Nawacita concept, will more be Regarding older fields, 50% of the we will not release any employee. given to foreign investors, or will recoverable oil is still in the ground. We will need them later when the all fall into Pertamina’s hand? Technology is available to produce oil price increases. Investors will this oil, including secondary recovery come in and create new employment Like I said earlier, the law says that and tertiary recovery. I will also give opportunities. I know that currently, PSC’s CAN be extended. We don’t incentives, so that the split can reach many investors are moving to other have to change the law. Ministerial 49% for the Contractor. countries because we are too stiff. Regulation number 38 clearly states That’s why I offer the open split bid that the contract can be extended Indonesia still has other sources concept. I’m sure those investors will once for 20 years, after which we can of energy, namely renewables in come back to Indonesia again. add a transition time of one, two, or the eight sectors: biofuel, biomass, three years. geothermal, hydro energy, wind You mentioned earlier about laws energy, solar power, oceanic wave, and regulations. Will there be any The area included in a PSC extension and tidal wave energy. Currently, big changes in the near future? may be the retained area, or it these renewables contribute less may be bigger or smaller than the than 10% of energy usage in In my opinion, we are better off retained area. If the Contractor Indonesia. So we are also working not changing the oil and gas law. would like to extend the PSC with relevant parties to ensure The existing law allows us to do area, perhaps because there in an the speedy and high take up of everything that we need, such as interesting undeveloped discovery renewables. change to a gross-split contract. just outside, then we have the ‘joint study’ mechanism to handle Please tell us more about the What about the future of SKK Migas? this situation. The joint study is a change in revenue split? Will there Just let it be. If we change to gross- cooperation between investors, also be a change in structure? split contracts, then the authority universities, and the directorate of SKK Migas, and eventually SKK general of oil and gas, and will We promote a gross split contract Migas itself, will gradually disappear. determine whether the contract because it honors the concept of extension area will be wider or production sharing between the So the law is fine, but we do need to smaller. If the joint study states contractor and government, and revise our PSC regulations. that an area has potential, then we follows our oil and gas regulations can change the area for the PSC that state that all costs and losses Firstly, the regulations do not extension. are borne by contractors. Moreover, consider the time taken to problems that we face, such as long implement a Plan of Development Concerning foreign investors, we bureaucracy, lots of legal findings, (POD). Our contracts consist of 30 know that exploration needs a large and mark-ups, will all be gone. years: 10 years for exploration and amount of funds. Pertamina doesn’t Control takes place in the post- 20 years for production. We need have money to speculate. So, for

SPE Java . Apr - Aug ‘16 13 exploration, foreign companies will However, internship programs high oil reserves continue to drill have a big part to play. They use are widely open. We accept all and open job opportunities. So, their money and their technology, students who want to be interns you don’t always have to work in so please make it easy for them to learn about the oil and gas Indonesia. to explore. However, when the industry. Interns will not be paid a discovered field has been producing salary, but they will receive meal A concluding question to a brave for a long time and they apply for an and transport allowances. We can and courageous official: what extension, then our portion should help each other. Students can drives you? be bigger. After all, their previous share their knowledge about the investment will have been long paid newest technology to us, about Since I was a kid, my parents taught off by then. how to reduce costs, and we will me to be brave whenever I am right. try to deliver it to the government. But bravery alone is useful. We must What do investors consider to be Students are all welcome to apply as also possess knowledge and power the ideal oil and gas industry? interns; we will help to distribute you as weapons. Otherwise, nobody will to the oil companies. As an intern, listen to us. Have lots of friends and Investors want two things: show your skill and achievement connections, so that they can back permitting that is easier and shorter, that you are worthy to be accepted you up when you are in trouble. and contracts that are win-win as an employee. So, send in your Be a positive-minded person. and transparent. So we need to application, it is government’s Motivate yourself by learning. Read be investor-friendly without losing obligation to accept all graduates. books. Be confident to speak in government take. We have to public. Speak up and contribute be better than our neighboring A second option is to open your in meetings, don’t just keep silent countries, because competition for mind to the downstream. With low or write notes. Don’t be arrogant investors is now global. oil prices, downstream industries are just because you are an engineer. profiting, because their raw materials Roll your sleeves up and do trivial Our national oil production is are cheap, but the price of their work yourself. Be friends with currently below 800 kbl/day. products is pretty good. Open your everyone. Help your friends and What does the future hold? mind for diversification. You don’t your supervisor, as they will help you always have to work in upstream. to achieve the collective goals. And Our short-term target is to maintain You can also see the world and work lastly, set your goals to serve your the present level of production, in other countries, as countries with people, country, and God. through secondary recovery and new working area appointments. Perhaps we can skip the working area tenders and go directly for project approval.

We can also increase the contractor split up to 49%, because nowadays the focus has moved from generating government revenue to driving economic activity.

What is your message for investors?

Today, Indonesia has changed. Now, our contracts are flexible, win-win, and transparent. Contractors can submit proposals detailing what they want. We will facilitate exploration in terms of permits and tax. After oil discovery, we will sit together to discuss how to develop it.

And your message to students?

With the recent condition, recruitment is limited or frozen. Bambang Istadi, Djoko Siswanto and Hasbi Lubis

14 SPE Java . Apr - Aug ‘16 16APOG_JPT_ad_290816_FAol.pdf 1 8/29/16 7:29 PM Interview with

Exploration and Brod production of all different forms should be on Sutcliffe the increase again.

16 SPE Java . Apr - JunAug ‘16 ‘16 ow did your career start? I moved back to field operations massive but declining oil production in the UK North Sea sector in 1987 levels. I had colleagues who advised and soon moved company to a me, “Don’t waste your time on Caltex HI started out in 1981 as a geologist smaller independent, Teleco Oilfield – there will never be a market for graduate. I was a very keen Services, who were still the market directional drilling there”. However geologist, in fact I had always been leader in MWD at that time. Teleco we soon proved the doubters wrong interested in geology since I was were an interesting company as they and went on to drill many packages young. My dad who was a university evolved from a military hardware of new and re-entry infill horizontal lecturer in chemistry introduced background and moved into the wells to access stranded attic oil. We me a professor of geology from oilfield after acquiring a patent for perfected a low cost short radius Aberdeen University when I was mud pulse telemetry. Teleco went on drilling system which was ideal for 15 who advised me to study math, to develop and release the industry’s drilling sidetracks to rehabilitate physics and chemistry at A Level first commercial MWD tool way back dead wells and expanded our (rather than geology) which set me in 1978. My knowledge of geology operations to Asamera and other EP up well for the future. I then went on and log interpretation gave me the companies in Sumatra. to study geology at Leeds University opportunity to become Teleco’s first in the UK. LWD coordinator in Aberdeen in All in all things went pretty well until 1990. My previous experience also the Asian monetary crisis of 1998. At university, I was most interested allowed me to assist in developing The political instability in Indonesia in engineering geology – Teleco’s drilling mechanics solutions at that time is well documented engineering dams and bridges, in conjunction with formation and was accompanied by a collapse exciting stuff! But when I graduated, evaluation. Those were good times in oil prices as Asian demand there was not a lot of work in that in our industry with oil prices higher plummeted. In 1999 Baker Hughes field. I was not really aiming for the and North Sea activity peaking. We lost their biggest Global directional oilfield, but I saw an interesting job were flat out ! contract at PDO Oman and I was opportunity with a Schlumberger relocated from Jakarta to Dubai to subsidiary in engineering geology. In 1992, Teleco was bought by Baker focus on rebuilding the Middle East I spent my early years in Spain & Hughes who formed Eastman Teleco & Caspian business. It looked very Africa then copped the opportunity which soon became Baker Hughes grim in 1999 with oil prices down to to head to Malaysia in 1983 to work INTEQ. My boss was transferred to $9/barrel, but the price recovery in alternately as a wellsite geologist Jakarta and one morning in June I 2000 was fast and unstoppable. My and pore pressure specialist in had a call from him asking if I would focus at that time was very much Malaysia and Myanmar. Oddly be interested in a move to Indonesia. Saudi Arabia, Iran and Kazakhstan enough, in three years I never made With young kids, it seemed a bit of and I learned a lot of new geology, a trip to Indonesia except Bali ! a leap of faith, but we took a look cultures and drilling challenges. and made the decision to head In 1985, times were tough in the over. I was quickly engrossed in the In the early 2000s Baker Hughes oilfield, though maybe not as bad hydrocarbon geology and tectonic had an initiative to integrate as right now. I moved back to maze of the country as well as the drill bit design, drilling assembly Europe as an MWD engineer in the culture which I found quite different configuration and M/LWD North Sea. This gave me a thorough from Malaysia. I embarked on a measurements into an optimization introduction to directional drilling market survey up on arrival and met application known as “OASIS”. and also drilling hazard mitigation quite a few people in the oilfield A dedicated focus on drilling using combined downhole and community who I still see around performance optimization yielded surface data. Whilst working on one today. some impressive results and lead to of Schlumberger’s first integrated further refinement in Baker’s drill bit directional drilling, wireline, At that time, Indonesia was design, M/LWD, motor and rotary mudlogging & MWD projects on producing 1.6 million barrels of oil a steerable technologies. The drill bit the Heimdal Field in Norway, I was day with a consumption of 800,000 – engineers were always looking on offered a one year assignment close to the opposite of today. It was how to change the orientation of at Anadrill’s HQ in Houston as a still a member of OPEC, a major oil the PDC cutter and the jets, the bit project engineer in the development exported and every year President hydraulic and the cleaning, to get of drilling and formation answer Soeharto opened the IPA personally a higher ROP with less vibration. products. This involved interaction due to the importance of oil and gas Coming from the directional & with the sales and marketing to the Indonesian economy. performance drilling side, we department and became another looked to manage torque, drag important component of my Early on it struck me that Caltex and vibration to getting enhanced experience. should be a major target due to the penetration rates and longer life out

SPE Java . Apr - Aug ‘16 17 tougher market than I was expecting. I was confident that coalbed methane (CBM) would be a growth markets for us to capitalize on but CBM never advanced beyond the exploration and appraisal stage.

In 2014, I received the opportunity of a lifetime to buy out a substantial independent directional drilling company in Australia, Surtron, which had a focus on in-seam coal drilling for CBM production and gas drainage for underground mining safety. This company had been looking to expand into Indonesia also eyeing the CBM market, but the owner, a US based group, decided Hasbi Lubis and Brod Sutcliffe to close down the directional drilling services division, because of the drilling jewelry. opportunity was too good to turn of the slowdown in the Australian down so I moved to Cougar, thinking market due to the lack of coal One of our greatest successes to myself “Okay, now, we start again mine methane degassing as coal in delivering directional drilling with a more limited set of tools”. We production slowed in Queensland performance was for Statoil offshore had Cougar mud motors, drilling jars and New South Wales. the Persian Gulf where we played and shock tools and we combined our part in cutting the average them with carefully selected off the My original intention was to buy drilling time from 48 to 26 days shelf technologies including the that business and coordinate it with average per well over a 27 well APS Technology M/LWD system Cougar, but it did not work out the workscope. A good part of the which had been developed by the way I hoped. So, I teamed up with improvement was realized through original Teleco team that had first some industry associates and we refinement of the BHA, putting a lot commercialized MWD! Their long put a successful offer for Surtron’s of power to a purpose engineered experience of developing robust directional assets. We finally had bit using powerful even-wall down-hole electronics gave me everything and set up ready for motors and dedicated vibration confidence in their products and business in Brisbane mid 2015. By management. Interestingly one of we purchased several M/LWD that time of course drilling activity the smoothly performing jack-up systems and matching them with in oil and gas had plummeted by drilling rigs utilized on that project Cougar drilling tools sold hard into about 76% with the current oil price was the Raniworo from Indonesia. Kurdistan, which is a tough area for collapse. So that brings us up to the drilling with hard rock and lots of present. I ran the OASIS group and Middle tectonics. East directional drilling operations So moving forward to where our for a few years before moving We put a focus on drilling industry is headed and especially to Weatherford in 2006 as they optimization and performance as the industry in Indonesia what are integrated Precision’s directional our differentiator in selling our your thoughts ? business into the group. I remained directional service against the in Dubai for a year before moved to competition. Of course there were It is interesting to talk about Asia Pacific for a third time based some technologies and service Indonesia. For example, why do I back in Kuala Lumpur. Weatherford levels we could not provide but we stay here? It’s because I continue Precision had a large directional knew our limitations. That was how to see lots of potential here. This drilling business in Indonesia and it we built up the company which we is a large country, with a large was good to reacquaint myself with rebranded Cougar Drilling Solutions. population and a growing economy. that market as well as expanding our I continued to see Indonesia as a This country has challenging tasks directional business into Australia, good market to expand into and ahead, particularly the need to China and Thailand. we opened operations here in 2012. modernize the infrastructure in a In conjunction we expanded from democratic world where everybody In 2010, I was asked by a Canadian Iraq into West Africa, Pakistan and has rights and nobody wants to give drilling tools manufacturer, Cougar Turkey where the rapidly expanding up, so everything takes a long time Tool, if I would be interested in geothermal business became a to get done. But it has to get done setting up a directional drilling key market focus. Unfortunately and does, just not quite always as services division for them. This Indonesia proved to be a much quickly as we would like.

18 SPE Java . Apr - Aug ‘16 I do sense that a lot of foreigners we they get improved PSC terms. North! My conclusion is that the gas are nervous about investing in Changes are rumored to be in development drilling market should Indonesia. I feel this directly when progress but I am not sure of the come back onshore Australia. It’s I’m in Australia. Many Australian current status. I think this lack of just a matter of time. do recognize Indonesia as a major clarity or visibility that perhaps it business opportunity on their is the area that the government You have mentioned geothermal doorstep. However, potential or the authority should look at energy several times. How do investors are often confused on improving, since there appear to you see the Geothermal market how to do business here and feel be a lot of grey areas. Foreign developing? uncertain about cultural aspects. companies do not really understand Because GeoGlide’s predecessor what they can or cannot do which In Indonesia, a focus is geothermal originated from Australia and our makes them risk averse. Even local to power backed up by an attractive main base continues to be Brisbane, companies struggle. The last thing power purchase agreement (PPA) we see a lot of potential to work any company wants is to get start, and there is also an opportunity for together with Australian oilfield commit spending then be shut down gas to power. Geothermal is very companies who are interested to do for some unforeseen infringement of in vogue at the moment – which business in Indonesia and need on regulations. reminds me of the CBM hype a the ground support proceed. few years back. However, again, Of course, it does not help with the it is not straight forward to get Personally I think that Indonesia fact that whole Global oil and gas projects executed. It almost always offers an excellent market industry has practically ground to seems to take years longer than opportunity for those who are willing a standstill because of the oil price. prognosed. Numerous projects seem to take it. The maze of bureaucracy In Indonesia, though the oil price delayed due to permitting, finance, in Indonesia may look daunting and is so low that it is not attractive to partners or lack of, etc. Is it going traffic ruin your day but ultimately go chasing stranded oil, the gas to come together? I am hoping so, business gets done. President Jokowi and power prices remains buoyant. because there is supposed to be seems like the type of guy who With the low oil prices, rig rates and 7,000 megawatts of incremental will get things done and appears service costs are down 30 % or more, geothermal power by 2025 as a to be strengthening his team. so if you do have access to capital component of the 35,000 megawatt. The government has set a target it’s a great time to drill for gas, or An additional 7,000 megawatts to develop the well documented geothermal ! of geothermal power equates to incremental 35,000 megawatts of around an additional thousand power generation; that is one big So how does that compare to development geothermal wells. That challenge and opportunity in its own Australia ? is a market we drillers cannot ignore. right. So, to me, yes I’m very interested in The situation in Australia is geothermal! So when I look at resource interesting. Since the decline in first opportunities like coal bed mining, then oil and LNG prices a Geothermal is happening, but I think methane (CBM), interest in which large number of mining, oil and that the biggest opportunity of all in has slumped dramatically after an gas related companies have closed Indonesia is gas for power. Honestly, initial frenzy, I still see it as a major their doors. In fact, there are only I think, if gas producers could sell opportunity sitting out there. There three directional companies open directly to PLN, gas development could be tens of TCF of methane for business in Queensland. Yet conventional, unconventional and locked in coal, which can easily be the reality remains that the three CBM would be incentivised. economically viable given the need Queensland Curtis Island (Gladstone) and price for gas and power. The real LNG plants are moving forward with Recently an Australian company opportunity here is gas to power, the last two LNG trains opening looking at projects in Sumatra similar to geothermal to power. within the next few months. With contacted me. In Australia, coal Maybe what is needed is to award four trains already operating, the miners are not allowed to mine coal gas producers a power purchase feed gas supply is looking tighter seams underground unless the coal agreement (PPA) with PLN and let than for a long time and domestic have been first degassed to remove them do the rest. Ultimately I think gas prices are rising. Meanwhile the risk of a methane gas explosion. that CBM focused EP operators lead development drilling for CBM and The coal is degassed by drilling by Nu Energy, Sugico, and Ephindo conventional gas remain flat and multiple parallel horizontal drains will build a successful Indonesian way below forecast levels. When the in the coal seam and extracting the coal bed methane business. It is just fourth LNG train went on stream coal gas over a period of months taking an awful lot longer than I at Gladstone, Queensland CBM ahead of mining. An added benefit is expected. delivery proved insufficient and that the extracted gas can be utilized now gas must be piped North from to provide electricity to power I don’t blame EP companies for the Bass Strait. It’s the first time the mine and local community, saying they will delay plans until for thirty years that gas has flowed providing a double win in terms of

SPE Java . Apr - Aug ‘16 19 safety and economics. dealing with a large and complex geo-pressure, we have the ideal market. I’m 57 now and I’m not reservoir evaluation and we have To date in Indonesia there is has going to go to easily move to new employed the best contractors. What not been much underground country or market and figure out now can possibly go wrong? coal mining. However, there is how to do business there. I prefer an interesting exception around to focus on Indonesia and make my I can sum that up in two words: Sawahlunto, West Sumatra, which business work here. There are some Communication and Organization. was the centre of coal mining during big market opportunities out there All the plans have to be properly colonial times, all underground. including Iran, Russia, Nigeria, and understood by those implementing In the 1960s to 90s, Bukit Asam other but I’ll leave those to their them, and the organization and ran a large open-cut coal mining local experts. communication channels need to be operation. The coal is high grade clear and thoroughly understood by due to the geothermal gradient In Indonesia when starting out it is the execution team. To address this and a large power station has been critical to establish and structure and improve communication and constructed close to the mines. the business robustly and select understanding involves common Once the close to surface coal seams trusted local partners to work with. sense. Pull the team together ahead had been exhausted, Bukit Asam For GeoGlide, we have identified of drilling and drill the well on paper. relinquished the mine and a number a good Indonesian partner and Work out together as a team in a of private mining operations have our business motivation is quite simulated environment what can go continued but with inadequate clear, the development of gas and wrong and how to respond. That is a safety controls. One mine suffered geothermal reserves to contribute to critical planning activity. a serious methane explosion in the incremental power need. We are 2009 with 32 miners killed. Standard waiting for the energy companies, Technologies add value also. were improved but without any gas and geothermal to increase They may be new techniques are requirement to degas the coal activity. GeoGlide is ready to provide simply a better way to apply an prior to mining. Recently another quality directional drilling services old technique. As an example, a underground explosion killed three. but my message the operators is simple logging technology adopted We are now together looking at to involve the service companies GeoGlide to provide a low cost utilizing our directional drilling earlier, especially during the well and risk open-hole formation expertise to prevent further incidents engineering phase. The more time evaluation log is the Logging While whilst at the same time generating and effort in the planning phase, the Tripping (LWT) tools. To avoid power. less time and cost during execution – running wireline and to get early i.e. drilling & completion. information, LWD (Logging While I see underground coal mine Drilling) tools are run for many methane degassing as becoming a During recent years I have become higher angle and higher cost wells. safety requirement in Indonesia as much more involved with the LWD tools are necessarily expensive more mines move underground as commercial side of the business. and subject to higher failure rates has happened in China where mine My emphasis has shifted from than other drillstring components explosions were once common but technical to commercial. Like any due to their complexity. If the LWD criminal legislation was brought company from an E&P operator to fails, it is costly. If you lose it in the in. In conjunction there should be a farm owner, we have a balance hole, it is much more costly. LWT the development of a gas to power sheet, profit and loss (P&L) and offers an alternative in that the market centered around the mine order book, and that is what we tool is only deployed at total depth and local community. live by. At the end of the day we by dropping it into the drillstring have to build value in the company. so that it seats in a special drill Returning to oil, its price is low, We need to win work then repeat collar pre-installed in the BHA. but there is still demand for oil business by delivering performance The time based measurements in Indonesia. To me, oil is still a to our customer. In our business that are stored in memory as you pull vital commodity. When I look at mean reduce the cost of drilling and out of the hole and merged with everything combined, the drilling reduce the lifting cost. depth at surface to obtain the industry should return to being well log. Should the pipe become a healthy business in Indonesia. How can GeoGlide contribute to stuck, the LWT tool including the Exploration and production of all reducing the well cost? radioactive sources can be easily different forms should be on the retrieved on slick-line meaning increase again. We can drill faster with less NPT little risk or lost in hole cost. This and fewer interruptions. How are we tool, which is provided by Cordax, For me personally, I have to consider going to get less interruption, fewer a Canada company, is available for is that a good portion of my industry failures and incidents? Let’s say that call off in Indonesia and Australia. experience has been gaining in we have planned the well perfectly, I agree it is not the solution for all Indonesia. That country experience have optimized casings design, fully applications, especially where real- becomes a valuable asset when understood the geo-mechanics and time measurements are required, but

20 SPE Java . Apr - Aug ‘16 which discourage foreign companies from entering Indonesia - companies who can bring the benefits of new technologies and ideas. In general would encourage the government should not to over regulate as this slows business down, increases cost and discourages investment.

Do you think it is nationalism or do you think it is rent seeking? Another regulation means another chance to extract rent.

I cannot say that I have observed that specifically, but I do think are some strange regulations. For Bambang Istadi and Brod Sutcliffe example, the regulation which it offers a clever option to reduce and we may face the need to bring makes it difficult for foreign oilfield logging cost and risk in people from overseas both to specialists over the age of 55 to supplement the workforce, but also obtain work permits in Indonesia is So this particular application is to train and develop locals. In my counter-productive. The intention more suited for fields that the experience Indonesian have a good may be to force companies to operator already knows well? work ethic and with the right training localize positions. However this and experience are excellent. rule does not take account of the Yes, and also for insurance logging. ten plus year experience gap in our For example for deep water or Hence it can be a challenge in Industry caused the slowdown of the remote exploration wells, the client Indonesia for a foreign owned 1980s meaning there are often not may choose to run LWD as insurance enterprise to enter and provide their enough highly experienced people in case of not being able to get support and expertise especially under the age of 56 to provide the wireline logs to bottom but this will to the onshore sector. However, skills and experience transfer which be very expensive. Deploying LWT bringing in skills and experience can benefit the local workforce. It is will be a fraction of the cost and you from outside is always valuable to often the guys of over 55 years who are certain of getting a triple-combo transfer to the local workforce. I have the most valuable and in-depth log over that area of interest. That would always encourage technology experience and are best positioned is what I call insurance logging. I see and skills transfer, training and to coach and mentor a younger a lot of potential for LWT for higher human capital development. I think Indonesian technical team. angle development drilling wherever that Indonesia could do more to special logs are not required. LWT encourage that. On that point, Perhaps the regulation is aimed has already been run on several it’s interesting to note that many to stop multinational companies for Pertamina and Petro China in international companies make their from transferring employees Indonesia, but I think it is still not Asia Pacific headquarters in Kuala almost at any age to Indonesia? being run as often as it should be Lumpur or Singapore, but not too He only spent maybe couple of perhaps due to a lack of awareness. many in Jakarta. Logistic are a factor, years in Indonesia, yet his whole but a big part is the ease of doing career pension of thirty years is How do you see Indonesia, in business. I think Indonesia could going to be cost recovered. terms of services? benefit from make the regulations easier on international oilfield service That could be true but I was Indonesia has strict stipulations for companies operating here. not aware that could happen. It local content. For example, onshore certainly would not be ethical. The drilling services in Indonesia should Of course I do understand that the cost recovery system for PSC’s be provided by a 100% Indonesian- local content regulations are a good was a good way to encourage owned Company. Actually I’m sure way to encourage development foreign investment when it was most companies would prefer to of Indonesian companies, but first introduced. But then, perhaps run a business in Indonesia with a regulations also requires some it is also open to abuse by some primarily local work-force where flexibility to allow foreign companies operators. So maybe today the cost possible. Though there are a lot of to bring in new technology and recovery based PSC may not be well trained, skilled Indonesians, approached. I would encourage the best way to run the oil and gas when the industry pick up it may international companies to find business. become tough to find enough good local partners here, but our Indonesians with the right skills, industry need to avoid regulations I would love to see the Indonesian

SPE Java . Apr - Aug ‘16 21 industry get right back into the many of the countries there run I have been heavily involved in heyday of high acivity drilling. more on national objectives rather setting up and handing over Today, the Indonesian offshore rig than economics. GeoGlide’s Australian operation. count is I guess 7 or 8 rigs. In the That is pretty much in hand now so 70’s and 80’s it was 20. Onshore, How can things be improved? I intend to focus more on Indonesia maybe we have around 30 rigs going forward. As I said I see the now. We used to have 70-80. You know I honestly think that for Indonesian market as having one of Given that low oil prices have led the service industry, allow businesses the biggest potentials for growth of to correspondingly low operating to do business. Don’t over-regulate many international markets with the costs, there is an opportunity that things. We want confidence in resource availability – oil, gas, CBM the drilling industry can be driven the predictability of business and geothermal. Though a lot of more by domestic power demand. conditions, otherwise people don’t things have slowed down, I remain As I said earlier, gas and geothermal want to invest. People will hold optimistic. Indonesian growth and resource consumption are driven by off their investment decision if development should remain on power demand. So, drilling activity regulations, permits and taxes vary track and hopefully accelerate as has an economic impetus to should unpredictably. Import regulations infrastructure improves. pick up. That will be good for our are also confusing. Ideally for a industry. But then, the challenge will strategic industry to Indonesia like Things get delayed but those things rightly shift back to the development oil and gas, the technology for E&P eventually will get done. When of people. I do believe that there’s development should be imported companies say they are going to a fantastic opportunity in this duty-free. The more the more carry out a project next year; that country for a professional and well incentives that can be given, the points me to believe that they are implemented oil and gas training more it will stimulate our industry. going to do it in 2019. There will institute. People tend to put their investment always be some reasons that create in countries and businesses where a couple of years delay. It could be I know that several universities have they think it will be safe, where they funding, it could be regulations, good Petroleum programs. Yet I can get maximum return from it. it could be changes in strategy. just suspect that when activity gets So, it is important for Indonesia to So projects that were planned for really busy here again, it’s going to cater to this. However, to me the 2015 will hopefully happen in 2017 be hard to find enough qualified most important thing in the service and so on. Geothermal activities people. I think that will be a tough industry is that EP Operators get are nowhere near where people challenge. So, all companies should back to work, because drilling service said they would be by now. Lots focus on training and human industry cannot do anything unless of projects are getting close to resource development. As I also the operators are drilling. If you are happening, we hope. And the power said earlier a major source of risk involved in well servicing, times are demand is not going away. is not having enough qualified, not quite as bad. experienced and competent For CBM, it’s probably going to be people. I have also mentioned the However life and business has to go longer, but at least for geothermal importance of communication and on. Operators know that shutting the traction is already there. Is well defined efficient organizational down drilling for a period of time CBM in Indonesia a long and structures and releasing staff and contractors winding tunnel with a glimmering is a quick way to cut cost. In doing light at the end? For SPE Java, it’s been tough on that, probably worldwide about 60- the fund raising side. It’s been 70% of the drilling related people in The service industry is obviously probably the worse in many years. this industry have been retrenched driven by E&P activity, so back in Our famous SPE golf probably over the last two years. A lot of them 2010 when everybody was talking delivered half of what it normally will not come back to our industry. about drilling hundreds of CBM wells does. And the fish fry is also not So when drilling activity picks up, in the 54 awarded PSCs to meet their as good as we thought. We still there is going to be shortage of commitments, it was exciting for all manage, at least in the good years qualified people. I will still be around the service companies. But it did we accumulated enough funds to ? I’m not planning to go anywhere. not happen, and so now everyone is provide for these hard times. But then I do often think to myself, skeptical about CBM. Nobody even at this age in life my job should now wants to hear the words CBM right When I look around, I don’t think be to train up the people to take now! But the gas and resources are Indonesia has necessarily been over from me. My job should be to there. affected more than other countries transfer my skills and knowledge. by this industry slowdown, but it is I think that the SPE offers a good Thank you for your time. affected severely. The region that forum to do that. I have resolved has been less affected least is the in my own thinking to get more Middle East. I guess that is because involved in the SPE here.

22 SPE Java . Apr - Aug ‘16 17APOG_call for paper ad_290816_FAol.pdf 1 8/29/16 7:36 PM Technology Corner

Maintaining E&P Economic Viability in the new Commercial Environment

The most critical component of any to meet Indonesia’s future services, however, is the human requirements. resource, the people. Without competent and experienced people We would now like to introduce organized into an effective team, two of our innovative technologies, ntroduction and Mission for even the best and most fit for both of which have already been run Indonesia purpose technology will not ensure successfully in Indonesia: the Cordax success. People plan the projects, Logging While Tripping system IDuring these challenging times prepare and maintain supply chains, which can significantly reduce open- of marginal oil and gas prices, and execute the complex interaction hole logging cost and risk whilst EP Operators must seek ever of functions to deliver the well improving log acquisitions success, more cost effective technologies safely and within budget. When and the Fishbones Multilateral and techniques to execute their communication and teamwork fail, Stimulation Technology which exploration and exploitation the consequences can be severe cost effectively enhance oil & gas activities. With the decline in oil commercially with serious risk production. prices, many marginally economic exposure. For this reason, GeoGlide reserves, especially including in conjunction with our partners unconventional resources such as has developed an aligned project Cordax LWT CBM and shale gas have shifted into support team to work with the the uneconomic space. Similarly project owner from conception to Logging While many IOR / EOR brown field assets close-out. Very much a part of this still holding appreciable recoverable is the training and orientation of Tripping Services reserves seem now uneconomic. In national resources and the transfer addition, access to funding for oil, of international techniques and btaining open-hole gas and geothermal development technologies. formation evaluation logs has been significantly constrained can be both costly and risky even though the sale prices for Another especially challenging Owhere tough logging conditions are gas and geothermal power may aspect of working onshore Indonesia encountered. Such conditions may remain buoyant. The impact of this is the availability and accessibility occur as a result of high borehole in Indonesia has been strongly felt, of land with all the associated social inclinations (e.g. above 50 degrees), and the level of drilling activity aspects of working within populated rugose borehole condition due to both on and offshore is the lowest and agricultural communities. borehole geo-mechanical stability, experienced for generations. Minimising the environmental fracturing, differential sticking or impact of a drilling programme via sticky formations. The modus operandi of GeoGlide intelligently positioned pad drilling and our partners is to help and the use of modern light- At best poor quality logs are Operators move projects back footprint mobile drilling units is obtained, at worst no logs are into the economic space. This can another of our core disciplines. obtained and wireline or LWT tools be achieved by a combination of and nuclear sources are lost in the reducing well construction cost and With the new reality of constrained hole (LIH) resulting in very expensive risk plus production optimization. oil prices and capital access fishing and potentially LIH charges. To provide EP Operators the best combined with a strong need to chance of success, GeoGlide has develop additional power generation The objective to the LWT service aligned with Global innovative from gas and geothermal to support is to provide a high quality technology providers such as Cordax Indonesia’s long term growth, we formation evaluation log, of an and Fishbones to bring value adding encourage the implementation of equivalent quality to wireline or technologies to Indonesia and more collaborative and constructive LWD measurements, which can be running them in conjunction with working relationships between configured to include gamma ray, our conventional directional drilling the EP Operators, Oilfield Service spectral gamma ray, dual induction and logging systems. Providers and Drilling Contractors resistivity, neutron porosity and

24 SPE Java . Apr - Aug ‘16

Cordax LWT Logging While Tripping Services

Obtaining open-hole formation evaluation logs can be both costly and risky where tough logging conditions are encountered. Such conditions may occur as a result of high borehole inclinations (e.g. above 50 degrees), rugose borehole condition due to borehole geomechanical stability, fracturing, differential sticking or sticky formations.

At best poor quality logs are obtained, at worst no logs are obtained and wireline or LWT tools and nuclear sources are lost in the hole (LIH) resulting in very expensive fishing and potentially LIH charges.

The objective to the LWT service is to provide a high quality formation evaluation log, of an equivalent quality to wireline or LWD measurements, which can be configured to include gamma ray, spectral gamma ray, dual induction resistivity, neutron porosity and formation density to be acquired with minimal risk of logging difficulties and zero risk of LIH.

The LWT logging drill-collar is a specialized drill-string component which is run in the final section drilling BHA. Once section TD is reached, the logging string is simply dropped into the drill-string and landed in the logging collar. Rig pumps may assist if needed. FE log and depth measurements are acquired versus time whilst tripping out of the hole. Once the tool is formation density to be acquired surfaceretrieved, continues. the FE time log is merged with depth-timerisk is greatly to produce reduced. the final open-hole logs. To with minimal risk of logging expedite log evaluation, the tool can by fished on slick-line at the casing shoe, and logs difficulties and zero risk of LIH. Shouldprocessed the whilst drill-string tripping tobecome surface stuckcontinues. Animations of LWT operations can

duringShould POOH, the drill-string the logging become string stuck duringbe POOH, viewed the at logginghttp://www.Cordax.com string including nuclear The LWT logging drill-collar is a includingsources can nuclear be easily sources retrieved can vi bea slick-line. or The on systemYouTube requ Channelires no additional (Cordax) rig at time to specialized drill-string component easilyrunning retrieved the equivalent via slick-line. LWD string The whilst the logginghttp://www.youtube.com/user/ cost and risk is greatly reduced. which is run in the final section system requires no additional rig CordaxLWT/feed. drilling BHA. Once section TD is timeAnimations to running of LWT the operat equivalentions can beLWD viewed at http://www.Cordax.com or on YouTube Channel (Cordax) at http://www.youtube.com/user/CordaxLWT/feed. reached, the logging string is simply string whilst the logging cost and dropped into the drill-string and landed in the logging collar. Rig pumps may assist if needed. FE log and depth measurements are acquired versus time whilst tripping out of the hole. Once the tool is retrieved, the FE time log is merged with depth-time to produce the final open-hole logs. To expedite log evaluation, the tool can by fished Fishbones Multilateral Stimulation Technology (MST) on slick-line at the casing shoe, and logs processed whilst tripping to Abstract

Thea 12m Fishbones joint ofor liner.Dreamliner Each MST Fishbones completion allowstitanium the installatneedlesion pre-installedof a large number into of 12m length x 15+ mm diameter multilateral branches into the reservoir perpendicular to the borehole Fishbones bothsub maximizinghas four (4)reservoir x 12m contact long andhollow providing flowexit channelsports located connecting at a reservoir 120 degree porosity. The installationtitanium isneedles carried outpre-installed in a single operation into oncespacing. the liner Eachhas been needle run into has the a thinopen highhole. The benefitsexit ports are located greatest whereat a 90 reservoirs degree have lowtensile permeability steel shaft and permeability threaded barriers.through Zonal Multilateral isolation can be achieved using swell packers. There are two alternative designs depending of the reservoirorthogonal lithology. spacing. On setting the it connecting a high speed turbine Stimulation liner hanger, circulation is initiated drive on top with a 12mm tungsten Optionthrough 1 “Fishbones” the completion is a jetted with solution acid designedcarbide for carbonates micro-drill or very bit soft element formations on such3 | Page as coal(or andfluid). unconsolidated The pressure sediment withins. In this case the individual bottom. Fishbones On setting subs the are liner preassembled Technology (MST) together with a 12m joint of liner. Each Fishbones sub has four (4) x 12m long hollow titanium needlesthe liner pre-installed and each into of the exit portsneedles located at ahanger 90 degree anchor, orthogonal circulation spacing. is On initiated setting the bstract linerbuilds hanger, until circulation the pressure is initiated breaks through the the completionthrough w theith acid completion (or fluid). The until pressure the within thepressure liner and shear each ofmechanism the needles forbuilds each until the pressurepressure bre withinaks the the pressure liner buildsshear mechanism for each needle. The needle then jets into the formation until fully deployed. needle. The needle then jets into the shears the burst disc in the liner AThe Fishbones or Dreamliner MST Optionformation 2 until fully deployed.is a drill-in solution designedshoe. Circulationfor harder, insoluble is increased formatio thoughns such as “Dream Liner” completion allows the installation of sandstones, siltstones and fractured rocks. In thisthe case liner the causing Dream each Liner subturbine is preassembled to a large number of 12m length x 15+ togetherOption with 2 “Dream a 12m joint Liner” of liner. is a Each drill- Dream Linerrotate sub hasand th driveree (3) the x 12m micro-drill long hollow bit. titanium needles pre-installed into exit ports located at a 120 degree spacing. Each needle has a thin high mm diameter multilateral branches tensilein solution steel shaft designed threaded for through harder, it connecting Each a high needle speed turbineis then drive drilled on top into with the a 12mm into the reservoir perpendicular tungsteninsoluble carbide formations micro-drill such bit as element on theformation bottom. On perpendicular setting the liner to hanger the anchor, to the borehole both maximizing circulationsandstones, is initiated siltstones through and the fractured completion untilborehole. the pressure within the liner builds shears the burst disc in the liner shoe. Circulation is increased though the liner causing each turbine to rotate reservoir contact and providing androcks. drive In the this micro-drill case the bit. Dream Each needle Liner is then drilled into the formation perpendicular to the flow channels connecting reservoir borehole.sub is preassembled together with a Animations of LWT operations can porosity. The installation is carried 12m joint of liner. Each Dream Liner be viewed at out in a single operation once the Animationssub has three of LWT (3) operat x 12mions long can hollowbe viewed athttp://www.fishbones.as/1264335 http://www.fishbones.as/1264335 liner has been run into the open hole. The benefits are greatest where reservoirs have low permeability and permeability barriers. Zonal isolation can be achieved using swell packers. There are two alternative designs depending of the reservoir lithology.

Option 1 “Fishbones” is a jetted solution designed for carbonates or very soft formations such as coal and unconsolidated sediments. In this case the individual Fishbones subs are preassembled together with

SPE Java . Apr - Aug ‘16 25 4 | Page

Interview with We need to bring visibility for investors Damien to invest long term. Clear and visible rules Dupont and regulations are very important so you don’t have to spend lots of time and money just to try to understand the law.

26 SPE Java . Apr - Aug ‘16 ngie, or it was known as GDF Suez, has been active in Indonesia for more than 60 years, manages portfolio of activities in power generation, exploration, and Eproduction of natural gas, natural gas infrastructure development and energy services. This year, Engie is pulling out of its exploration and production activities in Indonesia, as part of its global business transformation. SPE met with Damian DuPont, the VP of Business Development for Indonesia, that successfully brought in Engie to this country.

So maybe we can start with In Indonesia, infrastructure needs introducing yourself. to be developed. “Great!” We are utility company, not a pure oil and I am Damien DuPont. My gas company. That is where we background is a geophysicist. are different from Conoco or BP. one to two months of due diligence. However, if now you show me your Of course, we are in the oil and seismic line, I may have some issues, gas business too, but not on the Within three years, we managed because now I am more into the same level: we are an emerging to enter into North Ganal as well business development part. I have player. But we can bring to the as in Arguni, which was not so been working in the energy industry table expertise in gas infrastructure big compared to the number of for twenty years, with about fifteen because we have one of the biggest opportunities we looked at years in Business Development, and infrastructure networks in Europe. the past ten years with ENGIE. In We can also bring expertise in power But more and more of the time, to Business Development, I was first generation and renewables. We be honest, I am questioning if this based in Paris developing Hydrogen, also have Tractebel, an engineering country is ready for private investors. a B2B service, and then I moved to company, and we can build water Yes, the market is huge. Yes, there Power Generation. and waste treatment plants with is a lot that needs to be done on Suez Environment. infrastructure. A utility company like Around six years ago, I came back to us can bring a lot to the country, the oil and gas industry into the E&P So we had a strong willingness but I am not so sure if the country is business unit of ENGIE. Since then, to enter this market with its ready for us. I have worked in Qatar, Peru, the opportunities. We knew it was not Netherlands, Australia, Malaysia and going to be so easy; you know, First, it is very tough just to get Indonesia. I have been taking care of just because you are ENGIE, when authorization. It takes so much time Indonesia for about five years now, you arrive it doesn’t mean that all and energy. I think it is something and I have been living with my family the doors were open. But we were that people should work a lot on in in Indonesia for three years. willing to put in a strong effort. As Indonesia because that slows down our business developer, my objective so much activity. You need to put in Six years ago, when you were was clear, to develop the portfolio as so much energy to get just to get an looking from 12,000 kilometers a group. approval. away, how did you see Indonesia? We had a dozen of people working We are used to having very high For Paris, Indonesia is a great to study opportunities to invest in HSE Standards, and we are used to market with 220 million people and this country. In the last three or have a lot of compliance standards. everything to be done. It is a new four years, as a team we looked at We are very happy to follow all country for us and it is the place to more than two hundred business the rules. But here, the rules are be. So when I was in Paris, there was opportunities. For some of them, sometimes not so clear. And even lots of appetite from the group. we just looked at the teasers and when the rules are clear, it seems We have been in Muara Bakau since thought “this has nothing to do the administration doesn’t like to 2009, but we handled that from with us, that’s not in line with what take decisions; and it slows down Paris. I am a business developer, we are going to do”. On others, we very much on the process. When so when people sent me here it is spend a little bit more time to qualify company like ours decides to invest because we want to grow. and then we decided to let go. For money, and they can put big money; others we really put strong effort, you want the project implementation

SPE Java . Apr - Aug ‘16 27 to be fast, because you are going that. However, things are always corruption and that is something to put some money and it is going changing. A new tax will appear you need to capture. to be many years before you can that you never knew about before. get your pay back. Well, we know I mean if it happens once; well, why When the President came into to build something will take two to not? But when it starts to be routine, power, and we can see the PTK as a five years. That is normal. But we that is when people start to get strong effort to tackle this issue. I lose so much time, not because of uncomfortable. Well, when you are think more messages need to be the construction or exploration, but in the country you can feel it; you passed very much every time. Before getting authorization, and you don’t can understand. But, when you are making any business we do an ethics understand why it is. If the delay is 12,000 kilometers away, you will ask and compliance check. If we are because this document is missing; “Come on guys. What’s happening not comfortable with a partner, we fine, I’ll go and make sure that the over there? Why you are so slow?” prefer not to do business. There is document is ready and then I will “It’s because of the bureaucracy.” always a question for headquarters come back and give it. But often “Yes, but why are you so slow?” ‘How do we deal with that?’. It is we don’t know why they are slow. I “Okay. I’m trying my best.” “Yes, but always a tricky point because I think that bureaucracy is one big why are you so slow?” don’t want to accuse a country that issue. everybody is corrupt. It is always a So it is difficult for us to make a point in the democracy where you Also, the fiscal system lacks stability. business here. We have a high always have some people who abuse I am speaking about taxes and threshold for investment approval the citizen’s money, and that is the others, which are sending wrong because we are not getting visibility. issue. But then again, this issue is not signals. If a company wants to invest Our decision-makers don’t feel why we decided to exit. millions or maybe billions, it needs comfortable so they capture this stability. You can always invest your with a higher expectation on returns. So ENGIE will leave Indonesia. money somewhere else in the world. What is the reason? A company like us is in more than 70 These issues are going around in countries. Every time you speak to circles and are not being resolved. Yes, ENGIE has decided to exit your board you say, “Okay, I would If you are not careful, you will drive Indonesia. This is a strategic like to invest in this opportunity”. away people like us from investing in decision. It has nothing to do As a business developer, I was Indonesia. with Indonesia. It has nothing to presenting tens of opportunities do with oil and gas. The group per year. When you spend one or Sometimes people believe that we decided to move from a carbon- two months for Due Diligence, that are bad boys who only want to take based (oil, gas and coal) business is effort and money for the group. money from Indonesian people. We model into something that we call Then, when you finally say “On this are not trying to steal from anybody. 3D: Decarbonization, Digitalization, one I’m not so sure what is going to We just want to make a business and Decentralization. We believe happen…” Decision makers hate us, here as in France and in Europe. that the renewable industry will because you have no visibility. You come into our industry; and we can make tough decisions as long as This is a strong message. We have need to change our mindset. We you have visibility and you know it is been hearing it, but I think we need to find a new way to walk, a fair decision. Having little visibility need to air this more and more to because customers are starting to is a really big issue, but that is not the relevant parties. see differently. They have access to only for Indonesia; it is everywhere. all of these communities, and they I agree and I think I’m not the speak to each other. You can put a We need to bring visibility to only one too. I’m sharing with the solar panel on your roof and you can investors, because we need to put industry. produce your own electricity and sell a lot of money in order to build what you don’t use. new plant to bring energy, to build The next issue is corruption. For infrastructure, and to give jobs some people this is in the past, As a result, to fulfill our commitment, to local people. So, bring them but we still have some questions. we decided that we want to move visibility so that when they invest Are the rules really applied? Are away from coal, and so we sold for ten, twenty, or thirty years, they all people treated in the same Paiton in Indonesia. For oil and know that their assumptions on way? Such questions on ethics and gas, we decided to refocus on regulations and such are not going compliance make foreign companies Europe, because we are European to change again and again. Well, like us in Paris 12,000 km away entrepreneurs. We are going to the oil price dropped but this had feel uncomfortable. Indonesia has try to exit Indonesia, Malaysia, nothing to do with Indonesia; so we very nice people, very nice to work and some other parts of the world are not going to say anything about with, but there is still an issue with where the industry is not related to

28 SPE Java . Apr - Aug ‘16 the European market. In the US we need to be humble. You should not to worry. I prefer people to tell me decided to sell our gas merchant try to duplicate the way how you are “okay, it’s not ready. But it will be business and power generation. It is working, they have different culture ready at such time.” And then the really like a revolution. and different expectations, and we lines are clear. I know the timeline need to be willing to start to learn. I and I can adapt. Only oil and gas will leave Indonesia. did manage to learn to speak Bahasa My colleagues in Suez Environment Indonesia; I try to learn about the Land access is a big deal in working in Power Generation are culture. Indonesia. How is this handled in here to stay. They still have the France? appetite to grow with solar and Eventually, I learned that what gas power plants. Gas is still part a person here needs can be I am not into politics, so I don’t of the strategy, it is the cleanest completely different to how they exactly how land access should be carbon-energy. We can also can present it. And that personality is done. In France, we have projects use renewable geothermal energy what I underestimated the impact that are key for the country: you to generate power. We have of the culture. If I can sum it up, in need to build infrastructure. Of some partnership with Supreme in Europe we have four seasons and course you are going to deal with geothermal projects. But I question one of the seasons is winter; so you some people because you are if this country is ready for this type have to prepare for winter. But here going to take away their fields and of massive production. We also in Indonesia, the nature is beautiful. houses. In France, you try your still have a big appetite to develop best to please everybody; but you activity in services. So it is not cannot please everybody. We ENGIE leaving the country, it is just have 60 million people. Here, you upstream. have many more: 250 million. In France, we have an entity called When you think about investing DDE (Direction départementale in Indonesia, you have these de l’équipement), which is a indicators coming from well- French government entity, known institutions. But that who discussed with people at the end of the day, they and tries to negotiate and are just numbers. We didn’t pay people some money believe the condition was for them to move away. I so strong, but still attractive. understand that sometimes We believed that we could when people know that there manage to establish ourselves is a big project, they start to here. In the end we managed buy and build on the land. That to do it, but the effort we had is honestly against the good to put in was huge. For example, of the country. Of course you when you enter, first you have need to negotiate a fair price; and many expatriates. But you soon a fair price is always difficult to find need a good Indonesian Operations because it is the money that people Manager; somebody to help us want to buy a new house or a new who can speak Bahasa. Actually, You can choose anytime of the year field, and there is the psychological the people in front of us can speak to go somewhere and pick any kind value of the house. At the end of the English, but we have cultural of fruit or vegetables you need. You day, when it is good for the country, differences which had to be tackled can just put the seed and everything in terms of permitting for foreign as well. It took some time to find just grows back. And I think that company like us, that is when the the right person, and so now things gives a different mindset. People government should bring the are going smoothly. When we need here, sometimes they don’t project visibility and say “We will be on your him to speak to the authority he themselves too much in the front, side,” because nobody will be able can normally arrange face to face and there is nothing wrong with to deal with this decision if he is not meetings and so things move faster. that, I’m not judging here. What I an Indonesian people. I think that For me, I didn’t say we wasted one mean is when were in the meeting is going to bring lots of visibility, and a half years, but looking back, and we said like “Okay, we need to because permitting is the key. That my first move should have been see upfront, we need to prepare” but is one of the examples I wanted to to take a good manager. Maybe people in bureaucracy or authority touch. we underestimated the cultural are like “It will happen. No worries.” difference. For me, I always said And for us, it is stressful. When Have you experienced crossed when you go to one country, you people tell me “Don’t worry,” I start messages from different

SPE Java . Apr - Aug ‘16 29 ministries? And then you move to the remaining don’t compromise. We would rather thirty-five percent. On these, not going into an opportunity rather Yes. You know, Indonesia is lucky we spend a little bit more time, than going where the HSE is not fully to have plenty of natural resources. sometimes it was because of fiscal mastered. But sometimes it is a problem, a reason. Even if the PSC is attractive curse. An example is gas. If you enough to put money in, the Sometimes, it was purely related want the gas for the domestic government needs to understand to the quality of the road. We had market, whatever you want to do that when a company like us an opportunity where we have with it is fine. And if you want to manages investments, we are not gas which can be monetized with export it means you are going to comparing investments only within trucks. But the trucks have to travel get some royalty, which is good for one country. We are a company on roads with poor quality. We the Ministry of Finance. Sometimes who invests worldwide. Your PSC don’t want to find in a few years two ministers may have different is competing with the fiscal terms time that a truck where ENGIE has expectations. We as a private of Malaysia and Thailand. A few a share has an accident; because company can follow the rules, but years ago, our financial team makes people will forget that possibly the sometime they are fighting between a heavy exercise to compare all of issue was because the truck was them, and we have nothing to do the PSCs worldwide, with experts not in good quality or because the with that. We are fulfilling the rules, from all different parts of the world. road was not properly maintained. but we don’t know the direction, What we did was we put strong All that makes us not comfortable, which is why we get delayed and effort to show how nice it is when which I think sometimes it was lose time. You have to give us a clear we arrive, and we called this the “go kind of a weakness because you view of what you want. east” strategy. Four or five years come with your own standards, ago, the group was to go east, it but it was tricky for myself and our So what happened with those means here, because it is going to decision maker because we need two hundred investment be the new market. So, we came to keep high standard. When you opportunities? with lots and lots of appetite. And to speak about HSE, you speak about do this strategy, what we have done life, about injury; so we need to be Of the two hundred, the big ones internally, we studied all countries high standard. But you understand count about one third or even more. in South East Asia, like Thailand, that for country like Indonesia, our We are more a gas company rather Vietnam, Myanmar, Australia, competitor maybe offers a little than oil company. We are looking at Indonesia, and Malaysia. We studied lower than ours, because HSE costs gas projects, mainly in Kalimantan, all the PSCs. We also studied the money. To preserve life you need to Papua, Sulawesi, where geologically history of PSC in Indonesia; so we be proactive, not reactive. There is a it is not so exciting. Java and monitored two or three PSCs and we possibility that it will never happen Sumatra were really at the end of put marks. It is true that when we but that needs time and money. the queue, because we wanted to be look at the PSC of Indonesia in terms offshore rather than onshore. of ranking it is not the best one in So possibly here you have an issue, terms of attractiveness of the PSC. because the standards a company Around sixty percent of And we have not just looked at the like us brings is possibly a bit too opportunities we had no interest PSC but also at the tax. high compared to what the country for technical reasons, it has nothing is ready to pay for. And that is always to do with Indonesia. For example, Possibly ten or fifteen percent of tricky. Actually I can understand. perhaps the geology was not opportunities were turned down I mean you are four times bigger interesting. Every time I wanted to because we were not sure how to than France in terms of people; you qualify an opportunity, I had a quick commercialize, or due to a lack of need to help people to live, to get look and sometimes it was easy to infrastructure. better educated, you have a lot of say ‘no’, but usually I talked to my challenges. There are lots to handle; I technical guys and they said ‘no’. So we are down to twenty percent understand the government priority of opportunities. For five to ten may be different. Then, in maybe five percent, the percent of them I hired a due issue was the partners related to diligence team, and, we started dig However, If I am a little bit blind ethics and compliance. A guy could with much effort. But for many, very or focusing only in oil and gas, it come to me present the opportunity. quickly we notice a fatal issue. For is an issue because, of course I can I was always polite and listened example, with projects in Sumatra invest in Europe but it means that to him, but when he left I said we and Java, you will see that the HSE is investment cost here is higher and would never go there because he is sometimes not the same standard as less attractive. For the remaining very close to corruption and bribery. what you used to see on the North part (of the opportunities), you Sea. And again HSE is something we go present the opportunity to the

30 SPE Java . Apr - Aug ‘16 group, sometime you win sometimes About fiscal and tax, I’m not saying investment attractiveness, talking you don’t because the competitor what should be done but I am only to many parties and government is better than you, it has nothing asking for clarity. There are cases and the partners, how you shift to do with the country or the where they stick to a law and it from geoscientist into this, and opportunities. doesn’t help, because the message what drove you? passing is very negative. For What should Indonesia do about example, when people read about I should start from the beginning. its fiscal regime? delays to IDD and Abadi, it would When I interned in the oil and gas be very negative for the industry. industry, I was doing geophysics. I For me it is difficult to say “what is Because people will start to be was 20 years old at the time and I the best solution?” I am a private scared, they will be like “What will wanted to travel, and I was a guy investor, so I couldn’t say you should happen to me? If it happens to my who was better in math than in do that or that. I mean this your colleague, what will happen to me?” foreign language; so I decided to country, I am French and I know that And I don’t know when it is going to follow it just by luck. you want to protect your country rain and it is not good, because that and I am not shocked about that. is not what you want. I think it is possibly like most of your readers, you have a broad idea When you decide to take ten percent The Indonesian government need of what you want to do but you participating interest we know about to understand that we are here to don’t know. I liked geophysics and it. We know that when you are invest a lot, so we should get some I wanted to go offshore. I was once entering into a POD the government comfort. If I compare to European a field geophysicist doing seismic can take ten percent; of course it is countries, when we try to attract acquisition. I went on board for one very cheap. Because you take all the private company, of course you month working throughout the day, explosion risks and you have your decide what the strategic industries and then I was off for two weeks, POD and your term. It is fine; it’s part are. Some I want to really master and I went again for one month. I of the country. But you know your that because it is strategic for my loved that but it was tiring; I did that rules. You make your NPV and it is country; or a nuclear power plant for two years and a half and then I working; then, afterwards it is your that is going to be managed by the was a staff geophysicist. At the time rules and we follow your rules, for government because it is key to the I worked for Thales, which was a example in PSC is government take, country. It is up to government to competitor of Fugro. I was doing gas FTP, you name it. decide what is key for the country. hazard surveys. But for industries that the country But when you look at the law, opens up for private investors, you But then I felt myself a little bit transfer tax, gross profit tax, it is should help us. If you help us to put squeezed as geophysicist. I wanted not clear. We put so much expense the money, we will put money in the to do far more than that. After but at the end we are not so sure. country and not in another country. five years in geophysics, two and a So exactly what are the rules? I’m And that is the only thing we ask. half years on the field and two and not so sure I understand. It is a And at the end I believe it is a win- a half year as staff geophysicist, I lack of visibility and stability for win situation. completely changed my mind and investors. Even for people here, I wanted to get my MBA. And my sometimes (the rules) are not so Clear and visible rules and MBA would allow me to go into clear. Sometimes when we are regulations are very important; so business development that I have discussing, they have different you don’t have to spend lots of been doing now for 15 years. And I interpretation of the same law or money with tax adviser, legal adviser enjoy it, clearly. regulation or tax. Imagine that I’m a just to try to understand the law. buyer and you are a seller and when And sometimes the rules are also And I think it is more to your you are discussing we don’t have not too clear for them. Again, it is mindset. Some people are really like the same understanding. That is an never easy. I don’t underestimate technical. For me, I did geophysics issue. Because you are not sure, you the work that you have to do; but if but what I like is the lifestyle of a take the worse case. You said, “Okay you can bring clarity and visibility, it field geophysicist and my mindset I’m not so sure that I understand. will be very good for the country. was not very sharp in geophysics Possibly it is slightly better than what interpretation. I wanted new I think but because I’m not sure I You are geoscientist, and most challenges in new countries and would take the worse case.” And I of our readers, especially the new business opportunities. That think it’s starting to get too much, students, are petroleum engineers was how I moved to business because we already take a big risk or geoscientists. And your job development. on the gas price. And then one day now is dealing with developing you just thought “it’s too much,” business, looking into the And clearly you are going to

SPE Java . Apr - Aug ‘16 31 continue doing along this path? help you to face the future. and more the energy of the future. Some says that in 2030 or 2040 Possibly no. My objective is to take So, the 3D that you mentioned, more than 30% of the energy more responsibility as a manager, namely Digitalization, worldwide will be produced by the hopefully to manage a team or Decarbonization, and sun. Some countries like Africa and operational view or business unit. Decentralization, can you the Middle East will have a big share, What I like as business developer elaborate a little bit more? and Antarctica will have very a small and I would like as manager is really share. to be able to work with people with Today, we are convinced that the different expertise and different time is changing. “Big is was better” We also believe that consumers mindsets, like people who work in is in the past. We are convinced will change their mindset, because finance, in legal, in subsurface, in that it is going to shift and not people are very much connected. surface, in HR. Because when you anymore going to be the case. We Now you can say what you think; acquire your license to buy a new are still going to produce big in you can raise issues by yourself, just company, you need a due diligence different parts of the world. For by speaking with your neighbor, so you touch all subjects. And that example in Western Europe, we are your connection. Through Facebook is what I like, learning across multi over capacity on power generation. you can easily have thousands disciplinary task, multi cultural team We believe in COP21 Paris. We of followers that you don’t know as well, because that is very rich. believe that people will start to physically. At the end of the day, it That’s what I like. speak between themselves because becomes a new business model and they are more connected. So for companies like Google can become What is your advice for students? example, if I put solar panel on my our next competitor in terms of roof, and I go to vacation, I can utilities. You have to be good in what you sell your energy to the guy close do in terms of hard skill or technical to my house. Why would I want to Oil and gas companies possibly still skill; but what makes you different do that? Because it is a win-win. As exist but people like us are at risk, is your soft skills. It is your appetite a citizen, I invest in a solar panel, I so we need to reinvent ourselves to learn, your willingness and your pay for that and I get free electricity. to face this competition. Because flexibility. As you understand, ENGIE I pay CAPEX and the OPEX is free, if you are a company like Google; has completely shifted in terms of because it is my home. But when you master big data. They have strategy. For people like me, oil I am not here, why can’t I sell that so much information because we and gas is a big industry; I need to energy to my neighbor? it is good are connected, and if it is being reinvent myself. I don’t say that I for the environment because I don’t managed by big data to find a new want to leave the company, I just produce anything from something software or application, for a couple need to reinvent myself. And it is else, and it costs less in terms of of euro you can say how to optimize because of your soft skills, your infrastructure. your energy bill. If you don’t offer willingness to progress and to that to your clients, you’ll lose them. accept the change that I think you Look what has happened is Africa. Energy is starting to be a commodity will be able to enjoy yourself and to You know, ten years ago in Africa and you only fight on prices, if you progress in whatever decisions you there was no infrastructure at all. fight for price with no added value, make. People were leaving the countryside you are dead. because they don’t have electricity Of course you need to focus on your and no access to natural gas, of Big oil and gas companies, like hard skill, you need to learn the job, course. There are no fixed telephone BP and Total, their added value is but soft skill is something for me. lines, but they have mobile phones. that they can go to deep offshore, When I look at people, I am very But how are you going to recharge HPHT, places where small companies careful. I have on the top of my head the mobile phone? So, you invent cannot deal with. That is a clear somebody who is probably just 28 a solar battery, which is sufficient added value. years old now and we found that she to recharge your mobile phone, has a lot of potential. Of course as and the solar panel is big enough As a utility company, we need to a 28 years old you are not as skillful to also power a small fridge and find our own business model. It used as the older people, but you look TV. So, the issue of no telephone to be, because we are big we are at the potential, the attitude, the infrastructure and no electricity able to put a lot of money, we can willingness to accept the fact that is solved together. In Africa you still do that. But we know that the sometimes they don’t know, the have them everywhere. That is Chinese have an even bigger pocket hunger to learn, the mission to move why we believe in decentralization, and we are starting to struggle. So forward every time. I think that is key digitalization, and decarbonization. that as well is a way to follow the and those are the soft skills that will We believe that solar will be more future and to get ready, because

32 SPE Java . Apr - Aug ‘16 if you don’t move quickly enough, A year and a half ago, we had are not so smiling. you can be like Kodak, you will lose training about innovations, and they the business. We don’t know what showed us companies like Google What is wonderful here is your will be tomorrow, nobody knows. and Facebook. What I retained people. The first feeling when I come However, we know that we need from that is, “Don’t be afraid to here is a big breath of fresh air of to reinvent ourselves, we need to fail.” These companies clearly have people. You can see the streets are be open-minded, and we need to a culture of not afraid to fail. People full of young people who want to have new type of managers who are there to invent the world of do something and that is great, you are more delegating to local people tomorrow and to do that you have should preserve that. Sometimes it and individuals to find what it will to fail, because not all your ideas is frustrating because people are not be tomorrow. Going a bit further – work. That means a company like so conscious that life is not so easy Research and Development used to yours needs a complete change but it is a strength as well. At the be a very centralized department of mindset; not just people in the end of the day, you take life without of 200-300 very smart people. I bottom but also right to the top many questions and may make big don’t deny that they are still very management. Now, in management things. That is what I like here. smart. But if you want to access we still think of ourselves as small startups, they are small groups Superman. “I know everything, I am I work in Kuala Lumpur when I was a of individuals who are smart as going to tell you where to go, I will field geophysicist, I spent 6 months well. Possibly they are not being give you a very clear roadmap.” Now over there. When I arrived in Jakarta, identified by big companies like us, you have to accept that you don’t I feel it was like Kuala Lumpur 10 or but if you have access to them you know everything. You have to be a 15 years ago. It is a pity because you have access to thousands of ideas. little bit more humble and delegate have so much more proportionally. Of course, it is still difficult to pick up more to your team. “I am no longer I think their resources has been what is a good idea, but at least you the guy who will tell you that I properly used to develop the have access to all the ideas. What know everything, I will be the guy country, help people get better you have to do with this new way who are going to help you to find a educated, while in Indonesia, this of dealing with information is how way to prepare for the future.” You work had not been done. This is very you treat the information, how you need a complete change of mindset frustrating because you can always digest it, and how you make it work. because a company like us has fall in love with Indonesia, and it is You are going to start to say, “I no always been afraid to fail. It is very frustrating that so much can be done longer want to invest in a one billion fascinating that we embrace this new for the country and for the citizen project, or two billion project. I am strategy. but not done. going to invest in a thousand small projects in the range of a couple of So, personally, will you be staying But it is never black and white, it million, because one of them might in Indonesia or will you move is pros and cons. I really hope that be a success.” That is the way to also? for the oil and gas industry, the deal. government will understand. If we succeed to exit the country, Say you have a big delay in a one or the idea is to close the office and Thank you for your time. two billion dollar project, it is a huge go back to Paris. Personally, I only impact in your financials. When you had a three years contract that has have a big delay in some of the small been extended for six months until projects, some are not working well; Christmas. After that, the idea for you don’t see it as a big risk. So, you me is to go for new challenges. And are ready for the future, have better one of my new challenges will be management on your financial probably to leave the oil and gas sources, you are closer to your industry and focus on something customers; all of those are the things new like the 3Ds. we are trying to build, but I know it is challenging. And as a group, clearly I really learned to love this country. it is challenging, internally everybody Jakarta is not an easy town, but need to reshape their mind, 130,000 when you go outside people are so employees. Imagine a big boat, the nice. I have been travelling across group is doing a lot of things for South East Asia and honestly I did that. As a business developer, I am not see as much warmness (in other quite excited about that because I cities). Here, people are very nice, think it is a great challenge. they are smiling, wanted to help, curious, and that is something I would miss because in Paris, people

SPE Java . Apr - Aug ‘16 33 Interview with

The right time to impose tax is when we Zahra & produce the oil and gas, even though Hendra it has to be regulated earlier to ensure certainty.

34 SPE Java . Apr - Aug ‘16 PE met with Zahra Mulachella, is land and building tax (Pajak Bumi Do PSC contracts hold a higher Tax and Insurance Manager dan Bangunan –PBB), billed on the position than the new regulation? at Premier Oil Indonesia, entire working area, as property tax Sand Hendra Halim, National Tax is imposed on both the surface and H: GR 79 states that provisions in Manager at BP. Both are members subsurface. So if, for example, you existing PSC contracts remain in of the Finance and Tax Committee have an offshore PSC with an area effect until they expire, and that of the Indonesian Petroleum of 10,000 km2, you can imagine the anything not regulated in the PSC Association (IPA). We discussed size of the tax assessment. will abide to this new regulation. current tax matters in the Indonesian That is the catch. PSC’s are very upstream oil and gas industry. The Z: The principle of “assume and general and many provisions are not conundrum is how to achieve the discharge” in the PSC contracts had regulated. To further complicate best arrangement of tax that allows been considered as an assurance things, GR 79 applies retroactively. maximum benefits to the country in inviting and keeping foreign This is one of IPA’s major concerns; and still encourages a healthy level investors in the industry. With GR 79 should apply only to the of private investment. Indonesia has such a principle, investors became future contracts. been lingering with similar issues for confident to commit their funds for decades. Meanwhile, exploration a long-term project (20-30 years). In short, IPA’s position is that the and production dwindle. This Let’s draw a simple analogy with ‘assume and discharge’ principle interview should shed a little light on saving money in the bank. Bank A should be reinstated, i.e. Contractor the matter. is a reputable bank that offers an is only liable to pay corporate interest rate of 7% for savings with income and dividend tax and other What taxes are relevant in the oil a fixed rate guarantee for the next taxes and/or charges should be and gas industry? five years. Bank B offers an interest borne by the government. rate of 9% for the first year, without Zahra (Z): any guarantee of the amount of How does the Government justify In general, tax in the oil and gas interest to be applicable in the future GR 79? industry is similar to that of other and in addition to that there was a industries. There are income taxes, precedent where Bank B changed Z: I think this question should be Value Added Tax, property tax, local its saving terms and conditions addressed to the government. taxes and charges. drastically. Although Bank A offers However, from our point of view, a lower interest rate, an investor the purpose of GR 79 was basically Hendra (H): will likely choose it as it is steady to regulate and limit cost recovery Taxes in oil and gas industry are and reliable in safeguarding the and to increase state revenue - divided into two eras: namely the era investor’s cash flow for the next specifically income tax from the oil before Government Regulation (GR) 20-30 years (during the term of the and gas industry. If we look closely number 79 of 2010 and the era after contract). at GR 79, it regulates income tax GR 79. Before GR 79, Contractors calculations, tax deductions and only paid corporate income tax This Principle in the contracts prior cost recovery on what may or may and dividend tax; other taxes were to GR 79 has provided certainty to not be regulated in the contract. borne by the government. The term investors. But after GR 79, several It also contains new taxes, like the in the PSC for this mechanism is ministries and local governments land and building tax that used to “assume and discharge”. In income imposed additional taxes or levies be borne by the government. It tax, deducting the tax from the that were not inline with the PSC. changes value-added-tax, which employee’s salary is the contractor’s For example, some Operators had used to be directly reimbursable, obligation. Other taxes are the a water rental charge imposed into a cost recoverable item. GR government’s responsibility: like by the local government, and the 79 also imposes income taxes on value-added tax, property tax, and payment increased 200-500% in uplift income and the transfer of local charges and retributions. one year. As a result, the investor participating interest. Value-added tax is different from struggle to estimate their costs for other taxes, because we have to pay a short period of time, let alone for GR 79 regulates tax audits for it up front, but then the government the duration of our investment for the industry, which have resulted will reimburse it. The tax regime had the next 30 years. This matter has in disputed tax assessments of provided certainty for the investor become a major concern for PSC hundreds of millions of US dollars prior to GR 79. contractors in the IPA since GR 79 for several PSCs. Some cost recovery After the issuance of GR 79, was issued. This lack of certainty items which are allowed under PSC Contractors have uncertainty in will discourage exploration and will contract are rejected under GR 79. It fulfilling their taxes obligations. This impact detrimentally to Indonesia’s appears that GR79 reduces the size is a big issue. The most recent issue future oil and gas production. of the cost recoverability entitlement

SPE Java . Apr - Aug ‘16 35 for contractors which reduces the (KEN), the presidential staff, H: This study was conducted by contractor’s entitlement. and some academics. Studies Universitas Indonesia and IHS. We have shown that the oil and gas also made an internal IPA study. No On Land and Building tax, investment climate prior to the other country with PSC contracts some PSC’s were imposed with issuance of GR 79 was more imposes land and building tax. USD260mm of taxes for fiscal years attractive as it provided certainty What’s even more unusual is that 2012 and 2013 that were due on and stability. the land and building tax is also December 2013. The PSCs have to imposed on production, although pay the disputed amount before From the government viewpoint, we already pay income tax on the they can contest to objection to the goal of GR 79 is to increase tax same production. So, Indonesia is the DGT or appeal in the tax court. revenue. Is that realistic? unique, but not in a productive way Although the Ministry of Finance for investors. We continue conveying finally issued a regulation (Peraturan Z: Well, no major players have this message to the government. Menteri Keuangan) in 2014 that signed new PSC contracts in the past granted a 100% land and building three to four years, and exploration On the land and building tax, how tax reduction for PSC’s signed after activity is declining. Is this a direct is it unfair for investors? GR79, investors are expecting a impact of GR 79? Probably, because more firm and thorough regulation as mentioned, fiscal certainty is the H: We can divide a PSC into two that grants such exemptions on land main concern of oil and gas players stages, namely exploration and and building tax as implied prior to in Indonesia. Of course there will be exploitation. GR 79, with “assume and discharge” other contributing factors, such as provision. less geological potential. Regarding the exploitation, the government gave a tax facility in H: The forerunner of GR 79 was the H: One example where GR 79 2014, effective in 2015, in which implementation of the income tax hampered investment is when the land and building tax will not be law, in which it states that “taxation government imposed Rp 3.2 trillion imposed in the surface area. This is on the oil and gas industry will be of land and building tax (PBB) on fair, because in a PSC, we use a small further regulated.” It also follows new PSC’s. This created such a big portion of the surface for drilling and implementation of the State Budget noise in the industry, especially production. (APBN), which states that cost when the media covered this news recovery will be regulated. So, GR 79 intensively. Potential investors will However, it gets twisted. One was issued as a follow-up of other rethink their options, when they PSC, for example has offshore regulations, which mandated for this know that they have to pay a big exploration drilling activity in which matter to be further regulated. amount of property tax. For example they reported the use of surface BP is asked to pay 600 billion Rupiah area around 4 m2. Yet, the assigned In the drafting of GR 79, was for two exploration PSC’s for three purchase value (NJOP) for that area, there communication with the years. This makes no sense - it is as the basis of PBB tax, is 25 billion directorate general of tax? bigger than our PSC exploration per meter and 600 billion per square commitment. So of course, people meter. The amount of the NJOP is H: Yes, absolutely. There were will think hard before investing in incredibly expensive and frankly two years of consultations prior Indonesia. quite baseless. The block is in the to the issuance of GR 79. Yet, in exploration stage. The Operator has reality the input we gave was not Moreover, in Indonesia, when a party no stream of cash, yet they assume accommodated in GR 79. This is brings the issue to court and loses, all the risks. Why impose additional what caused the “big noise” in this we have to pay 100% more as a costs? industry that still continues to this penalty. No one will be interested to day. There are indications that the deal with such a risk. For exploration blocks, BP with government has started listening to our block in West Aru, along with our concerns, so hopefully GR 79 will Exploration is already expensive. 23 other PSC’s, have received tax be changed in the near future. Drilling one well will cost millions payment notices (SPPT). We have to tens of millions of USD. The risk an objection to this tax, but we are Z: Actually, several government is too big without “assume and obliged to pay a minimum portion of departments have raised their discharge” in the PSC. it before able to bring it to the court. concerns that GR 79 has disrupted So there have been some payments, investment activities in oil and gas: What about the study from IPA but this is not a sign of acceptance SKK Migas, the Energy and Mineral comparing Indonesia to other from our side. The good news is Resources Ministry (ESDM), the countries? some of the PSC’s have won their National Exploratory Committee cases in court and now are in the

36 SPE Java . Apr - Aug ‘16 process of receiving refunds. Second is the land and building tax tax, a 20% Branch Profit Tax (“BPT”) for onshore, offshore and buildings, is imposed on the net gain of the Later, in the exploitation stage, which all belong to the State. Third transfer. the land and building tax (PBB) are local charges, like the passing is imposed on production. From permit, charges for excavation class Another uniqueness of GR 79 is statistics, the tax charge is around $2 C, charges for using underground that it stipulates that the subject per barrel, which is around 20-30% water, and many other levies. Now, of tax is the Contractor, which of operating expenses (opex). As the contractor has to pay all of those means the party who signs a Bu Zahra has said, this tax charge local charges during the exploration PSC contract, or whose name is increases every year without any and exploitation stage. mentioned in the PSC contract. If clear basis. Thus, the investor has the transferred is done by the parent no “certainty” for economic and Z: If the investor wants to share the company, this parent company is financial planning. risk of the block by farming-out deemed as the contractor from their interest, GR 79 imposes tax GR 79 and its implementing Exploitation PSC’s that will soon on transferring the participating regulation’s perspective. One of expire are problematic. To gain interest. There are exceptions, the implementing regulations of an extension, the Contractor has such as the transfer of participating GR 79 in the Ministry of Finance to sign a new contract with GR 79, Regulation No. 257 year 2011 or and bear the risk. Many of these PMK 257/2011 that imposes another blocks are mature, and hydrocarbon tax (outside the previous 5% and production is low and declining. 7% tax) of 20% BPT on the net The imposition of land and capital gain of the transfer. For building tax makes Indonesia example, if I sell a part of my oil and gas investment not participating interest in an attractive. exploitation stage PSC for 100 million, then I have Let’s get back to a to pay 7 million tax on general view. If a transfer. To calculate the foreign investor wants BPT, the 100 million may to invest in Indonesia be deducted by 7 million upstream oil and gas, and unrecovered costs they may start with a related the investment joint study, then then be (sunk cost). The awarded a PSC. What are remainder (profit, if any) the tax elements imposed will be taxed at 20% as BPT. on this investor? The unique part is that this 20% BPT is not regulated H: Well, if the block is in the under GR 79 but under another exploration stage, then they regulation that is lower in hierarchy have to pay Value Added Tax compared to GR79. (Pajak Pertambahan Nilai – PPN) of 10% of the gross amount of their H: Since a PSC is a capital intensive investment. For example, if the interest during the exploitation operation, the purpose of farming- exploration is 10 million, an investor stage to a regional/national out is to share risk. But the 5-7% has to pay 1 million of Value Added company as required by the PS. transfer tax plus 20% BPT will Tax. This tax can be added to the Another exemption is on transfer for discourage risk-sharing among cost recovery only when the block risk sharing purpose under certain investors which will hold back is in production. While if the block criteria; less that the whole interest exploration activity in Indonesia. did not reach a production stage, is transferred, the interest has been We have tried to provide the the exploration cost and cost of held for a minimum three years government with our concerns 10% VAT will be solely born by the period, exploration activities have regarding the issue. contractor. It is one of our requests been carried out, and the transfer is to the government to reinstate the not intended to generate profit. Is the Branch Profit Tax applicable VAT deferment facility. So, during for both foreign and domestic the exploration stage, the contractor Other than that, the government investors? is not burdened with any tax, except will impose a 5% or 7% tax from the cost of exploration itself. the gross amount of the transaction Z: In addition to income tax on a value. In addition to the 5% or 7% profit, Indonesia recognizes another

SPE Java . Apr - Aug ‘16 37 type of tax; dividend tax or BPT in regulation is lex generalis (“Lex Treaty stating that any PSC that which can be considered as the specialis derogat legi generali”). This signs the contract after December second layer of tax in a company. means that special legislation such 1983 will be charged with 10% tax. as a tax treaty can override general However, from the government I would assume that dividend tax legislation or Indonesian domestic point of view, the usage of Tax is similar to BPT in general tax income tax law in its application. Treaty compromises the state regulation. Referring to the income revenue. In our opinion, Tax tax law (“Undang-Undang PPh”), it So while BPT is payable at 20% Treaty is an agreement between provides an exemption of dividend pursuant to article 26 paragraph 4 two countries that has to be tax for an Indonesian incorporated of the Income Tax Law, the tax treaty recognized and honored. If it results company or Perseroan Terbatas may regulate differently, depending in a problem in profit sharing, (“PT”) if the shareholder/recipient on the agreement between the two then the government should fix of the dividend holds at least 25% countries. the PSC contract and not issue of ownership and the divided is Tax Assessment Letters (“Surat paid out from retained earnings. Take Premier Oil. From the Ketetapan Pajak”/ “SKP”) that in a However, we are not aware of beginning, we complied with way ignore the tax treaty. the application by the Indonesian the application of the Indonesia- incorporated PSC. Right now, we are still on a long and winding road, as the verdicts For a foreign incorporated company, from one tax judge to another are pursuant to article 26 paragraph different. Regarding a tax treaty, 4 of the Income Tax Law; a 20% the government has two options: tax is imposed from a profit revoke it, or amend the PSC after corporate income contract. Two years ago, the tax on a representative government clearly stated of a foreign company that it will not extend (“Permanent the expired BIT (Bilateral Establishment” / “PE”). Investment Treaty). Such Subject to certain a clear statement is good criteria, a BPT exemption to increase clarity. The is facilitated under second option will bring UU PPh, however, we the PSC renegotiation. are not aware of the The PSC contract is not application in the oil and a holy book; it is just an gas industry. agreement between a country and an investor, and Beside GR 79, what are our it can be changed through other tax issues? negotiation, not through a decision from one party. Z: Another material dispute that emerged in year 2011 was the Z: Behind the scenes is a debate application of tax treaty agreements about which law is more powerful: for income related to PSC operation Netherlands Tax Treaty agreement. the general Tax Regulation or the in Indonesia (Branch Profit). But, this has been disputed by the Tax Treaty. The appeal process tax authority in Indonesia, but it has in the tax court has been going A Tax treaty is an agreement provided no strong legal grounds to for more than three years. BP between countries and is stipulated prevent the application of tax treaty. and Premier have provided many under article 11 and 23 A of the This has introduced another big expert witnesses: mostly reputable 1945 Constitution. The President uncertainty into our industry. professors with unquestionable may conclude treaties other credibility. Among others; professors countries and tax shall be regulated The industry is of the view that the of state administration law, by law. BPT dispute is a contractual issue. professors of contract of obligation While Tax assessments received from law, a professor of international tax A Tax Treaty is binding on the taxing authority in Indonesia law, a professor of Indonesia tax the parties to it and must be are not an appropriate “remedy” for law, and professors of International implemented by them in good such contractual issue. contract of law. They all hold the faith. A Tax Treaty is considered same opinion that the tax treaty lex specialis while general tax H: In BP’s case, we use the UK Tax shall be honored.

38 SPE Java . Apr - Aug ‘16 Does each Tax Treaty have an think it shows the inconsistency Contractors’ right to reimburse the expiration date? of the government. If it is a VAT, for FTP, LNG plant operational contractual issue, then it must be cost, & certain importation and H: Tax Treaties have no expiration executed through the contractual giving right to SKK Migas to offset date. However, either country mechanism, namely negotiation and any outstanding VAT against other can terminate the Tax Treaty arbitration otherwise the Indonesian disputes. as happened in 2000 between government may terminate Indonesia and the Netherlands. or renegotiate the tax treaty In this difficult time of low oil Actually terminating a Tax Treaty is agreement. prices, PMK 218 has caused a pretty simple. Indonesia just has to detrimental economic impact, due notify the other country that they no Among all of these tax issues, to the long delay to receive the longer want the Treaty to apply. what are the most important VAT reimbursements (far exceeding things that must be looked at 60 days as agreed in the PSC ) and Z: There is a dispute resolution first? because some VAT is no longer mechanism provided under the tax reimbursed but cost recoverable. treaty agreement, namely a Mutual Z: First and foremost, put back the Agreement Procedure (“MAP”). ‘assume and discharge’ provision in The IPA has explained the When there is a dispute, two the PSC, to provide certainty in this implication of PMK 218 to the competent authorities from each environment of high volatility. Ministry of Coordinating of country can meet, discuss, and find Economic Affairs, EMR, MoF, solution. H: Second, remove VAT during the and other related government exploration stage via a facility of tax institutions and now is expecting for BP and Premier have proposed deferral until the exploitation stage. the revocation or revision. MAP to the government of each of Then there would be no taxation the home countries, which resulted problems during the exploration and H: We expect that this issue can in the governments of the treaty so the investor can focus on effort to be resolved by the Coordinating countries filing objection letters finding new reserves. Minister, either for the Economy or to the Indonesian tax authority. for Marine Affairs. Both Coordinating Actually, this was quite complex, The right time to impose tax is when Ministers have to communicate because we have to prove to the we produce the oil and gas, even to solve the problems. Especially government of the home country though it has to be regulated earlier nowadays with low oil prices that we truly deserve to be protected to ensure certainty. The ‘assume and and cash flow problems, leading by them. discharge’ provision states that we to decreased exploration and will only pay corporate and dividend production, this industry should be Although there have been tax when we start producing, and helped. The government should several negotiations between the that no other taxes should be added believe the industry’s voice and governments of the treaty countries later on, will enforce that certainty. resolve the problems. Ideally, when and Indonesian government an investor/contractor invests in (Ministry of Finance), either in writing Z: If I may suggest, in the future, all Indonesia, all they think about is or face-to-face meetings, the MAP regulations related to oil and gas oil, oil, oil; and not about paying all process of Premier and BP have not operation have to be managed and these sudden taxes. progressed. There were reply letters coordinated by the relevant ministry, from the Indonesian government the Energy and Mineral Resources Today, I read that SKK Migas has to both the Netherlands and UK Ministry (“EMR”). approved the relinquishment of government stating that “this BPT 25 PSC’s. This is a huge number. issue is a contractual issue, not a tax This would avoid issues like VAT. In Perhaps it is because the geology is dispute. Therefore, it should not be some PSC contracts, the Government no longer appealing. But on top of resolved through the MAP”. shall reimburse Value Added Tax that there are tax and fiscal issues, so (“VAT”) within sixty days after it will look even more unappealing. In our opinion, if the government receipt of invoice. However, on I think it’s one of the things that recognizes the dispute as a December 5, 2014, the MoF issued the government should really pay contractual dispute, then the tax Regulation No. 218/PMK.02/2014 attention to. Indonesia needs to assessment letters shall be revoked. re.: VAT Reimbursement Procedure, compete with other countries. We At the moment, on one side the which has raised contractual, have to fix our fiscal terms. Besides government said it is a commercial financial, and administrative issues that, in terms of government take, or contractual issue, but on the to the PSC Contractors, such as Indonesia has amongst the highest other side the SKP remains valid requiring additional administrative takes in the world, and higher until the court make its decision. I procedures, setting a limit to the than our neighboring countries.

SPE Java . Apr - Aug ‘16 39 Moreover, our exploration wells have well equipped to help government field. My personal background was not found any major fields recently. solve the problem. What is your pretty much similar with Hendra. I Our most recent major discovery was background? started as a consultant and learned Banyu Urip and that was 15 years a lot there, because I dealt with ago. With a challenging geology and H: Well, I started as a consultant. I various different industries, from many fiscal problems, who would have a finance degree. First, I worked doing administrative works to more want to invest in Indonesia? as a consultant, and then I worked complex ones, from joining related in an oil company, Conoco. I got professional organizations and Z: If the purpose of applying the here by doing and getting involved getting the tax consultant certificate regulation is to boost short-term in many tax cases. Well, at first issued by the Ministry of Finance. revenue by giving limitations for the struggling with the administrative The main thing that the student PSC, bear in mind the consequences documents, learning the techniques must have is having high curiosity of many reputable PSC companies’ of how to do it right. We can learn and a willingness to learn. Afterward, losing interest to bid for new a lot when we already inside it. I everything will roll by itself. PSC’s in Indonesia or to commit to learned from zero; how to develop explorations activities. A simple an argument and how to negotiate recent fact: an investor was in the with the counterpart parties. bidding process for a new PSC, when the government suddenly Z: I think in Indonesia you can start imposed land and building tax, the from any law or finance background investor chose to lose its money for to work in tax area. Most of us come million dollars that has deposited from an accounting background. as a requirement of the bidding Tax has two basic elements. First, process, rather than get the PSC is compliance, like calculating and have to pay an enormous the taxable income, (the basic amount of land and building tax knowledge for it is accounting), every year. So, what I want to say and reporting i.e.: filing a tax return. is, the consequences of providing The other element is managing uncertainty are felt in the long term. disputes, which requires a deep We need to fix it immediately. technical understand of related laws and regulations. Students It looks like we still expect a long from FISIP, finance, law, or maybe fight on this. Luckily, you are very taxation majors can enter this

Hasbi Lubis, Zahra Mulachella, Hendra Halim and Bambang Istadi

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SPE Java . Apr - Aug ‘16 41 Indonesia O&G.indd 1 11/02/2016 11:41 Interview with

42 SPE Java . Apr - Aug ‘16 nterview with Debbie Chastity After two years in the law firm, I was a senior counsel and I learned oil on the Legal Function in the ready to pursue a higher education. and gas 101 from the engineers and Indonesian oil and gas regulatory Many colleagues recommended geologists. That was interesting and Ienvironment. the University of Texas at Austin something completely different to as they have a very good program law. After a year, Conoco was happy SPE met with Debbie Maya Chastity, in Petroleum Law, specializing in with my performance and they Vice President of Legal and Ethics International Petroleum. At that offered me a permanent position in ConocoPhillips Indonesia, and time, they only accept about twenty back in Jakarta as a legal adviser. Chairperson of the Regulatory Affairs to thirty international students, so Committee at Indonesia Petroleum it was not easy. Anyway, I applied, I moved back to Jakarta in 2001. Association (IPA). We discussed a was accepted and moved to Austin Conoco’s office was still at Menara function that is very topical in the in 1999. My professor was the Mulia, and I reported to an Indonesian oil and gas industry: former Dean of the law school and expatriate who was Vice President Legal. We will see through the eyes, he specialized in Petroleum Law. He of Legal. It was a very small legal mind, and life of an experienced was excited to have me because he group. At the time, Conoco only lawyer about current issues on never had an Indonesian student had one big producing asset- regulatory matters in the Indonesian before. Back home, it was around the Block B. Other asset that we had upstream oil and gas industry. We time the government was planning was still in the exploration stage. hope that the interview below will to revise the oil and gas law. He got I dived straight into work, such enlighten our members. really excited, as he wanted to know as procurement and the new oil my perspective about the proposed and gas law. I also joined the IPA Can you tell us more about your revision. Regulatory Affairs Committee. I was career journey? still very green but I learned a lot As the end of my study approached, from the other IPA members which I am a lawyer by education, but and I was preparing my thesis, I consists of senior counsels and legal I have a long-time interest in oil intended to return to Jakarta to managers of other PSCs. I like my and gas, as I was raised within this my former law firm that I enjoyed work and the people that I work industry. My father had a career in working with. However, one or two with. Everything has been great. I Pertamina, which shaped my early months before graduation, the had great mentors who were very views about oil and gas. career office called and mentioned open in terms of knowledge sharing. that Conoco was looking for I went to law school in 1992. I knew an Indonesian lawyer with a US Shortly after I came back to Jakarta, to be a successful lawyer that I had education background and I was the Conoco bought Gulf, and after to start my career off with a law firm, only person that met the criteria at that Conoco merged with Phillips. simply learn the basics of how to the law school. I accepted the call Immediately, there were a lot of become a lawyer, rather than directly and they flew me to Houston for changes. We moved into the Gulf joining a company as in house interview. Conoco had a growing office in BNI. And we got busy counsel. business in Jakarta, and they had because we had two big producing University of Texas Austin on top of blocks with different issues: one So in 1997, I started working with their list for graduate recruitment. offshore and one onshore and I a law firm called Soemadipraja They were excited and offered me was assigned to work mostly on & Taher. At that time, not many an internship in Houston for a year. commercial agreements after the Indonesian law firms specialized in I flew back to Austin and thought merger. I’ve been working for them oil and gas. Soemadipraja & Taher about it. I thought that after learning ever since. specialized in mining. I learnt a lot the basics in a law firm, this might be in the first year of my career, about the time to focus on oil and gas work So it is sort of a coming home project financing, mining operations, and what better way to learn than story to oil and gas for you. corporate matters, but not so much working in an oil and gas company. about oil and gas. After two years, I didn’t know engineering; I didn’t Yes. I remember when I was growing one of the partners told me, “Do you know how to find hydrocarbons. up, my dad was and is my role know what is lacking in Indonesia, I had to go back to basics, and model; he is my idol. My dad was Debbie? Oil and gas lawyers. You’re considered that this internship would a chemical engineer; he graduated not going to find that many oil and give me an advantage regardless the from the University of Gajah Mada. gas lawyers working in a law firm. path of work I chose afterwards. For me, he was a true company man; Most of oil and gas work is done by he always came early to the office, foreign consultants.” That thought So I accepted a position as an and was very loyal. He was also a resurrected my interest in oil and intern with Conoco and I moved family man at home. I wanted to be gas. to Houston. They assigned me to a chemical engineer like my dad but

SPE Java . Apr - Aug ‘16 43 I was not really enticed to math. and gas family, who often talk about hours beside him and watch him the same thing, and face more or construct his advice. It was a really I was born in Sungai Gerong, less the same issues. painful process, but you learn a lot because my dad was assigned from the way they think and the way there. We then moved to Jakarta, On the legal side, what would be they shape their advice. You don’t to Balikpapan, back to Jakarta, the main differences between usually get that when you work in a to Palembang, and back again in being a lawyer in oil and gas and company. Jakarta, where I went to high school. in other industries? You learn how to structure your My dad always has this affection Unfortunately, law schools in advice, to structure an agreement, toward the oil and gas industry. So, Indonesia don’t offer subjects on and you can apply that to whatever when he learnt of my interest in oil oil and gas law. They do teach civil specialty you choose in the future. and gas, he seemed very happy. He law, criminal law, International You will have to learn the specifics of was not excited when I worked at law, business law and corporate your industry, which for me is oil and the law firm and came home (on law, but not much on oil and gas. gas law, and that’s what I did when I average) at 9 to 10 p.m. every day. When I studied at the University of joined Conoco. The basics of how we However, at the end of the day he Indonesia Faculty of Law, I never govern a contract is still within the understood that’s what I had to go learnt Petroleum Law. Indonesian Civil Code that we learn through. Finally, when I pursued in University. Therefore, working in a career at Conoco, he was really When you start working in a law a law firm was a valuable experience happy. I think the working hours firm, you always learn from scratch. that prepared me for the next step provide more stability and this is the However, as you are progressing, of my career. industry that he’s really comfortable you will develop your own with. As for me, I knew that in the affinity toward a subject; perhaps I suppose that some Corporate beginning I would work under the intellectual property or company law work is the same with what the shadow of my father’s reputation, or financing or mining or oil and gas. lawyers are doing in a legal firm, as he was well respected and known This will emerge naturally, because but some is very specific? by many, including people from at the beginning you will get a Conoco. But he knew that I got this variety of work. You will be dumped Yes. Working in a law firm is very job on my own credentials, and he with basically the worst cases but different than in a company. When was just being a father that is very hopefully at the end it will really you work in a firm, you work for proud of his daughter for being shape where your interest is. a client, an industry. You don’t independent and able to support necessarily see the fruit of your herself. Every time we talk about At the beginning, I couldn’t say labor at the end, because you’re issues in the oil and gas industry, he that I learnt a lot about oil and gas. providing services. However, if you gives me his insights. I can talk to However, I did learn a lot about work in a company such as oil and him for hours. Obviously, during his preparing agreements, advice and gas, you will have the opportunity to time it was completely different from legal opinions, what to look at in negotiate your gas sale agreement our time now, but I can always learn an agreement, and how to write a and at the end of the day you really something from him. proper clause. Lawyers from firms feel like this is the fruit of my labor are normally better prepared than because you eventually see the gas It’s such a small world. Conoco lawyers who immediately go as flowing and the revenues coming in. bought Phillips to become in-house counsel. Corporations So, in a way, I do feel that working ConocoPhillips. I also met my usually have standard forms, but in in this type of environment is much husband in this company. I law firms, you will really learn from more rewarding. Working in a knew his father first. He was our zero particularly when you have to legal group in a large company like Vice President of Relations. My prepare an opinion or an agreement. Conoco means you support every husband studied at the University They have a variety of different function. It could be exploration, of Oklahoma and was interning in types of opinions, agreements or operations, finance, audit, business Conoco for a short while. He is an advice for each transaction for many development, land clearance, Indonesian who grew up in the US different clients and industries. government relations, and many but he is also a very devout Muslim. other functions that need your After a short dating period, we got In International firms, you will have support. married, and he decided to switch the benefit of having an expatriate to a different company. So now he as mentor. The way they produce So no one will move until Legal works for BP, his brother works at legal opinion and legal advice are says “Okay” ConocoPhillips, and his sister-in-law very different. When I was there, works at Santos. We are truly an oil my mentor would sit me down for Most of the time. Hahaha…It

44 SPE Java . Apr - Aug ‘16 results in a lot of work for the Legal issues happening here and now in them are very glad when we come to function. That’s why you have to this industry. That’s why we have them to learn something. However, have a very good system to divide staff meetings and knowledge perhaps it’s Indonesian’s nature the work between lawyers. There’re sharing. We may not like reviewing and culture where we just wait for usually a number of lawyers, and regulatory issues, for example, but somebody to teach us rather than each has his or her strength on we have to do it and share with go and knock on somebody’s door. a particular subject. Some are others. I always feel that being proactive is probably good at commercial, some one thing that has helped me in my at litigation, and some others in the I’ve been following a lot of career. supply chain and land. Actually, regulatory issues since the in a law firm it is the same. At beginning of my career because Particularly if you are a lawyer some point, you have to pick your my boss wanted me to be an IPA and you notice something or your specialty. But even though you have member. But, as much as I dislike company is drifting out of the picked a specialty, you still need to going to the review sessions where corridor of the host country law or know a little bit of everything that is we go through regulations one by the home country law, you have to going on in your company so that one, at the end of the day I become speak out. you can be relied upon to handle aware of what is happening in the a matter when the lawyer who is Few people are comfortable to speak responsible on a particular subject is out. They will say that their English not available to be reached. Some is not good or something else. Well, lawyers will struggle when they are it doesn’t matter really. Don’t be faced with issues that they are shy about it. I’ve never been not familiar with and/or it is in a situation where people outside their comfort zone don’t appreciate me when I but working in a company speak out, particularly with that has multiple issues, a the expatriates. Speaking lawyer will not have the out doesn’t mean being luxury to just choose to disrespectful. I don’t say work on a subject that things in a disrespectful he/she familiar with. In tone, only that we have this regard, I recognize a different opinion. And that not everybody are that is good. I don’t see suited to become a lawyer that as a negative. even though they have a law degree, however, they Moving on to Indonesia might be really good at a oil and gas regulatory specific subject such as HR issues. What are the main or procurement so they might issues? be better positioned working for those specific department. We have Well, this is going to be a long given opportunities in the past for answer. Hahaha… people to move into the group that best suited them. industry. Besides, I learn something From the legal point of view, I new each time, which prevents life think one of the most important Very interesting. You don’t need from becoming boring. I’m lucky aspects is contract sanctity. to know everything in depth, but that I am surrounded with a group When investors sign a 30-year you need to understand a lot of of very talented lawyers that like contract, obviously they want to things. challenges outside of their comfort have certainty that the terms and zones. conditions will be implemented and Absolutely! I think the key is you’ve honored throughout the duration got to have one strong specialty, I always encourage our team of the contract. You calculate your but you also have to know a little members to be proactive and to economics based on these terms bit of everything. Otherwise, when speak up. If you don’t know, don’t and conditions. So, if in the middle my team members are on vacation, be shy to knock on somebody’s of the road, the government can I cannot service people coming to door and ask him or her to teach change pretty much everything, why see me and asking for legal advices you. Particularly from expats who do you have a contract in the first which I know very little about. I do are expected to provide knowledge place? It does not mean that we believe that you have to know the sharing; it’s their obligation. Most of want to undermine the sovereignty

SPE Java . Apr - Aug ‘16 45 of the government. We always external stakeholders limit the ability permits which can impact the timing recognize it; but we would also of the government to be flexible. of a project. appreciate it if the government also Particularly for the last couple of recognizes that we have a contract, years, as the national sentiment Indonesia has oil and gas operations a long term contract that underpins rises, the cost of doing business in from Sabang to Merauke, and every our initial investment. this country becomes really high. region has different rules. The Particularly, when you don’t have central government has a huge This has been the central theme that legal certainties, as a lawyer you task to streamline the regulations, the IPA has been advocating since have got to ask questions. We need because I understand that the the first time I joined. When the certainty to be able to implement regional l governments may have oil and gas law was issued back in the terms of our agreement. The different needs and priorities. The 2001, we were very happy because agreement allows for it, but the root of regional issues are pretty we had a grandfathering provision practice can be different. You’ve much common across Indonesia: that honored the existing terms and agreed something in the PSC, and they want more transparency conditions. However, over the years, the government all of sudden in terms of profit sharing from this industry has been bombarded said that you can’t have it. For the hydrocarbon production from their with regulations that contradict the investor, that is a fundamental region. terms and conditions in existing breach in their contract. PSC’s. We, in the IPA Regulatory You mentioned that many Affairs Committee, feel like we’re So, again I think that contract regulation, not specific to oil and always fighting fires, because one sanctity is key to encourage long- gas, impact our industry. So does regulation comes out, and then term investment. Multinational oil and gas no longer enjoy lex another comes out before the first companies have other business units spesialis status? one is resolved. I know that the in the region that are competing government has absolute power to with Indonesia for corporate funds. When we are proposing solutions to issue regulations, but they also have So, looking at the pros and cons, GR 79 issues, we do want to return to understand the impact of those they will go to the country that will to those days when we were given regulations on investments in the provide them with higher certainty. status as lex spesialis; due to the long term. Unfortunately, it is not that easy nature of this industry. We have to attract those investment to high risk and expensive exploration Sometimes, we can work out the Indonesia lately due to the legal investment, with a very low success issues with the government. We uncertainty impacting existing PSC’s. rate. The investor will bear all the have a good relationship and so we risks during exploration so in order can deal directly with the upstream Tax issues and VAT reimbursement for the investors to come and invest regulator, and from time to time, have also been the hot topics in oil and gas exploration, the we manage to work out the issues for many PSCs. A number of government must provide incentives with them. But in recent years, so Operators cannot afford to continue for those investors both domestic many other government institutions their operation until their VAT is and foreign in return for absorbing have also issued regulations that reimbursed by the government, those exploration risks and one of impact our industry. For example, because they have negative cash them could be restoring the status the Ministry of Finance spearheaded flow. of lex spesialis to the PSC. the drafting of Government Regulation (GR) no. 79 which is Those are some of the main central Many parties, in particular the largely to govern cost recovery. government issues that we’re parliament, may not understand Since its issuance, GR 79 has created dealing with. cost recovery. Where does the IPA many issues for the oil and gas stand on this? industry which hamper investment. Ministries are streamlining oil However, the good news are that the and gas permitting to be handled I think cost recovery is one of the government has recognized those through a one-stop shop in the most misunderstood concepts in issues coming from GR 79 and they Investment Board Office (BKKPM). this country. People think they know are willing to consider revising it. But this only covers permits that are about it, but when you talk to them, issued by the central government; they don’t actually know it very well. not those permits that we have to I feel that the IPA needs to do more IPA, over the years, always aim to obtain from regional governments, in terms of educating people and the work with the government to find such as land acquisition, forestry public about cost recovery. workable solutions. Unfortunately, and environmental permitting often times we’re not successful. issues which are problematic due to Cost recovery was implemented Sometimes, pressure from the the length of time to obtain those successfully for decades, but then

46 SPE Java . Apr - Aug ‘16 people’s perception changed around Revising the oil and gas law is not parties. That’s pretty much the aim. 2008-2009 when they started to easy and again, it creates another consider cost recovery to be part of uncertainties in the eye of the Now for our readers, students and the state budget, and that’s when investors. The government has professionals, any suggestion or everything started to unravel. People taken the initiative to prepare a draft advice? form their opinion from the media, and the IPA was invited to provide which does not necessarily paint the feedback to the draft oil and gas It is a challenging environment at the whole picture accurately. The IPA law. However, we’ve heard that those moment. I do feel for the students has tried to enlighten and educate initiatives have been halted because and fresh graduates. They are about people about how the PSC and the parliament has decided that to embark with their career and then cost recovery works through the the draft should be coming from suddenly the industry is in a down media and workshop but like I said them instead of the government. turn and lots of companies are not sometimes it’s quite challenging Accordingly, the IPA has sent a hiring. because a public opinion has already letter to the parliament, seeking an been formed and it’s really difficult audience with them and to try to get Graduates have a certain degree to change that. However, IPA will their version of the draft of oil and and will have a specific job in continue to advocate industry issues gas law. mind. But you have to be open- through the media or other forum minded. I’ve seen people with an that it deems appropriate. I really hope that the parliament will engineering background or finance invite the IPA for a discussion on the background go outside their MIGAS have made breakthroughs draft oil and gas law so that the IPA comfort zone and try something with open-bid splits and other can provide its feedback. We hope different such as commercial or new concepts. How do you see that one of the aim for the revision business development. I know that’s that? of oil and gas law is to attract more scary, but I do meet people who investment, which at the end of are very successful in their career SKK Migas and MIGAS (ESDM) the day will provide benefit for the which career was not their original understand our issues and that this people of Indonesia. In the last preferred choice because they have industry needs a boost in terms of ten years we haven’t seen a lot in a degree in another subject. exploration and investment. They exploration and reserves addition. see that investment is going down That means in fifteen years we will So, if you’ve got an offer to do and we’re just maintaining our not see any increase in production. something even though it is not existing operations. So, when we What we are doing, as everybody within the discipline that you have talk to SKK Migas and ESDM, they understands, is just to curb the chosen when you studied in the want to help, but again it’s not up to natural decline. We are late already university and you do not have any them alone. And that’s the problem. for our future. better offer in your plate at the In order for them to make certain moment, I’d say go ahead and take breakthrough (e.g. fiscal incentives), Well, despite of all of these the offer. At this stage, it’s all about they will also need the support of hard issues, I guess the main the experience. If you don’t get the other government institution so it part of your job is to keep being opportunity that you want at the is not that simple sometime for SKK optimistic and engaging? moment, it will open up for you Migas or ESDM to introduce new sometime in the future, I do believe concepts specifically if it involves Absolutely! And I think that’s why that. If you actually put your mind other departments. we are so busy. We’re trying to and passion into the things that you anticipate all the changes coming to do right now and you do good job We have many issues, from our industry. We continue to hope at it, opportunity will open for you. sanctity of contract, lex spesialis, that the industry will be involved in criminalization, and many providing input and comments for Also, you have to realize that only adversely affecting regulations. upcoming regulations. At the end of you who are able to change the What was your view in tacking all the day, what the IPA would like to course of your career. Nobody is of these issues through the new see is for Indonesia to attract more going to do that for you. That’s how oil and gas law? investment in the upstream oil and I look at it, in terms of my career gas activities which will translate progression. You need to be ahead Tackling some of those issues that into new exploration that are badly of the pack right now. Don’t be late; we discussed above in the oil and needed by the country and one this might be your opportunity. gas law may not be appropriate of our goals is to contribute to the as some of those issues are more discussion with the government and appropriately dealt in a lower level the parliament for them to produce regulation. regulation that is workable for all

SPE Java . Apr - Aug ‘16 47 Interview with

What we want to do is create an environment where we can export highly talented Indonesians so they can gain international experience and then come back home.

48 SPE Java . Apr - Aug ‘16 Hasbi Lubis, Andrew Law, Robert Mathes and Bambang Istadi

e are here with Andrew We are trying to put this structure in entering the market. Law, General Manager of place now so we are prepared for after Weatherford Indonesia. the storm. When you look at it, the This is why I am very keen on making WWe were talking in general about toughest issue facing the service sector the team here perform exceptionally, not the topic which is relevant right are the contract terms being proposed. only for our customers in Indonesia but now that everyone is suffering the Long-term contracts will remain a big also around the world. We need people consequences of the sudden downturn challenge, so therefore we need to focus outside of Indonesia to be amazed by and everybody is facing different on a couple of things to best manage the capability of our local Indonesian types of challenges in terms of how this situation. For example we need to team; that will make us much more to face and manage it. What are your focus on internal quality and quality attractive to invest in. We want to have strategies in terms of 1) weathering to the customer. For us to succeed, such a highly capable, efficient team the storm 2) what comes after the everything we do has to be held to a that when the rest of the world looks storm blows over and we have to pick high standard. at Indonesia, they would say, “you guys up the pieces, because eventually know what you are doing, we have nothing lasts forever? The next question, is Indonesia still confidence in you to deliver, and we will promising from your strategic point invest in you.” We’ve heard from other people their of view to have something to pursue perspectives, it would be interesting in the future within a certain timeline? For me creation of this team is the most to see your perspective being head of important thing to focus on and we have Weatherford Indonesia, if you could It is promising because the reserves put a lot of effort into this objective. list for us the greatest challenges that and infrastructures are there for further The market may be dynamic, and other you are facing in terms of what needs development. Of course the challenge is factors may pose challenges, but we to be done to maintain the business that this market is very dynamic. know we will have a competent team. running, not just from the profitability This is how we become stronger in the prospect but also in general, what The end of PSCs is also the beginning industry. does it take in this climate to run the of a new era. We need to put a long- business here in Indonesia? term plan in place that recognizes the It’s quite interesting because that’s changing development. We also need how internally you look into the What we are trying to do with the to manage and operate within the organization and to make sense business in this current climate is to regulations and framework that exist. of the Indonesia environment, put together a solid business plan that The key is to have the best team to work you mentioned earlier about why will be sustainable after the storm. In within this framework and to run the Indonesia is still attractive because the fact, weathering this current storm is business in the new era. reserve probably still there and the a real challenge due to its severity and government always say geologically duration so we just have to respond to Basically there is still something that Indonesia is always at the top of the each situation as best we can. companies look for at the end of investment list. But in reality probably the storm. We asked this question not because of several factors. So To weather any storm, you need to have to several people and mostly to you have described how to prepare a plan focused on a number of very clear operators why you are still here? And your organization to make it credible components: most importantly, people. to newcomers, what attracts you to to face any challenges in the future, Even during this current situation, we come here? but from your short period coming are ambitiously hiring excellent local here, how do you see that applied Indonesian talent, because the only way There is still market to grow in Indonesia, to Indonesia as the market for many that I see for a sustainable long-term but we need to be very patient and be companies? future for Indonesia is to have amazing prepared. Our job is to maximize the local talent in our organization and to do value of our existing infrastructure and If you look at the countries that are this in a very structured manner. to make it more attractive for those more developed and more mature, the

SPE Java . Apr - Aug ‘16 49 regulatory framework has had a lot of to have regulations it has to be there Setting up and continuing to have good time to develop. Having an established as appropriate and pragmatic because partnership arrangements is indeed framework is effective but it can be some people just want do the right part of our strategy, and is especially difficult to make changes. Here, the thing. important in this operating environment. regulations may not have been perfected but if you take the case of SKKMIGAS, That’s a very valid argument because Because the operating environment they are actually willing to listen and there are organizations that are will change also the uncertainly of to look for advice on how we could get investing heavily in developing the exploration of PSC’s, Indonesia is through this downturn together. Indonesian human resources and changing: basically its more and more some have been doing it for decades Pertamina and local operators getting I don’t think you find such engagement and younger Indonesians haven’t had stronger. in many other countries and certainly not the chance of producing significant directly between the service companies results yet but like you are saying you We still need to remind ourselves that and the regulator. In other words, there are doing it in a challenging time to efficiency is what’s best for everyone is room to improve and it seems there is work towards the same vision. across the industry. For example, if a willingness from SKKMIGAS to improve you have to set up a joint venture the environment. Particularly right now Now the other thing that we haven’t because the current system does not with the market the way it is, this is an touched on and it is also one of the accommodate international companies, important issue for the nation. realities of Indonesian market is one then the most efficient thing to do of the fundamental requirements is is actually to change the terms and In a way to put Indonesia back to always increasing the local contents as conditions of the system. Then you have the map using your analogy for your in local or regional competitors, and an efficient industry which then can be organization, in your case is preparing so the next question would be from successful. the human resources to be able to your current view of Indonesian and weather the crisis and coming up regional markets, do you see the local Very interesting, because the stronger on the other side. But for competitors having an advantages government thinks that we are Indonesia your suggestions is looking or are they handicapped compared already very efficient and perhaps into the regulations and improve it to to the big players like Weatherford it is not so, we may need advice and oppose the crisis. and other major International service feedbacks and comments. So how do companies in terms of being able to you see the SPE in this context, what The analysts are quite right. In actual find a better need for the business as would be your expectation or from fact I might add that what Indonesia to International corporations? your company? as a country needs to do is to extend the drivers to attract investments First, let’s look at the critical success The SPE is a very successful organization into the economy and look at the factors in Indonesia. We need to have globally and we need it to continue to particular sector of energy and mines, solid services sector to support the local focus on technology and also provide a since those are the keys components and international operators working very strong technical networking forum, of the Indonesian economy, it has here. So how do you achieve that? which promotes personal development. been traditionally relying very We need to stay focused, to remain heavily on resources, they should We have to be mindful that where there visible within the industry and to become actually take that same focus they are regulations, they are appropriate and a very powerful organization. Just keep are putting on attracting the other aligned with introducing relevant, quality doing what we are good at: Make sure to types of investments and looking technologies that will deliver success to serve the community as it changes, and at how to improve the investment Indonesia and at the same time nurture a to really encourage that community’s climate for this traditional foundation local service sector. involvement. The key to success is to of the economy and making it more make sure that operators (PSCs) are competitive. One of the best ways to encourage involved in the SPE. a good, local service sector is simply You bring up a valid point and this is one through having a strong operator sector We always try for that but coming of the areas where I believe Indonesia with steady activity. The key is creating back to business vision that you have can succeed. What we are aiming to do value-adding local service companies exposed to us, it is remarkable that here in Indonesia is to create a team of that will work alongside or compete the service sector seems to be always highly talented Indonesians who will directly with the international service carrying the torch, it’s not really create a sustainable business within companies. an innovation because you are not Indonesia. We are doing this because we reinventing, it’s just you are doing it feel it is the right thing to do for talent The Government always encourages in a place where it hasn’t been done development and it is the right way the technology transfer for example before and operators tend to be for to respond to changes in the market. and by that probably they mean is whatever reasons seem to be always We are not doing this because of any for international service companies lacking behind. regulations; it is simply the right way to to ensure that technology transfer run a sustainable business. is there within a certain period of The service sector seem to be always time and also to nurture the joint very nimble I think that is something What we want to do is create an venture or cooperation with the local that is perhaps consequences of what environment where we can export highly companies, so the same question happened in the early 90’s when talented Indonesians so they can gain without going into heavy handed operators basically divested all the international experience and then come regulation do you see that’s part of research and development and they back home. We have seen this work very the strategy as well? basically concentrated on operating well in today’s climate. When you start assets and becoming basically more

50 SPE Java . Apr - Aug ‘16 like financial investor and not really in Australia, one of our very best sales thing to create as we mature. It would be fully integrated operation in the sense people did not come from another fantastic to able to be involved in that of developing technology, developing service company or even from within the too. strategies other than commercial oil industry. He came from a commercial strategies? lab environment, yet due to his personal One of the advantages of international qualities, his eagerness to learn and his operating companies is they can deliver Are you asking about Technology aptitude, he succeeded. Recently, he co- things like expertise, they can help with application in the industry? chaired a technical session for the SPE in things like technology, but they will Australia. only invest if there is good solid safety Yes that’s what we stumble over ground. If you don’t have that then continuously, however that might be The point is we tend to be afraid of you shouldn’t have any involvement. one of the keys and here making a change but we can get excellent people So I would like to see that across the suggestion instead of question but who are keen to try new things, for industry. in the particular case of Indonesian example related to supply chain. You oil and gas industry perhaps one of can get really good ideas from places Collaboration is the most searched in the ways of overcoming some of the outside of the oil and gas industry. this 21st century and everybody in all regulatory hurdles could come from kinds of industry always talked about initiatives done by service industry I actively look for people in certain collaboration, work team, eliminating because they have a totally impartial functions — supply chain, finance, politically structured organization perspective because the service sector surprisingly even sales — who are not and so on. Do you see in the current needs to be there no matter who from the oil industry because they environment in our industry as fertile the operator is, be it PERTAMINA, come with more creative ideas. When ground for increasing the level of be it other Indonesian operators or you get those people from outside you collaboration between the players? regional players or major IOC’s. get different ideas, you try new things, and that’s where you get success. It’s Not yet, I think that’s what SPE is for. SPE So perhaps this might be something amazing what people can do. can help foster that collaboration. as a suggestion to the service sector in general, would be IPA has been You mentioned about the operating For example if you have a number always the operators lobbying tool sector needs to be stronger part of operators and contracts at the in Indonesia with the climate of before the service and operating same table and you are talking about communication between IPA and sectors can make a change. Knowing implementation of a technology, then government improving as the latest that the Indonesians operating you are more likely to see adoption. So new government came into office, it environment is changing at the this is where you can create the best is still lots of hardship because of the moment, there’s uncertainty over environment for collaboration. conflicting interest between the two there but going back to your parties. expectations, views and experiences Probably this topic of collaboration in the past, what would be the top brings in another aspect that you’ve So maybe there is such a thing in two or three changes in the operating mentioned already a couple of times. the Indonesian service sector, maybe sector that you would like to see for Your story about a salesman being nothing to do with cartels or anything Indonesia? completely from the outside of the but more like common strategy for industry and it kind of reminded me success in Indonesia would it be the The main thing is to learn from the rest of a couple of examples that we have service sector get together and brings of the world. Take lessons from the seen in other industry completely forward this initiative or idea to the experiences of others so that the same unrelated oil and gas of how being in regulators and see if that actually mistakes are not made again. At the the real almost existential threatening makes any drop in their minds and same time, be prepared to take the risks environment and how they basically affect change in a more effective way to try different things and really focus on manage to dig themselves out by than we have been doing in the last 20 efficiency. radically changing the way they do years. things and that’s basically because The operators can do that, service they get inspired by something that’s Introducing technology is always companies can do that, the industry going on totally different. So perhaps an uphill task. I remember when can do that. Let’s move onto the next would you say this might be the time Weatherford tried to bring new step, without losing the maturity of this when the oil industry will actually technology into a different country, and industry, but continuing to grow. So let’s start looking beyond this in order the government was willing to provide jump on to that. to find inspiration in terms of doing a tax break to the operators. However things differently? the operator never introduced the If I look at safety, the objective and focus technology simply due to the perceived is always keeping our people safe while We’d like to think so; I don’t see it risk of doing something new. running an efficient business. happening just yet. I don’t think we have sufficient people from other industries That is something Indonesian That’s what we should be focused on, people in our own sector to bring those government is not very keen for: keeping people safe — and the way we good ideas. change is almost a taboo word in the do that by having a very sustainable local culture from my experience. business. Likewise, sustainability comes Perhaps it’s because the examples with safety and efficiency. What I’d like like automotive they basically finally In terms of change here is one example to see are good industry-wide safety step out of their comfort zone and of what I have seen in the past and what practices for operators and service start looking for somebody else as I would love to do here. When I worked companies. For me that’s an amazing successful in a totally different field

SPE Java . Apr - Aug ‘16 51 and copying their ways and adapting You mentioned the word ‘challenging’ Do you see the local content is more them to their industry so that’s several times, in your opinion what do of burdensome and competition or it probably in my opinion will need to you think is needed by the industry, is more an opportunity? happen now. The oil and gas industry by the players like yourself from the should look beyond its horizon and government? What kind of support Like I said before I can see why from look at other industry what did would you need to be able to fulfill an international perspective we want they do, how did they transform the government’s requirement for to increase local content. At the same themselves. We cannot go back to just the local content, like some sort of time, I think we have to think about business as usual. collaboration, what other support how we achieve a sustainable model. would you need to overcome those I think sometimes the long term The key to bringing in people, and challenges that you mentioned? encouragement of an investment is the challenge, is you have to make it the best way to do it without being attractive to join the oil industry. It’s I think a lot would be around very obligated to do it by regulation. difficult as the other industries are not pragmatic and well written legislation. as affected by the economic downturn Also, if you have stability, that would It can work and it takes a lot of trust, compared to us. make it more appetizing for further these things don’t just happen overnight, investment in the country. We have to you can make it happen short-term, I have a question, as a new guy in create the stability here and encourage through legislation, though it is better to town, you’re probably aware that investment from the global perspective. consider the long term. the government is trying to enforce local content into the equation of I am thinking of criteria that needed That’s what we would like to see. the industry be it goods or services, like the volumes, what kind of It would be wonderful to set up a do you see that as an opportunity progress as an industry would you sustainable long term future for our perhaps for you as service company ask to be able to want to invest here, industry, though we have to make sure to collaborate and make some sort of so volume wise itself would you that any legislation on local content industry locally good qualified local invest here vs Middle east or China doesn’t prevent the implementation of content? or companies that decided to move certain technologies that may benefit for certain reasons, and I am asking the local oil and gas industry. If we think The challenge is pertinent across the you this because you are a new about what is good for our industry, globe actually, and is heightened during person meaning you are not clouded it is using the best and most efficient a shrinkage of the industry. The upside by things that are discomforting, I technology possible. is that things like manufacturing get run mean we may have readers from the more efficiently typically by centralizing government who want to push local So regarding local content regulations, into the key manufacturing areas around content but vice versa what would let’s make sure they are used wisely to the world, in 1 or 2 key geographical you need? encourage strong investment and inject areas. stability within our industry. It depends on local volume and whether Now the challenge here is that Indonesia the export can be used there as well. How can SPE play a role in what you hasn’t yet become one of the key just mentioned to those challenges manufacturing areas for oil and gas. It’s You have got to have a very strong focus such as quality assurance? never really been a manufacturing area, on quality in manufacturing first, and secondly it’s very hard to make I think where the SPE can play the best the economic case. Generally people If you look in setting up a manufacturing role is by doing what it is very good at. shy away from setting up manufacturing plant, it is a challenge. If you look at the Technology is the main area. SPE can outside their current, efficiently run exploration of the PSC’s there are lots of help by introducing the technical know- operations. uncertainties. We would like to do it but how from other parts of the world to we don’t know what happens next. So operators here in Indonesia and create It’s very tricky to get local content from stability is crucial. an environment of sharing best practices outside even if we are talking about and technologies between operators local content in service companies. I We need to know how that is going within Indonesia. It is about having appreciate the intent of doing it, but the to work. How stable is it going to be? a long term technical focus instead timing is maybe something we need to That’s the challenge at the moment. It’s of looking at influencing regulations be aware of as it’s a real challenge for a very uncertain time for the industry in because that is covered by other groups manufacturers to invest outside their Indonesia. We need to have confidence who are doing that. core hubs right now. that the change would be smooth in order to be encouraged to invest. That’s I think we should stay focused on It requires a little bit of trust. Again the main thing: stability and quality. the very long game by increasing if we focus on the very solid industry involvement between the operator with stable framework that inspires and So how do you overcome the quality community and the SPE as that will encourages investors and you can get issues? increase the knowledge sharing and that anyway. People will be going to just by doing that success will come. go to more established countries with Well, again we have to train excellent That’s why the SPE exists. Let’s do that lots of opportunity and investing there. people. You can have the best system and the results will happen. My belief is I think you will get a worse result if you in the world, but to achieve success you if we are more focused on the positive are forced to do it. If it becomes a good have got to change the culture within side of things such as technology idea then you just jump into it. your company. You need to establish implementation, the rest will just follow. quality as part of the culture. I hope so.

52 SPE Java . Apr - Aug ‘16 Distinguished Lecturer

Society of Petroleum Engineers Distinguished Lecturer 2016-17 Lecture Season

Thursday, 15 September 2016 Energi Mega Persada Office, 28 Floor Bakrie Tower, Rasuna Epicentrum, Jl. HR. Rasuna Said Jakarta 11:30 AM - 02:00 PM

“Dry Hole Analysis: What I have Learnt about the Upstream Petroleum Industry from My Failures”

Steve Mackie Santos Ltd

Abstract: Finding and producing oil and gas are the major objectives of any upstream oil and gas company. Both, however, can be highly elusive. Dry hole analysis is an exploration methodology to determine what can be learnt from drilling failures. Using a series of case studies from my own career I look at what we can learn from "failures" - not just those that occur during exploration, appraisal and development but also those that relate to the business as a whole. Having worked for all types of companies - multinationals (both Euopean and USA), local Australian companies and even my own consulting I have been exposed to many and varied management and organisational models. In each case the distilled learnings are universal and applicable at any stage of a carreer. Originally prepared as a Young Petroleum Professionals lecture, the concepts have been expanded to help all professionals see the upstream petroleum industry as a business. As well as uncovering technical findings from failures we can also find out a great deal about the industry that will help working in it become more rewarding and exciting!

Biography: Steve Mackie has a BSc (geophysics and sedimentology), MBA (strategy) and PhD (decision-making) together with 35+ years’ experience in the upstream petroleum industry functioning in both regional and field specific geoscience and engineering. As well as running his own successful consultancy he has worked with multinationals and local explorers in both technical and managerial roles. He has been forming, managing and developing asset teams, including virtual teams, associated with exploration and development geoscience and engineering for the last 20 years. He currently is Manager – Geophysics at Santos Ltd. He is also an adjunct at the Australian School of Petroleum, University of Adelaide; a member of the Advisory Board to the Australian School of Petroleum; chairman of the Australian Petroleum Production and Exploration Association (APPEA) Technical Program Committee and editor of the APPEA Journal (2009 – 2015). Steve is the Federal President of the Petroleum Exploration Society of Australia (PESA). He is an honorary life member of APPEA and an active member of SPE, AAPG and EAGE.

SPE Java . Apr - Aug ‘16 53 Society of Petroleum Engineers Society of Petroleum Engineers DistinguishedSociety Lecturer of Petroleum 2016- 17Engineers Lecture Season Distinguished Lecturer 2016-17 Lecture Season Distinguished Lecturer 2016-17 Lecture Season

Thursday, 16 March 2017 Thursday, 16 March 2017 Energi Mega Thursday,Persada Office 16 March 28 Floor 2017 Bakrie Tower Energi Mega Persada Office 28 Floor Bakrie Tower EnergiRasuna Mega Epicentrum, Persada OfficeJl. HR 28Rasuna Floor SaidBakrie Jakarta Tower Rasuna Epicentrum, Jl. HR Rasuna Said Jakarta Rasuna Epicentrum,11:30 AM Jl. –HR 02:00 Rasuna PM Said Jakarta 11:30 AM – 02:00 PM 11:30 AM – 02:00 PM

“Creating Value from Uncertaint y and Flexibility” “Creating Value from Uncertainty and Flexibility” “Creating Value from Uncertaint y and Flexibility”

Reidar B. Bratvold Reidar B. Bratvold UniversityReidar B. of Bratvold Stavanger University of Stavanger University of Stavanger Abstract: AnAbstract: increasing number of oil & gas companies use decision analytic methods to deal AnAbstract: increasing number of oil & gas companies use decision analytic methods to deal withAn increasing complex and number uncertain of oil decisions,& gas companies but still usethey decision get consistent analytic under methods- to deal with complex and uncertain decisions, but still they get consistent under- performancewith complex inand typical uncertain business decisions, metrics but (cost, still theyproduction get consistent rates, time under to start,- … ) performance in typical business metrics (cost, production rates, time to start, … ) leadingperformance to less in valuetypical than bus expected,iness metrics or, more(cost, perniciously, production rates, than possible.time to start, Uncertainty … ) leading to less value than expected, or, more perniciously, than possible. Uncertainty perleading se is to not less the value culprit, than rather expected, a failure or, to more make perniciously, the best decisions than possible. under uncertaintyUncertainty per se is not the culprit, rather a failure to make the best decisions under uncertainty –per which se is are not often the culprit, non-intuitive. rather a The failure real to value make-destroyers the best decisions are bias andunder failing uncertainty to plan – which are often non-intuitive. The real value-destroyers are bias and failing to plan –for, which and areexploit, often the non different-intuitive. ways The reality real value might-destroyers evolve - if areyou biasunder and-estimate failing tothe plan for, and exploit, the different ways reality might evolve - if you under-estimate the realfor, anduncertainty, exploit, theyou different are likely ways to under reality-invest might in evolve managing - if you its underconsequences.-estimate the real uncertainty, you are likely to under-invest in managing its consequences. Makingreal uncertainty, the best decisionsyou are likely requires to under an accurate-invest in assessment managing its of consequences. uncertainty Making the best decisions requires an accurate assessment of uncertainty (unbiased,Making the neitherbest decisions optimistic requires nor pessimistic) an accurate – and assessment an unbiased of uncertainty approach to (unbiased, neither optimistic nor pessimistic) – and an unbiased approach to managing(unbiased, its neither consequences optimistic –nor putting pessimistic) as much – andeffort an on unbiased capturing approach upside to managing its consequences – putting as much effort on capturing upside opportunitiesmanaging its consequencesas mitigating risks. – putting as much effort on capturing upside opportunities as mitigating risks. Weopportunities often make as decision mitigatings to risks. live up to expectations rather than to live up to We often make decisions to live up to expectations rather than to live up to possibilities.We often make Despite decision thes ubiquity to live up of tooptions expectations in the oil rather & gas than industry, to live in up practice to these possibilities. Despite the ubiquity of options in the oil & gas industry, in practice these possibilities.embedded options Despite are the often ubiquity overlooked of options in the in theformulation oil & gas and industry, evaluation in practice of these embedded options are often overlooked in the formulation and evaluation of embeddedinvestment optionsopportunities, are often even overlooked when uncertainties in the formulation are explicitly and evaluation modeled. of investment opportunities, even when uncertainties are explicitly modeled. investmentThis talk will opportunities, illustrate and evendiscuss whe hown uncertainties to create value are fromexplicitly uncertainty modeled. and flexibility This talk will illustrate and discuss how to create value from uncertainty and flexibility Tbyhis applying talk will an illustrate option andpricing discuss methodology how to create that explicitly value from focus uncertaintyes on upside and flexibility by applying an option pricing methodology that explicitly focuses on upside bypossibilities. applying an To option properly pricing value methodology flexibility, we that must explicitly model focusnot onlyes onthe upside possible future possibilities. To properly value flexibility, we must model not only the possible future possibilities.decisions, but To also properly the information value flexibility, available we mustat the model time these not only decisions the possible are made. future decisions, but also the information available at the time these decisions are made. decisions, but also the information available at the time these decisions are made.

Biography: ReidarBiography: B. Bratvold is Professor of Petroleum Investment and Decision Analysis at Biography:Reidar B. Bratvold is Professor of Petroleum Investment and Decision Analysis at Reidarthe University B. Bratvold of Stavanger. is Professor His of res Petroleumearch interests Investment include and decision Decision analysis, Analysis project at the University of Stavanger. His research interests include decision analysis, project thevaluation, University portfolio of Stavanger. analysis, realHis -resoptionearch valuation, interests and include behavioral decision challenges analysis, inproject valuation, portfolio analysis, real-option valuation, and behavioral challenges in valuation,decision-making. portfolio Prior analysis, to academia, real-option he spentvaluation, 15 years and behavioral in the industry challenges in various in decision-making. Prior to academia, he spent 15 years in the industry in various decisiontechnical- making.and management Prior to academia, roles. He he is spenta co-author 15 years of the in theSPE industry book Making in various Good technical and management roles. He is a co-author of the SPE book Making Good Decisions.technical and Professor management Bratvold roles. has He previously is a co- authortwice served of the SPEas an book SPE Making Distinguished Good Decisions. Professor Bratvold has previously twice served as an SPE Distinguished Decisions.Lecturer. He Professor is the 2015 Bratvold recipient has of previously the North twice Sea Regionserved asSPE an Management SPE Distinguished & Lecturer. He is the 2015 recipient of the North Sea Region SPE Management & Lecturer.Information He Award is the and2015 currently recipient serves of the asNorth the Seaexecutive Region edito SPEr for Management the SPE & Information Award and currently serves as the executive editor for the SPE InformationEconomics &Award Management and currently journal. serves He is as a theFellow executive of the Societyeditor for of the Decision SPE Economics & Management journal. He is a Fellow of the Society of Decision EconomicsProfessionals & Managementand a member journal. of the NorwegianHe is a Fellow Academy of the Societyof Technological of Decision Sciences. Professionals and a member of the Norwegian Academy of Technological Sciences. ProfessionalsHe holds a PhD and in apetroleum member ofengineering the Norwegian and an Academy MSc in mathematics,of Technological both Sciences. from He holds a PhD in petroleum engineering and an MSc in mathematics, both from HeStanford holds Unia PhDversity in petroleum and has studied engineering business and andan MSc management in mathematics, science both at INSEAD from Stanford University and has studied business and management science at INSEAD Stanfordand Stanford University University. and has studied business and management science at INSEAD and Stanford University. and Stanford University.

54 SPE Java . Apr - Aug ‘16 Society of Petroleum Engineers Society of Petroleum Engineers Distinguished Lecturer 2016-17 Lecture Season Distinguished Lecturer 2016-17 Lecture Season

Tuesday, 13 June 2017 Tuesday, 13 June 2017 Energi Mega Persada Office 28 Floor Energi Mega Persada Office 28 Floor Bakrie Tower, Rasuna Epicentrum Jakarta Bakrie Tower, Rasuna Epicentrum Jakarta 11:30 AM – 02:00 PM 11:30 AM – 02:00 PM

“The Digital Oilfield - Collaborative Working at Global Scale” “The Digital Oilfield - Collaborative Working at Global Scale”

Frans van den Berg Frans vanShell den Berg Shell Abstract : Abstract: Coll aborative Working helps assets to operate more efficiently and as one team, resulting in higherCollaborative production, Working less helpscost, assetslower HSE to operate exposure more and efficiently higher morale. and as one team, resulting in higher production, less cost, lower HSE exposure and higher morale. Shell has pursued the Digital Oilfield for the last ten years, under the heading of Smart Fields. CollaborativeShell has pursued Work the Environments Digital Oilfield (CWEs) for the were last tenimplemented years, under in the the majority heading of of assets, Smart Fields.live environmentsCollaborative Worknow cover Environments over 50% (CWEs) of Shell’s were productio implementedn. in the majority of assets, live environments now cover over 50% of Shell’s production. The presentation will provide an overview of current Collaborative Work Environments. It will showThe presentation examples of will CWEs provide in different an overview types of of current assets, Collaborative and of the business Work Environments. value achieved It .will The showlarge scaleexamples implementation of CWEs in was different achieved type sthrough of assets, a structured and of the deployment business value programme, achieved taking. The assetslarge scale and projectsimplementation through was a standard achieved design, through implementation a structured deployment and embedding programme, approach taking. assets and projects through a standard design, implementation and embedding approach. T o embed and sustain the new ways of working, a focus on the people aspects and change managementTo embed and has sustain been the critical. new Eachways projectof working included, a focus mapping on the workflows, people aspects awareness and change and trainingmanagement sessions has and been establishing critical. Each coaches project, supportincluded and mapping continuous workflows, improvement awareness. and training sessions and establishing coaches, support and continuous improvement.

Biography: Bi ography: Frans van den Berg currently works in the global Smart Fields programme in Shell’s Projects andFrans Technology van den Berg organisation currently inworks the Netherlands.in the global SmartHe leads Fields the programmeglobal implementation in Shell’s Projects of Collaborativeand Technology Work organisation Environments in the in Netherlands. Shell. He leads the global implementation of FransCollaborative joined Shell Work after Environments graduation in in Shell Physics. at Leiden University in The Netherlands. He has heldFrans various joined positionsShell after as graduation a petroleum in Physicsengineer at and Leiden asset University development in The leader Netherlands. in operational He has heldroles variousand in globalpositions technology as a petroleum deployment. engineer He workedand asset ten development years in Malaysia leader and in operationalThailand. rolesHe has and been in global involved technology in the organisation deployment. of Hethe worked SPE Intelligent ten years Energy in Malaysia and Digital and Tha Energyiland . He has been involved in the organisation of the SPE Intelligent Energy and Digital Energy Conferences since 2008. Conferences since 2008.

SPE Java . Apr - Aug ‘16 55 Fish Fry / Hogfest 2016

016 was a very challenging year to say the least for the SPE Fish Fry, like joining with Yayasan Harley Owners Group (YHOG), the new Venue Balai Sarwono, and having a smaller crowd. In the end it turned out to be very successful, and the crowd loved it. We received zero complaints, all positive feedback.

Both YHOG and SPE Java faced many challenges some new and very difficult. Both organizations were going to cancel this year. But by joining together, we managed to put on an outstanding and entertaining evening.

Adding the children’s activities turned into a huge hit. Everyone enjoyed the food, the band, and auction items did well. At the end, nothing but happy and smiling faces, from little children to adults, left the venue.

Great Job to everyone who participated, and helped at the event. Special thanks to YHOG Committee, SPE Committee especially Mega, Mr. Big’s Crawfish, Queen Events Origination, Frank’s Smokehouse, Crown movers, 4-students helpers from Trisakti student chapter, and the staff at Balai Sarwono. You were the backbone in making it all come together.

A special thanks also to the sponsors; Amway, Prowell, PT.Hot-Hed, PT. Djarum, PT.Wartsila Indonesia, BH Financial Services, Total Bangun Persada, PT. Pumpa Cakrawwala Mulia, Chevron, Reliant Energy Services, Hana Tour, PT Delta, and all of the guests for coming. Without your kind donations we couldn’t make it happen. Thanks again and we hoped you enjoyed our event. See you in 2017....

Rob Jagodzinski PIC SPE Fish Fry

56 SPE Java . Apr - Aug ‘16 SPE Java . Apr - Aug ‘16 57 same time serve other national priorities. The overtone of this session was to push for acceleration of the inter- sectoral reform by taking the momentum of the economic slowdown and the low oil price. After lunch, The Plenary Session III was held by the theme “Gas Governance in Supporting the Acceleration of Indonesia

Economic Development” by Presidential ChiefTrisakti of StaffJakarta the Republic of Indoensia, Mr. Teten Masduki. This session served as the avenue for all the key players from upstream, mid-stream, and end-users to discuss the issues from multiple angles and discuss recommendations to enlarge the gas “pie” and provide win-win solutions to all stakeholders. The second day of the eventIPA Cclosonventioned by Cocktail and and Entertainment Exhibition at the plenary Hall JCC at 5 p.m. 25-27 May 2016 Friday, 27th of May 2016 was the final day of the largest oil and gas convention and exhibition in South East Asia, 40th IPA Convention and Exhibition. Technical Presentations was continued on this day, and got all the winners from each categories. On this third day of 40th IPA Convex, there was “Special Session” at Plenary Hall, with the theme “Case Studies of Oil and Gas as Catalyst for Regional Development”. This session talked about the expectations from national and regional stakeholders towards the contribution of oil and gas activities to regional development which increasingly high, so this session discussed about among others explore what are the best practices around us. This session was moderated by Mr. Andang Bachtiar, Chairman of National Exploration Committee. Finally 40th IPA Convention and Exhibition was closed by PA (Indonesian Petroleum “Shifting Paradigms in Indonesia - Professional category was divided by th Association) is a Forum for its Supplying Energy in the New Reality”. three categories, which was Geophysics, award presentation and official closing of 40 membersIPA Convention and future investors and Exhibition.This event is the largest oil and gas Geology, and Engineering. There was Ito exchange knowledge, ideas and convention and exhibition in South also Plenary Session at Cendrawasih experiences about the Oil & Gas East Asia, It offers opportunities for Room 3, with the theme “Surviving the Industry in Indonesia and worldwide. unlimited networking in the sector. Oil and Gas Industry in Indonesia under The IPA’s role is to promote the Current Oil Price” by The Coordinating exploration, production, refining, The 40th IPA Convention and Exhibition Minister of Economic Affair RI, Mr. Panel diskusi day 1 processing, distribution opening and marketingceremony was opened by the speech of Minister Darmin Nsution. This session presented of the petroleum and geothermal of Mineral and Energy, Mr. Sudirman the government’s view on the low industries in Indonesia. IPA has an Said followed by VIP TOUR (VIPs oil price from a macroeconomic annual big event called IPA Convention tour to the exhibition area). On this perspective and how it will impact the and Exhibition. This year, the 40th IPA first day of IPA Convex, there was country in the longer run, then followed Convention and Exhibition 2016 was technical paper presentation which was by global and regional analysis vis-à-vis held on 25 – 27 May 2016 at the Jakarta divided into two categories, student Indonesia’s competitiveness, and ends Convention Centre with the theme category and professional category. with a reality check from the oil and gas players in Indonesia. The first day of The 40th IPA Convex was closed by Cocktail Gathering, A social networking event at the Exhibition Hall of the JCC.

The second day of the 40th IPA Convex was opened by 8 a.m. The exhibition opened for visitors, such as professionals, students, media organization, and journalists. There was also technical presentation, which continued the technical presentation from the previous day. On this day,

58 SPE Java . Apr - Aug ‘16

same time serve other national priorities. The overtone of this session was to push for acceleration of the inter- sectoral reform by taking the momentum of the economic slowdown and the low oil price. After lunch, The Plenary Session III was held by the theme “Gas Governance in Supporting the Acceleration of Indonesia Economic Development” by Presidential Chief of Staff the Republic of Indoensia, Mr. Teten Masduki. This session served as the avenue for all the key players from upstream, mid-stream, and end-users to discuss the issues from multiple angles and discuss recommendations to enlarge the gas “pie” and provide win-win solutions to all stakeholders. The second day of the event closed by Cocktail and Entertainment at the plenary Hall JCC at 5 p.m. Friday, 27th of May 2016 was the final day of the largest oil and gas convention and exhibition in South East Asia, 40th IPA Convention and Exhibition. Technical Presentations was continued on this day, and got all the winners from each categories. On this third day of 40th IPA Convex, there was “Special Session” at Plenary Hall, with the theme “Case Studies of Oil and Gas as Catalyst for Regional Development”. This session talked about the expectations from national and regional stakeholders towards the contribution of oil and gas activities to regional development which increasingly high, so this session discussed about among others explore what are the best practices around us. This session was moderated by Mr. Andang Bachtiar, Chairman of National Exploration Committee. Finally 40th IPA Convention and Exhibition was closed by award presentation and official closing of 40th IPA Convention and Exhibition.

Panel diskusi day 1 opening ceremony

there were many students from different institution came to this event. They came to get more knowledge about energy and the oil and gas industry by following the presentation which held by many companies in their booths, such as, Chevron, Premier Oil, ExxonMobil, and other companies. There were also many prizes for whom could answer the questions after The second day of the event closed the contribution of oil and gas listened the presentation. by Cocktail and Entertainment at the activities to regional development plenary Hall JCC at 5 p.m. which increasingly high, so this session Other than oil companies, there were discussed about among others explore also oil and gas organizations’ booth Friday, 27th of May 2016 was the what are the best practices around us. such as SPE Java, IATMI, and AAPG. This final day of the largest oil and gas This session was moderated by Mr. Year’s SPE Java Booth was organized convention and exhibition in South Andang Bachtiar, Chairman of National by SPE Java in collaboration with SPE East Asia, 40th IPA Convention and Exploration Committee. Finally 40th IPA Trisakti Student Chapter and SPE UI Exhibition. Technical Presentations Convention and Exhibition was closed Student Chapter. The Booth provided was continued on this day, and got by award presentation and official information about SPE Java and its all the winners from each categories. closing of 40th IPA Convention and Student Chapters. The visitors could On this third day of 40th IPA Convex, Exhibition. also join SPE by signing up at the booth. there was “Special Session” at Plenary There were many visitors came and Hall, with the theme “Case Studies share about experience, education, of Oil and Gas as Catalyst for opinion, and many more. Regional Development”. This session talked about The Plenary Session II was held on the expectations from this second day of the event. The national and regional theme for The Plenary Session II was stakeholders towards “Inter-sectoral Reforms Key to Energy Sustainability” by Mr. Sudirman Said. This session tried to identify what are those critical inter-sector reforms that are critical for oil and gas especially those that at the same time serve other national priorities. The overtone of this session was to push for acceleration of the inter-sectoral reform by taking the momentum of the economic slowdown and the low oil price. After lunch, The Plenary Session III was held by the theme “Gas Governance in Supporting the Acceleration of Indonesia Economic Development” by Presidential Chief of Staff the Republic of Indoensia, Mr. Teten Masduki. This session served as the avenue for all the key players from upstream, mid-stream, and end-users to discuss the issues from multiple angles and discuss recommendations to enlarge the gas “pie” and provide win-win solutions to all stakeholders.

SPE Java . Apr - Aug ‘16 59 ITB Bandung

SPE SC ITB 2016/2017

ince March 2016, SPE ITB SC The second event was the SPE First the possible collaboration between has been running by 2016/2017 Gathering. The goal of this event was SKK Migas and SPE ITB SC. We were boards with Mr. Fikri Aulia to strengthen the internal bonding welcomed by Mr. Elan Biantoro as the SAkbar as our president and Mr. between the SPE Partners and the SPE Head of Public Relations Affairs at SKK Farhad Hamid as our vice president. Boards and also as a way to get to Migas. The first session was opened with In the last 3 months, we have been know each other. a presentation by Mr. Fikri Aulia Akbar conducted numbers of event under about the vision and mission and work our departments which are Internal, As from our external departments program of SPE ITB SC, such as national External, and Student Development. recently was a courtesy visit to SKK and international benchmarking, Migas office in Wisma Mulia Building company roadshow, guest lecture, Internal Department has conducted 30th Floor, South Jakarta, on April 5th, and etc. The second session was two events; the first event was Culinary 2016. The courtesy visit to SKK Migas continued with a presentation by Mr. Night. This event was held in order to was to represent the structure of the Yusuf Pradana as the Head of Social carry out the Internal Affairs Division’s new boards of ITB SPE SC, to present Investment Division of SPE ITB SC about responsibility to strengthen the internal the work programs of the SPE ITB SC the social investment’s work program bonding among the SPE Boards. in 2016/2017, and to discuss about

60 SPE Java . Apr - Aug ‘16 such as school revitalization and CSR Collaboration with Company related to oil and gas industry. Overall, Mr. Elan Biantoro gave a positive feedback to our presentation. He was willing to help SPE ITB SC reaching our goals by opening the possibility of collaborating throughout our program.

Student Development Department held two events in these past three months. The first event was the Schlumberger Guest Lecture Series. With the commitment to help the entire members to develop their skills and knowledge related to technical and non-technical problem, SPE ITB SC through its Student Development Department collaborated with Schlumberger to host this event that consisted of four guest lectures which had different topics. The first one was about ‘Introduction to Oil and Gas Exploration and Production Cycle’ that gave a brief explanation about the outline of oil and gas exploration process and its production cycle. The second guest lecture’s topic was about ‘Drilling, Logging While Drilling, and Geomechanics’ that mainly discussed about the overview of drilling operation and the role of geomechanics in it. The third one was about ‘Wireline Open Hole Logging’, basically very fundamental because Schlumberger was the first one to develop the wireline logs in 1927.

The last guest lecture mainly discussed about ‘Well Services Operation’ where the speaker explained more about his experiences in well services and fracturing. The second event that had been held by the Student Development Department was Schlumberger Vacation Trainee training. Schlumberger Vacation Trainee is an internship program for undergraduate students. To accommodate the candidates to pass the Schlumberger VT selection process, SPE ITB SC through its Student Development Department collaborated with AAPG ITB SC and SEG ITB SC was conducted the Schlumberger VT training in which the trainers are VT alumni. There were several sessions held: sharing session from VT alumni, communication skill training session, and Focus Group Discussion simulation or FGD simulation.

SPE Java . Apr - Aug ‘16 61 UNPAD Bandung

BENCHMARKING BETWEEN UNPAD SC & ITB SC

n May 1st 2016, SPE UNPAD SC sharing sessions. Where had a Benchmarking with SPE several groups of board ITB SC in Padjadjaran University members, regardless O(UNPAD). Benchmarking is one sharing which SC they were, event between SPE Student Chapters gathered around and where members of Student Chapters discuss anything. The gathers around to share anything and groups could be various, bond with each other. Benchmarking has it could be a group of several purposes. First, to strengthen the board member who had bond between the two Student Chapters, the same position. Take Secondly, to share information between an example, where the PR the two Student Chapters, last but not was grouping with PR from least, to open up chance to make a other SC, or the leader collaboration event together. Those groups with leader from Purposes of Benchmarking are beneficial other SC, and vice versa. for both sides of Student Chapters. That way, PR from SPE UNPAD SC could learn about many On the D-day, both Student Chapters things about PR from SPE gathered their board members on ITB SC, and vice versa. But it Geology Engineering Faculty (FTG) didn’t stop the chance to group Building in UNPAD. In the morning, SPE randomly. Another example was, ITB SC arrived and was welcomed by when both leaders could observe SPE UNPAD SC. As soon as they were too how the Internal Division from the arrived, SPE UNPAD SC showed them the other SC was. There were no Boundaries auditorium room, where they were going for the discussion, everyone can enjoy to do all activities there. The activities in the discussion together. In the sharing Benchmarking allows all members of benchmarking could be various, but at session, each SC could ask anything to Student Chapters to get along with each the Day, there were two main activities; the other SC. Also in sharing session, it other. It also allows them to know more Presentation and Sharing. allowed everyone to explain anything about each other’s Student Chapters. more thoroughly depends on the There, they can share about plans and The Presentation Session allows each SC questions. It was a beneficial chance to projects of their own Student Chapters, to share many things inside the SC itself. get along with each other, the sharing thus it allows each member to have One SC could actually explain; who were session was the key to strengthen the depiction of the other member’s plan. their leader, how was the leadership bond between two Student Chapters in In addition, they can also understand method generally, how was the the Benchmarking. what difference between each Student organization structure, who were their Chapters. In a way, members of an SC board members, how was the regulation, In the end of the Benchmarking, there can compare their organization system what were their plans & projects of the was a documentation of all participants with the other SC. assuming that one year, and many more. While one SC of the day, in order to eternize the organization system is somehow better delivered the presentation, the other SC memory, and also to sign a mark of a than the other, it could be an evaluation paid attention. By this activity, each SC good relation between the two Student to make a progress for the other SC. Not could see how were the other SC from Chapters. Finally, SPE UNPAD SC had a only organization system, there are a lot the other college was, and each SC could farewell before SPE ITB SC departed back of things that can be compared between compare how different or how similar to Bandung. the two Student Chapters, such as; they were from other SC. Leadership method, Regulations, Plans There’s a lot that we can get and Projects, Coordination system, and After the presentation, there were from Benchmarking. It’s because etc. In the end, both SC will learn about

62 SPE Java . Apr - Aug ‘16 each other and learn about new things. Benchmarking is a step to maintain a good relation between Student Chapters of SPE. It opens up the chance to make a collaboration event between Student Chapters, where the event could be wider and bigger because of the help from the two Student Chapters. Benchmarking serves all purpose of bonding between two Student Chapters.

Hopefully, both SC from UNPAD and ITB could learn from each other, complete each other, and support each other. And hopefully, we all could maintain a good relation between SPE UNPAD SC and SPE ITB SC. Because what could be better, than the unity of the young generation.

“Together, we will go further”

APPROPRIATES OREYES is the biggest event held important, because preparation by SPE UNPAD SC every year. is the key to make a successful BOREYES consists of various serial event. In APPROPRIATES, all Bof events, which includes; Seminar, boards of SPE UNPAD SC can Competitions, and Bonding. The event discuss thoroughly. All aspiration itself is conducted as long as several regarding development of days long. While the events are various, BOREYES can actually be and considered many, they require a catered in APPROPRIATES. Now, lot of preparations. There would be APPROPRIATES allows all boards months of preparation to conduct to deliver their idea, so chances such an amazing events on just several are, there will be more innovative days. Now SPE UNPAD SC has already events thanks to creative ideas begun its preparation, known as from the boards. APPROPRIATES APPROPRIATES, in order to set BOREYES can also be the chance to evaluate for 2017. the mistakes that are done in the previous BOREYES, a chance for APPROPRIATES is mainly a gathering introspection, so that the same event that held by SPE UNPAD to mistakes won’t happen again on discuss regarding anything that will the next BOREYES. APPROPRIATES be presented on the next BOREYES, allows the next BOREYES to have more simply, APPROPRIATES is a preparation progress than before, and have less So far, SPE UNPAD SC has gather twice for BOREYES. APPROPRIATES will be mistakes than before. for APPROPRIATES. And here, we already followed Boards of SPE UNPAD SC, and have Irsan Indra Prabowo as BOREYES will be held routinely every once in a APPROPRIATES can also be a way for new project officer and also Gatra while. The purpose of APPROPRIATES is the boards to cooperate and bond with Purwaatmaja Setyadi as the vice project to achieve the best preparation so that each other. As we know, new boards and officer. There will be a lot of discussion BOREYES 2017 can be held in the best member has just joined not long ago. ahead for SPE UNPAD SC in order to set way possible. And here, new boards can learn from a better BOREYES compared to the last their seniors and blend with them. The one. APPROPRIATES consists of discussions seniors can build their trust towards the which will result a lot of settings for new boards by giving them tasks and Hopefully BOREYES can be one useful the events such as; Basic concept, SOP teach them. While they do the hard jobs, event, not only for the participants but & ROP, Projects officer, along with its the new boards observe. Hopefully, the also the committees. Also in order to vice, series of events that will be held, new boards can evaluate and do better achieve a stronger organization, SPE The professional figures that would be the moment when they are becoming UNPAD SC. invited, and more others. seniors. And thus, APPROPRIATES can be beneficial for the internal bonding and “Together we will go further.” APPROPRIATES is believed to be building experience.

SPE Java . Apr - Aug ‘16 63 FIELD TRIP COLLABORATION SPE & SEG PERTAMINA GEOTHERMAL ENERGY KAMOJANG

PE & SEG had conducted a collaboration event, On Tuesday, May 10th 2016, which was a Field STrip to PT. Pertamina Geothermal Energy in Kamojang. The event was followed by 60 participants which were members of SPE, SEG and even geology engineering students from Padjadjaran University (UNPAD). It was an opened event for any geology engineering students in UNPAD.

SPE & SEG made a collaboration event in order to achieve mutual benefits, also to build good relation between both Student Chapters (SC). The purpose of the event was to educate the participants regarding Geothermal Energy. By running this educative event, participants were given chance to observe directly, how geothermal energy actually works. The participants could also get more The touring around GIC completed directly to the crater. And again, Mr. knowledge because a professional figure around 11.30 A.M. , which was also Didit provided them explanation about also followed the event, which was Dr. Ir. the time to take a break. Participants how geothermal energy works, how was Agus Didit Haryanto, MT as their guide were given an hour to take a break, the system in geothermal energy, and for the trip. Mr. Didit was one of lecturer have lunch, and pray. During the time, even more. There, participants could from UNPAD Geology Engineering participants could enjoy their free time understand more about geothermal Faculty (FTG). together in the GIC. energy by observing objects that they heard before, in addition, they The series of events started in the By 12.30 P.M., all participants were also got more knowledge about how morning, participants gathered on already departed on bus to go to the geothermal energy actually works. And UNPAD gate before they departed at geothermal field, which was Kamojang in the end of that, all participants took a 6.30 A.M. They rode a bus to go to Crater. During the way, they could see documentation to eternize the memories. Kamojang, Garut. It took them several pipes that were connected between hours before arriving on Geothermal geothermal machines and they could Finally, participants departed home on Information Centre (GIC), Kamojang at even see the cooling tower of the a bus at 3.30 P.M., and in the end they 9.00 A.M. As soon as they got there, they geothermal facility. While the participants arrived at UNPAD around 6 P.M. received presentation on the theater couldn’t watch anywhere closer, they room, the presentation was about could still see facilities from the bus. It was a memorable moment for all Geothermal Energy in general, such as; Along with that, Mr. Didit, again, was of the participants. The event served what was geothermal energy, how was explaining of; what kind of facilities its purpose to educate its participants the comparison between geothermal that they were seeing, what was the exclusively. Not only they could observe energy than oil & gas energies, how function of each machine, why the pipes a lot of things by themselves, but was the reservoir system of geothermal had various shapes and sizes. There, they were also provided with clear energy, where was geothermal energy Participants could get more information explanation, both from Mr. Didit, and source, how was Indonesia geothermal without getting off the bus. from the presentation. The field trip energy potential, even the explanation of provided an effective way to educate how could geothermal energy be useful Participants were finally arrived on the geology engineering students about for the society. After that, participants geothermal field at 2.30 P.M., and there, geothermal energy. That way, not only were guided to have a GIC touring, where participants could take a closer look they get more understanding, but also they were taken around GIC building to around it. The geothermal field includes more experience in geothermal subjects. see a lot of things, including; energy core, Kamojang Crater, and served both as Hopefully, it will be very beneficial for samples of rocks, models of boreyes, an old geothermal worksite also for their education, also for their career. And miniatures of facility buildings, and even tourism purpose. Kamojang geothermal hopefully, they could bring development illustrations that demonstrate system field was the oldest geothermal worksite towards Indonesia’s geothermal energy. and mechanism of geothermal energy. in Indonesia. The Kamojang Crater It doesn’t stop the chance that in the While participants were observing the was considered as geothermal spot, future, Indonesia geothermal energy objects around GIC, Mr. Didit was there it released a great size of water vapor would improve because of these fellow to deliver explanations about one object to the air, hence the nickname “Steam participants. to another. There, participants could Train Crater”. Many people, even from get more understanding through direct abroad the country, were interested “Together we will go further.” observation, in addition, with a help of a to see this unusual crater directly. On lecturer whom also served as a guide. the spot, participants could observe

64 SPE Java . Apr - Aug ‘16 UNDIP Semarang

Guest Lecture

uest Lecture is a mini seminar Universitas Diponegoro. topic to the audience. The speaker is held by SPE (Society Of The event was opened with introduction then invited to the stage and proceed Petroleum Engineers) Diponegoro of masters of the ceremony, Monica with the lecture. This section was given UniversityG Student Chapter. It is one Bella and Medika Sihombing who will 2 hours of duration and Mr. Gema of Professionalism’s department guide us to the main events. Followed by explained all about the Shale Oil and Gas programme. We concept this Guest giving a HSE speech by Nadia Dwi Ayu. and it’s effect to the oil and gas price in Lecture will be held three times in our After the opening ceremony the event the world. This section was closed with period where we invite experts in oil and continued with a welcoming speech Question and Answer sessions, and there gas world to give talks and share their from the Vice president of the SPE are 3 question given for the speaker. knowledge to the audience. This event Universitas Diponegoro SC 2016, Irma After the question and answer session is open for all major. So far we have Meiditya as our president is attending Mrs. Irma Meiditya as the Vice President conducted the first Guest Lecture for another event. The next section of the of SPE UNDIP SC giving the certificate 2016 period with the theme of “Shale Oil agenda was handled by the moderator, and the souvenir for Mr. Gema Wahyudi and Gas and their Role in the Petroleum Deo Reynaldo Alwi, giving brief Purnama. The event was closed with Sector”. The event was attended by introduction of the honourable speaker, giving memento and taking picture with participant from various department of Mr. Gema Wahyudi Purnama and the all participant.

SPE Java . Apr - Aug ‘16 65 INTENSIVE CLASS

ntensive class is a knowledge-sharing Teknik at 19.00 on 19th May 2016. This presentating about the beginning of class where we discuss various topics Intensive Class is open to every SPE Oil and Gas and also details about regarding oil and gas, this event is members. On this Intensive Class the offshore design structure. The talks was Iopen for every boards and member of theme that was brought is Offshore then continued by Mr. Rangga which SPE UNDIP SC, this is one way of SPE Design Structure and we invited IMSO explained about the case study and UNDIP SC to facilitate our member to as one of the Oil and Gas bureau in the common problems occurred in the gain new information and learn further Diponegoro University. Intensive Class field of Offshore Design Structure. The about oil and gas. Intensive class not was opened by Mrs. Fanta Uli Hartati last session of this Intensive Class is only provide discussion regarding the from IMSO as the Master of Ceremony the question and answer sessions and oil and gas but also sharing session with of this event. After that Mrs. Fanta the audience was deeply involved in alumni or senior student that can give called the moderator for this Intensive the discussion. After the session was us more information and share their Class, Mr. Farhan Ramadhan from SPE done, Mr. Farhan as the moderator experience about everything that are UNDIP SC to give brief introduction gave the conclusion of this intensive related in oil and gas. of the speaker and the theme of the class followed by giving certificate to Mr. Intensive Class. Our Speakers are Mr. Hardy and Mr. Rangga as the Speakers. Our first intensive class was held in Rangga and Mr. Hardy from IMSO. The The event was closed by photo taking the Flash Lounge Dekanat Fakultas first sessions started with Mr Hardy sessions.

66 SPE Java . Apr - Aug ‘16 Student Chapter VISIT TO UPN SC

Chapter awards from SPE International.

The agenda is attended by 30 boards of SPE UNDIP SC. Arriving at 12 pm we are welcomed by SPE UPN VY SC’s boards then we are headed to Gedung Perminyakan UPN VY and continued the event with opening from President of SPE UPN VY SC, Lervino Fridela. After that, there’s Student Chapter’s introduction by SPE UNDIP SC’s President, Yudy Wiraatmadja as well as SPE UPN VY SC’s President which is then followed by Question and Anwer Sessions. Lastly, sharing sessions of each student chapter’s department and division. The event is closed by having a photo sessions before we are leaving for Semarang.

PE SC visit is one of Public Relation Department’s work program under External Affairs division. The aim of SSPE SC Visit is to have a benchmarking session and increasing student chapter’s competitiveness by improving in various areas such as productivity and services to the members. Benchmarking allows SPE UNDIP SC to gather informations and knowledges from the other student chapters to have a good comparison in order to evaluate our work programmes. This is an effort of our student chapter to develop and improve our organization by exchanging information with the examplary SPE UPN VY SC which already achieved the Outstanding Student

SPE Java . Apr - Aug ‘16 67 UPN Yogyakarta Geomechanic for Drilling Optimization and Reservoir Management

Mr. Beni started his presentation, “3 minutes interview” challenge is not He can tell us all the information easy. 3 minutes full of talking was kind of about geomechanics perfectly. mind blowing. We have to think really fast He explaned us from zero, for a without any mistake full in 3 minutes. really basic information about geomechanics until the expert one This event being more interesting when with a very interactive presentation Mr. Beni also introducing 4 of his friends. and he can made the audience They are the achiever of LPDP (Lembaga interested with his presentation. Pengelola Dana Pendidikan) Scholarship. They told us how to get the scholarship This presentation had a really and motivate us to get the best education. good time managerial. The Such a good information for the audience speakers isn’t a boring public who wants to continue their studies speaker, he is a pretty smart from the undergraduate degree to the speaker because he can plot master degree with scholarship from our the “ice breaking” time and the government. PE UPN “Veteran” Yogyakarta SC main information time perfectly. He had Guest Lecture has been successfully so many videos about Schlumberger live Then, at the end of event, our speaker Mr hold in Seminary Room of Agriculture lifes or animation about drilling and so on Benny and almost all the participant really SFaculty UPN “Veteran” Yogyakarta on April for the ice breaking. And it was a really appreciate us of conducting this event 30th 2016. Presented by amazing keynote good attention keeper. He also realize that perfectly. They thought that it was pretty speaker, Mr. Ngurah Beni Setiawan from his audience aren’t just from petroleum amazing, this event has been conducted one of the world’s largest oilfield services engineering student, there are so many very well. It was well prepared and well company, Schlumberger Kuala Lumpur as students from other major that came to be organized. “So, we’d like to say thank you Sr. Geomechanics PetroTechnical Expert. his audience. So, from the way he present, so much to the speaker for the knowledge This event’s theme is “Geomechanics we can make sure that all major can and the experiences. For all, we hope this For Drilling Optimation And Reservoir understand about what he’s talking about. event can be held regularly because it gave Management”. us so much benefit. Good job SPE UPN The most attractive moment in that “Veteran” Yogyakarta SC and keep up the As a really worth event with a really worth event. It was when Mr. Beni tried to do hard work!” – they said. knowledge, Geomechanics, the science Schlumberger’s interview in their open of evaluating the interplay between recuitment, named “3 Minutes Interview”. #SPEUPNVYSC stress, pressure, mechanical properties At first, he choosed a volunteer and he #TowardsExcellent and natural fractures in rocks, plays said that he wanted this volunteer to say a critical role in the characterization everything that he knows in 3 minutes and development of oil and gas about “money”, without fields. In particular, geomechanics is stop obviously. Then the becoming a critical design tool for the volunteer just stuck in the optimization of drilling, completion and moment and didn’t say stimulation programs in shale and other anything. And thought at unconventional plays. This seminar is that moment “it was a really designed to provide the under graduate easy challenge to do”. It is students major of geoscientists, petroleum literaly just need to say what engineer, geologist, and other engineering you knew. But it was not as students with the basic principles of easy as that. Then Mr. Beni petroleum rock mechanics, reservoir asked for the 2nd volunteer management, and the use of well logs, to try. It challenged to core measurements and drilling and the first year student of production information for geomechanical Petroleum Engineering. modelling. New conclution, that this

68 SPE Java . Apr - Aug ‘16 BLOOD DONOR “GIVING BLOOD TO SAVE LIFE”

PE UPN Veteran Yogyakarta in collaboration with Palang Merah Indonesia (PMI) had already Sconducted a blood donor at Pendopo Mineralogy Faculty of UPN building. This event was one of annual social activities held by SPE UPN Veteran Yogyakarta Student Chapter.

Blood Donor event was held on Monday, May 23rd 2016. It was opened at 08.00 A.M. until 03.00 P.M. This blood donor activity was opened for Public. The participants were students, lecturer, and staff officer of UPN Veteran Yogyakarta.This activity was sponsored by PMI. SPE UPN Veteran Yogyakarta Student Chapter did about publication, donate their blood or not regarding to boards, students, lecturers, and also registration, and provided the time and the PMI’s requirements. If they passed staffs of UPN who joined to donor theirs venue. the test, they could donate their blood. for helping another one. We successfully collected 24 pouch of blood. There was After filled the registration form, the This blood donor activity had a goal no other purpose other than to help donators did medical test. This test was to help another ones by ours. Big other who needed. done in order to know the donators can enthusiasm proven by many of SPE’s

SPE Java . Apr - Aug ‘16 69 Mud Innovation Guidance “The Importance of Drilling Fluids”

s Petroleum Engineers, we need course divided by three sessions. of mud drilling also the mud innovation. to know that drilling fluids are And the last but not least was, Mr. Handy essential to drilling success both First speaker was Mr. Yudha Yusriansyah. Hermanjaya. He was the 2nd runner up maximizingA recovery and minimizing He was the Champion of Mud Innovation in Mud Innovation Competition in OGCE the amount of time it takes to achieve Competition in OGCE 2014 in Kuala 2015. Mr. Handy Hermanjaya taught us first oil. Mud Innovation Guidance 2016 Lumpur, Malaysia. He delivered his about how to deliver your presentation is an internal event held in order to presentation for almost 45 minutes; he in good way. help boards to have more information explained the basic thing about mud regarding mud in drilling process. itself, such as the purpose, and the The entirely of this short course went This internal event was held on 17th types of drilling fluids. Second speaker, on for more than 2 hours. Despite that April 2016 at Go Rich Resto located in Mr. Catur Cahyo, is also one of our this was a very simple event, yet it had Gejayan. The theme of this event is The expert speakers. He was the 2nd runner a lot of things that we could take. The Importane of Drilling Fluids. The formers up in Mud Innovation Competition in information was inspiring especially for of SPE, which had a lot of experiences in OGCE 2015. He mostly talked about the the mud innovation. competitions, gave this short course. This additives for mud systems, the character

PAPER GUIDANCE - LET’S BEGIN TO WRITE!

PE Paper Guidance 2016 is an event held in order to increase the interest of boards to write a paper Swhich is like the theme, “Let’s Begin to Write!”. It is an annual event that has been established since 2010. This year, SPE Paper Guidance 2016 was attended by all of the Boards SPE.

This event was held on Sunday, March 6th 2016 in one of the board’s House, Windyanesha that located at Pendopo Karangmojo. In this event, there were two speakers; Mr. Dr. Ir. Dedy Kristanto, And then, Mr. Bimo gave us some useful your paper’s subtitle, your underlying M.T. which is our lecturer and Mr. tips : message, and the most important is the Christian Bimo, S.T. which is our former 1. Do Your Best, Don’t Aim for Podium reason you wrote the paper. With those from Batch 2011. 2. Be Nothing to Loose quintessence we can begin to write a 3. Practice Make Perfect paper. Mr. Christian Bimo told us why must 4. Improve English Writing, Reading, write paper and publish it? Because and Speaking At the end of Mr. Dedy’s presentation, our writing is a window of unlimited he challenged us to write a paper, might opportunities, for personal publication Other than that, Mr. Dedy Kristanto told be individual or in groups, and the and promotion which is we can increase us about the essence of writing a paper deadline is April 26th 2016. It means the value of our personal CV, and the and the technical of making a paper. that he wanted to see our spirit and the most important is we could improve our The essence of writing a paper is The outcome after attended this event. English skill. core idea, your insight, your inspiration,

70 SPE Java . Apr - Aug ‘16 INTRODUCING SPE THROUGH OPEN MEMBERSHIP DAY

pen membership is one of popped up about how to become a raised many extraordinary enthusiasm to breakthrough event of SPE UPN member and also about accessing participate in this event. From morning “Veteran” Yogyakarta Student membership. until evening there were about 273 OChapter 2016-2017 period. The main people who regis to become a member. purpose of this event is to introduce Boards serve very well for students who Even after closing the booth, there are what is SPE to student of UPN “Veteran” want to register to become a member, still many students asked about spe and Yogyakarta University and serves as these students are directly notified the wanted to be part of SPE member so the a gate for non-petroleum student know-how to register membership until committees provide an online form for especially for student from Faculty of they get the ID Number and Member those who couldn’t grab their chance at Technology Mineral and Faculty of Card. New members are very satisfied the booth to be a member. The students Industrial Engineering to get their chance with the services provided by the board will feel the benefits after becoming a to be a member of SPE and get the of SPE UPNVY SC so they gave a very member and board SPE will always serve benefits if become a member of SPE. good respond. During the event, which excellently.

This event was held on March 14th, 2016 and located in Pendopo of FTM (faculty of mineral technology), the activities are include disseminate to students about SPE, open membership registration and open SPE booth. Students are very enthusiastic about this event, many of those who want to know more about the SPE. The boards explained about the perks of being a member such as conference and workshop discount, JPT (Journal of Petroleum), SPE-connect, scholarships etc. Many event related to oil and gas industry that which was held by the SPE UPNVY SC, another Student Chapter and SPE internaional such as Petrolida, Petro Gas Days, Ipweek, OGIP, SPEED FEST, PETROFEST, APOGCE, ATCE etc.

Interest arose after it was explained more deeply about all existing activities and also the excellent benefits which attract students willingness to become a member SPE and a lot of good questions

SPE Java . Apr - Aug ‘16 71 SPE TOEFL Preparation for Better Communication

OEFL as you know stands for Test of English as a Foreign Language. It is taken to prove your abilities to handleT the language in reading, writing, listening and speaking Communication is one of the most important thing in life activities because with good communication all the activity will deliver with clearly and not miss understanding. Because many benefits and need SPE UPN VY Student Chapter conducted SPE TOEFL Preparation for Better Communication on April 1st, 2016. This agenda start at 07.00 p.m and done at 09.00 p.m all of the boards participate very curiuous and also enthusias. communication when we are spoken english and the last section report of SPE Toefl Preparation cooperation the toaefl test publish to SPE UPN VY with high quality and an international Student Chapter and how great boards english course, SWIFT Yogyakarta. have great result of the test. Hope Representative from SWIFT told this activity can improve skills of this and give advice for better and good organization.

Togetherness in SPE Student Chapter Gathering

together. Tourism tour was done at Ullen Sentalu Museum located at Pakem Kaliurang, Sleman Regency. In this tour, the participants were divided into four teams consisted of several boards. This museum displayed culture and life of the nobles from Mataram Dynasty (Kasunanan Surakarta, Kesultanan Yogyakarta, Praja Mangkunegaran and Kadipaten Pakualaman). Moreover, all participants were showed the kings and the consorts of the king in various daily costumes.

The name of Ullen Sentalu is abbreviated C Gathering 2016 is an event held student chapters, such as UPN Veteran from Javanese language “Ulating by SPE UPN Veteran Yogyakarta, Yogyakarta, UI, ITSB, ITB, UGM, STT Blencong Sejatine Tataraning Lumaku” in order that the boards between Migas, UNDIP, UTP (Malaysia) and UTM which means “The light of Blencong Sstudent chapters can be able to make (Malaysia). Lamp, the guidance for human to closer relationship to each others. It is an step this life ahead”. This philosophy annual event that has been established This gathering was held on Friday, is derived from kerosene lamp that since 2010. This year, SC Gathering 2016 February 19th 2016 designed in a is usually used in leather puppets was attended by 81 participants from 9 tourism tour and having a lunch performance (Blencong). This lamp is

72 SPE Java . Apr - Aug ‘16 the light that always moves to guide and session for each student chapters. In this session, all the participants enshrined make bright our life journey. In addition, honor opportunity, each student chapter this special moment in to a photograph this museum was founded by a noble should have a self-introduction and together. from Yogyakarta who famously had close work program presentation. This session relationship with the family of Keraton is purposed to have a positif sharing Surakarta and Yogyakarta. from all student chapters to make an improvement for the universities that In Ullen Sentalu Museum, all participants they come from. At the end of this were indicated how the ancestors in Java made Batik which has great and deep meaning in every patterns. Furthermore, there are several histories about the ancient Javanese culture including its entire special rules. The design and decoration of this museum was truthfully astonishing that was also able to bring all participants back to the past life in the period of the ancient java.

After tourism tour at Ullen Sentalu Museum, the participants moved to Pondok Laras Restaurant located at Kaliurang Street KM.11 Ngaglik, Sleman. In this restaurant, they were coddled by delicious food and enchanted acoustic musics which made a warm atmosphere among them. Subsequent to lunch, there were presentation and sharing

SPE Java . Apr - Aug ‘16 73 SPE UNDIP SC AND SPE UPN SC Benchmarking 2016

the session is general question and answer session who moderate by MC. This session was running interactively. The boards from both n Saturday, 26th of March SPE Student 2016, SPE UPN Veteran Chapters were Yogyakarta Student Chapter held active to ask Obenchmarking event with SPE UNDIP which can SC. The theme of this event is “Exchange make each Experience, Towards Excellence”. The SPE Student event is opened festively by the boards Chapter from SPE UPN Veteran Yogyakarta better. Student Chapter welcoming the boards from SPE UNDIP Student Chapter. On 1 The clock p.m. MC opened the event. Chapter is still young, they make efforts showed 2.15 p.m, it is discussion session to make themselves compatible with for each department. Boards from SPE This event was divided into two another SPE student chapter that had UPN Veteran Yogyakarta and SPE UNDIP major events, general discussion and been early established. After Mr. Yudy were grouped to five small groups that department discussion. After all of Wiratmadja finished the presentation, had the same department. Finally, we the participants sung our National Mr. Lervino Fridela as the president of come to the end of this event. This Anthem Indonesia Raya, MC allowed SPE UPN Veteran Yogyakarta Student event was closed with giving momento the president from SPE UNDIP Student Chapter deliver the presentation about and photo session. Before the boards Chapter, Mr. Yudy Wiraatmaja, to inform the profile, structural organization, from SPE UNDIP go back to Semarang, us about the structural organization, job description, achievements, our our boards from SPE UPN Veteran job description of each department, contribution to many events and Yogyakarta invited them to have a their contribution to many events and competitions, our upcoming event and short campus tour. This event was so competitions , and upcoming events that the last is the teaser of our biggest impressive and enriches our networking will be run by them. SPE UNDIP SC have annual event SPE Educational Festival with another SPE student chapter. just established by SPE International 2016 (SPEEDFEST 2016). Setelah both since 2014. Although SPE UNDIP Student presidents have done their presentation,

74 SPE Java . Apr - Aug ‘16 Board of Directors

SPE JAVA INDONESIA BOARD OF DIRECTORS 2015-2016 No. Position Name Company Address Tel E-mail Member# 1 Chairman Hasbi Lubis 08111251148 [email protected] 3169015

2 Vice Chairman Andrew Law Weatherford Indonesia Talavera Office Park 5th Floor, Jl. Letjen. TB. 08118712869 [email protected] 3153423 Simatupang Kav. 22-26 Jakarta 3 VC Membership Steven Broadmeadow Geoservices Jl. Minangkabau Barat No. 34, Jakarta 12970 0811187763 [email protected] 957704

4 VC Membership Cessy Bellafania Semesta Energi Services Graha Satria 1, 2nd Floor Suite 203A/204, Jl. 08551123855 [email protected] 3519018 Raya Fatmawati No. 5, Jakarta 12430 5 VC Program Geoff Thompson Indo Kaya Energi Jl. Wirajasa Blok ZN No. 1, Jakarta Timur 0811834132 [email protected] 3106465

6 Secretary Amin Hartoni Engineering & DBS Bank Tower 28th Floor, Jl. Prof. Dr Satrio 0811816560 [email protected] 3050372 Management Consulting Kav. 3-5, Jakarta 12940 7 Secretary Prijo Hutomo Individual Koperasi ASB, Jl. Golf Raya, Kompleks BPM 0811821108 [email protected] 846469 Blok C4, Depok 16433 8 Treasurer Iwan Soerono Schlumberger Wisma Mulia 42nd Floor, Jl. Gatot Subroto 08121015722 [email protected] 3207263 No. 42, Jakarta 12710 9 Treasurer Hanifatu Avida ExxonMobil Wisma GKBI Room 27-321, Jl. Jend 08118606625 hanifatu.avida@exxonmobil.com 3155502 Sudirman Kav. 28 Jakarta 10 Past Chairman Thomas Schievenbusch 3498828

11 Advisor Bambang Istadi PT. Energi Mega Persada Bakrie Tower 28th Fl. Rasuna Epicentrum, Jl. 0811883266 [email protected] 3262190 Tbk. HR. Rasuna Said, Jakarta 12960 12 Advisor Peter Adam PT. Energi Mega Persada Bakrie Tower 28th Fl. Rasuna Epicentrum, Jl. 08121017094 [email protected] 1347491 Tbk. HR. Rasuna Said, Jakarta 12960 13 Section Officer Mega SPE Java Section Wisma Mulia 42nd Floor, Jl. Gatot Subroto 081311113128 [email protected] 4587095 No. 42, Jakarta 12710 SPE JAVA INDONESIA COMMITTEE CHAIRPERSONS 2015-2016 No. Position Name Company Address Tel E-mail Member# 14 Scholarship Teddy Komaroedin Pertamina EP - Blue Sky Menara Prima 26th Floor, Jl. Lingkar Mega 08129174430 [email protected] 888644 Langsa Ltd. Kuningan Blok 6.2, Jakarta 12950 15 Co. Scholarship Fitrah Arachman PHE ONWJ Perkantoran Hijau Arkadia Tower F 11th 0811156873 [email protected] 3067221 Floor, Jl. TB. Simatupang Kav. 88 Jakarta 16 Student Chapter & YP Muhammad Titis Star Energy WismaSelatan Barito 10th Floor, Star Energy Tower, 08128584456 [email protected] 3200553 Redjoso Jl. Let. Jend. S. Parman Kav. 62-63, Jakarta 17 Co. Student Chapter & YP Julianta Panjaitan ConocoPhillips Indonesia Ratu11410 Prabu 2 Building, 11th Floor, Jl. Letjen. 081328001572 [email protected] TB Simatupang Kav 1B Jakarta 12560 18 Co. Student Chapter & YP Subihi Prasetya PT. Energi Mega Persada Bakrie Tower 23rd Fl. Rasuna Epicentrum, Jl. 02125577000 [email protected] 4068760 Tbk. HR. Rasuna Said, Jakarta 12960 19 Continuing Education Hari K. Oetomo Petrochina Menara Kuningan 20th Floor, Jl. HR. Rasuna 0811801047 hari.oetomo@petrochina.co.id 1535368 Said Block X-7 Kav. 5 Jakarta 12940 20 TDG Lead Edy Subiantoro PT. Energi Mega Persada Bakrie Tower 23rd Fl. Rasuna Epicentrum, Jl. 08111770418 [email protected] 4202862 Tbk. HR. Rasuna Said, Jakarta 12960 21 Co. TDG Niesharsa Triaswari Statoil Indonesia Pondok Indah Office Suite 602, Jl. Sultan 08121063981 [email protected] 3443034 Iskandar Muda Kav. V-TA, Jakarta 12330 22 Co. TDG Sri Rahayu PT. Energi Mega Persada Bakrie Tower 23rd Fl. Rasuna Epicentrum, Jl. 081392087252 [email protected] 4105582 Tbk. HR. Rasuna Said, Jakarta 12960 23 Co. TDG Paulina Tio DAW Group Alamanda Tower 22nd Floor, Jl. TB. 0818985489 [email protected] 3485527 Simatupang Kav 23-24, Jakarta 12430 24 Media/Advertising William Ongseputra GE Oil & Gas Jl. RA. Kartini Kav. 8, Cilandak Barat, South 087789255035 [email protected] 3467283 Quarter, Tower B 19th Fl, Jakarta 12430 25 Co-Editor Robert C Mathes RM&EC Consulting, C.A. +584126284377 [email protected] 930388

26 Website Satrio Wibowo HSP Energy Pondok Pinang Center - C34, Jl. Ciputat Raya 08115426790 [email protected] 3442543 Jakarta 12310 27 Co. Website Fernando Napitupulu GE Oil & Gas Jl. RA. Kartini Kav. 8, Cilandak Barat, South 082160926972 [email protected] Quarter, Tower B 19th Fl, Jakarta 12430 28 Shrimp Boil Doug Slusher Santa Fe Relocation Jl. Karanggan Muda Raya No. 59 Gunung 08161902830 [email protected] 4098263 Services Putri 16961, Bogor Indonesia 29 Fish Fry Rob Jagodzinski Turbochem International Menara Batavia 21st Floor, Jl. KH Mas 08111631739 [email protected] Mansyur Kav 126, Jakarta 30 Co. Fish Fry Pande Susanta National Petroleum The Manhattan Square Building 12th Floor, 08118418878 [email protected] Services (NPS) Jl. TB. Simatupang Jakarta 12560 31 Golf Bob Shearer Oilfield Advisor Jl. Darul Ma'arif 45G, Jakarta Selatan 12410 0816864315 [email protected] 926006

32 Golf Brad Sincock Geological Consulting 0811947920 [email protected] 3437981

SPE Java . Apr - Aug ‘16 75 Consider it covered.

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