Fundamental of Upstream

 Upstream = exploration and production (E&P) sector

 Upstream = activities related to searching for, recovering, and producing crude oil
and natural gas, manage oil well: how to locate, how deep and how far, how to
design, construct, operate, and manage, to deliver greatest possible ROI with
lightest, safest, and smallest operational footprint
 Exploration step:
o Operator obtaining a lease from the owner of onshore/offshore
(Government)
o Operator conduct geological and geophysical survey to select the first well
site called “Wildcat well”
o Drilling = physically creating the borehole in the ground that will become an
oil and gas well  done by rig contractor and service companies
o In one oil well there are 30-40 service companies providing different
expertise
 Type of well:
o Vertical well
o Deviated well = J or S configuration  numerous branches or lateral
 Production = reserves are converted to cash by maximizing the recovery of
hydrocarbons from subsurface reservoir, bringing the hydrocarbon to the surface
and treating them to make them marketable
 Unconventional Resource = any resource extracted or produce by any method other
than the traditional vertical or slightly deviated well
o Horizontal drilling = reduce the size of drill pad footprint and enable
production along the length of reservoir
o Hydraulic fracturing or fracking = process of injecting water, chemicals, and
sand into wells  resulting fracture in surrounding rock formations allow for
hydrocarbon to escape
o Subsea engineering = used in deep water of coast Africa, south America,
mediternian
 Upstream business characteristic:
o High risk, high return
o Highly regulated = production, access to reserve, pricing and taxation,
environmental regulation
o Impact by global politic
o Technology intensive  capital intensive
  Main player in upstream:
o Major = integrated oil companies (IOCs) also operate assets in other segment
(midstream and downstream)  ExxonMobil, BP, Chevron, Shell
o NOCs = National oil companies that owned and managed by government 
Saudi Aramco, Pemex mexico
o Independents = Not integrated into other segment  E&P companies, ex:
apache, anadarko
o Oil field service company = provide specialized equipment, services, and
technical skills needed for exploring, drilling, completing, testing, producing,
and maintaining

Fundamental of Midstream

 Midstream = provide vital link between producing area and population center
 Assets of midstream:
o Field gathering
o Processing plant
o Transmission pipeline
o Transportation assets = marine vessel, railroads, trucking fleets, storage assets
 Midstream business characteristic:
o Low risk  low capital
o Highly regulated  interstate transmission pipelines and local gas distribution
rate is regulated in US by FERC
o Depends on health of upstream
o Market price affect demand
 The player of midstream
o Plains all American
o Enterpise
o Kinder morgan
o Trans Canada
o Spectra energy
o OAO Transneft (Russian state-owned transport monopoly)
 Four major midstream operating components:
o Filed Gathering
 Gathering oil = oil is moved through a “spider web” of small diameter
pipelines to a central location  the tank volume is large enough to
efficiently be sent to refinery
  Gathering natural gas = natural gas cannot be stored at or near the well.
Small diameter pipelines move it to a central treating or processing
facility to remove water and impurities
o Field processing
 Measure the production rate of oil, gas, and water from reservoir
 Separate the oil and gas from the wastewater
 Remove any impurities
 Temporarily store the crude or gas until it is ready to be moved
o Fractionation = separate the high valued natural gas liquid or NGLs from natural
gas production  NGLs used as blend component in refinery or feedstock for
manufacture or petrochemical
o Transportation = treated oil and natural gas delivered via pipeline or distribution
infrastructure
 Transportation of Natural Gas
 Pipeline = natural gas flow at much higher pressure than crude oil,
transported in large diameter pipeline
 LNG = natural gas that been converted to liquid for easier
transport and storage  occurs when the gas is cooled to -162
degree Celsius  LNG can be transport in large vessel
 Transportation of Oil
 Pipeline = safest and most efficient
 Truck and rail = more flexible for multiple destination
o Storage
 Storage of Oil = field tank batteries, product bulk terminals, refinery
tanks, holding tanks
 Storage of natural gas = because its large volume and high pressure,
natural gas is stored underground until it ready to be transported.
Facilities: depleted gas reservoirs, salt caverns, aquafers

Fundamental of Downstream

 Downstream = processing, transporting, and selling refined product made from crude oil
 Key business sector = oil refining, supply and trading, product marketing, wholesales and
retail
 Petroleum product = gasoline, diesel, jet fuel, heating oil, asphalt, petrochemical
(lubricant, synthetic rubber, plastic, fertilizer, pesticides)
 Characteristic:
 o Margin business  refinery margin = price realized for the product – cost of the
crude. Refinery margin is decreased if cost of crude increase
o Very complex
o Global perspective  because the global nature of energy supply chain as well as
impact of supply and demand on feedstock and product price
o End-user consumption
 Oil refining = crude oil are mixtures of thousands of different compounds called
hydrocarbon. Each component has its own size, weight, and boiling temperature
 Petroleum product:
o Light product = Liquid Petroleum Gas (LPG), gasoline, Naptha
o Medium product = kerosene, diesel fuel
o Heavy product = fuel oil, lubricating oil, paraffin wax, asphalt and tar, petroleum
coke
 Global integrated refiners: BP, Exxonmobil, Shell, Total
 Independent refiners often have chain of service station to market their product, but
they have no E&P Operation

 First step of oil exploration: geology & geophysics

 One oil well needs 3-4 years
 Kendalanya kalau ketemu dry hole oil well
 Semua biaya sebelum dpt ditanggung kontraktor  cost recovery (saat sudah produksi)
 Kalau gross split tidak di recover
 Karena ketidak pastian recovery (pada rezim gross split), investor menjadi tidak teratarik
 Unconventional Upstream = resource are defined as any
 Gas tidk bisa disimpan kayak refinery maka harus langsung disalurkan  harus ada
perjanjian jaul beli sebelumnya (sama kayak listrik)  monopoli
 Makin banyak pipa  harga gas makin murah
 Harusnya yg punya gas gabole punya pipeline  nanti jadi monopoli karena gas adalah
open access
 Karakteristik upstream = exploration, high risk high return, global politics
Bisnis Hulu Migas Indonesia

Tahapan Bisnis Hulu Migas

 Mendaptkan Wilayah Kerja Migas (>100 WK)
o Untuk mendapat WK, investor/kontraktor harus faham peraturan yang berlaku
di sub-sector migas
o Juga harus tau model kontrak yang berlaku, misal model royalti, model
kerjasama, model campuran, dll
o Dan tau resiko dengan menentukan rasio kerbahasilan setiap waktu
 Mengksplorasi dan melakukan studi (studi geologi, geofisika, & drilling)
 Mengembangkan atau membangun (Pre-FEED Front End Engineering Design, FEED,
Amdal, Sosial, Gempa, Arus laut dan ombak)  Tekno ekonomi kaitannya dengan POD
(Plant of development) untuk disetujui bersama (PSC)
 Mengestraksi dan memelihara lifting/kapasitas produksi
 Menutup lapangan (Abandonnement and site restoration – ASR)

 Peraturan saat ini bisa milih PSC nya cost recovery atau gross split
 4 Kelompok kepemilikan migas:
o State property
o Private property
o Communal Property
o No Property
 Tata Kelola Hulu migas
o Dasar: UUD Pasal 33 ayat 3
o Kebijakan umum: UU Migas no 22 tahun 2001
o Kebijakan pelaksanaan: PP, Perpres, Permen
 PP untuk hulu migas tidak ada, adanya perpres untuk SKK migas
 Gross split ada di Permen
 Yang mengatur SKK Migas adalah Perpres bukan PP  sehingga
menunjukkan bahwa SKK Migas harusnya sifatnya sementara
o Model/Pola pengolahan dan monetasi migas: Kontrak SKK
o Operasinoal hulu (pengendalian dan pengawasan): PTK Peraturan Tata Kelolan
Pengendalian dan Pengawasan
 Sejarah model pengelolaan migas
o Konsensi: sampai tahun 1960, UU Indische Mlnjwet Staasblad no 214 tahun 1899
o Kontrak karya: berlaku dari 1960-1966, Perpu no 44 tahun 1960
 o Kontrak bagi produksi: berlaku dari 1960-2001, UU no 8 tahun 1971 (UU
Pertamina yg menciptakan Pertamina seperti pemerintah)
o Kontrak kerjasama: Berlaku 2001-2017, UU migas no 22 thn 2001, PSC bagi hasil
o Kontrak kerjasama: Berlaku 2017-Sekarang, UU migas no 22 tahun 2001, Permen
8 dan 52 tahun 2017, PSC Cost recovery dan Gross split di tahun 2020
o Saat ini UU no 22 tahun 2001 masuk ke omnibus law
 PSC Cost Recovery vs Gross Split
o Klasifikasi Upstream Petroleum Conctract
 Concessonary System = royalti, pajak
 Contractual system
 PSC = royalti, sistem bagi hasil, pajak
 PSC di Indonesia tidak mengenal royalti, tapi FTP
 Service contract = setelah memperoleh biaya, semua bagian
negara, kontraktor dpt fee
o Pure service conctract
o Risk service constract
o Front end loaded system = penerimaan pemerintah didapat dari pembayaran
migas yg tidak ada hubungannya dengan keuntungan, dari discovery bonus,
royalti (bayar di depan)
o Back end loaded system = bagian penerimaaan pemerintah dari profit oil dan
tax, sistem ini lebih menarik bagi investor
o Biaya cost recovery = biaya hanya bisa dibebankan kalau sudah disetujui oleh
pemerintah
o Sementara biaya di konsesi = semuanya dibebankan ke perusahaan, tidak perlu
persetujuan pemerintah, tapi kemungkinan oknum curang lebih tinggi
o Gross split itu mirip konsesi hanya saja sebelum biaya sdh dibagi bagian untuk
pemerintah dan kontraktor, jadi biaya nya tdk perlu persetujuan pemerintah
o Royalty rate worldwide  untuk tau apakah PSC Indonesia kompetitif
o Contractor split = base split (minyak 57:43, gas 52:48) + Variable split (10
variabel, status WK, lokasi lapangan, ketersediaan infrastruktur, dll) + yearly
adjusted by progressive split (harga minyak, harga gas, kumulatif produksi
minyak dan gas bumi)
o Investor hanya fokus ke total split untuk dirinya tdk perduli ke jenis PSC nya
o Access to gross revenue  untuk tau daya tarik suatu rezim fiskal
o AGR = GP – before tax FTP government
o Di Permen, ada diskersi dimana split bisa ditambah atau dikurangi jika tidak
mencapai tingkat keekonomian tertentu  ketidakpastain definisi tingkat
keekonomian tertentu  untuk dapat diskersi perlu negosiasi perlu cost lagi
o Better PSC = let investor memilih, tugas pemerintah adalah menyediakan
pilihannya. Serta kebijakan fiskal yang lebih menarik. Ex: Sistem di brazil dan
mexico
o Geological survey dilakukan oleh pemerintah  di Indonesia masih di bawah
pemerintah/kementerian sehingga anggrannya adalah anggaran kementerian
o FTP (10%) in advance, jadi jaminan, mirip dengan signature fee
Pak Hendra Jaya
Strategic advisor for CEO of Pertamina
 Pertamina = perusahaan pertambangan dan minyak dan gas bumi negara
 BBL (Barrel) = 159 liter = 42 gallon
 BBL = Blue Barrel = karena gentong (barrel) di cat warna biru di amerika
 Tahapan:
o Eksplorasi (10 tahun)
o Development (2-3 tahun)
o Production (biasanya 20-30 tahun)
 Cash flow nya minus sampai ketemu BEP di masa production
 Economic limit = biaya lebih besar daripada pendapatan, terjadi di production karena
production akan menurun
 ICP = acuan harga minyak indonesia
 WTI = west texas intermediete = acuan harga minyak amerika
 Carbonate and sand stone = trap (punya permeability dan porositas)
 Seal = karena sinklin antiklin
 Pemboran = mengubah pressure di reservoir sehingga minyaknya bisa ke atas
 Venezuela = minyak berat
 Saudi arabia = sweet oil
 Minyak hanya bisa diambil 15% = primary
 20% = secondary
 30% = tersiary
 EOR dengan polymer di china = 50%
 R/P rasio = reservoir to production ratio
 Proven = bisa diambil
 Opportunity = harus pakai eor
 Unrecoverable reserve = pasti ada yg tidak bisa diambil
 EOR terbesar ada di Caltex
 Hendraj@pertamina.com