3 3 4 5 9 27 39 59

MISSION AND VISION CORE VALUES STATEMENT FROM THE CHAIRMAN EXECUTIVE HIGHLIGHTS REALIZATION OF UPSTREAM OIL AND GAS IN 2010 PELAKSANAAN PROYEK HULU MINYAK DAN GAS BUMI NATIONAL CAPACITY EMPOWERMENT & K3LL INTERNAL BPMIGAS

MISSION AND VISION

MISSION
Supervise and control the Production Sharing Contracts implementation through partnerships in order to ensure the effectiveness and efficiency of upstream oil and gas business activities for the greatest welfare of the Nation. Assalammulaikum Wr.Wb.

STATEMENT FROM THE CHAIRMAN

Today, upstream oil and gas industry still serves as one of the primary state revenue generators. Within the last 3 (three) years period, the upstream oil and gas industry has been contributing around 30% of the entire state revenue. Given the fact that natural oil and gas are considered as non renewable energy sources, BPMIGAS has initiated and pushed a shift function of the upstream oil and gas industry from being the state revenue generator to become an economic growth engine. Several attempts have been undertaken to realize this paradigm, which among others, was by involving other domestic business sectors to actively support the industry, ranging from banking to other supporting industries. The use of energy for domestic consumption was also being the top priority concern for BPMIGAS, whereas that particular decision has eventually rolled a multiplier effect condition, as a result of the strong impact of the pro growth, pro poor, pro-employment policy set out by the Government. Implementation of this decision still prioritizes on environmental protection aspect aiming at sustainable development. Therefore, BPMIGAS should develop the required effective and holistic management of demand, infrastructure and oil and gas supply as first priorities. Upstream oil and gas industry recognized the increasingly challenging journey along with all the involving operational, fiscal or legal aspects. Moreover investors perception toward non-conducive investment climate added to the upcoming challenges that must be properly addressed through hard working and smart working attitudes. To that, BPMIGAS invites all stakeholders including other government institutions and business players to work together and strengthen the synergy through effective communication and coordination so that the upstream oil and gas industry can run its duties and responsibilities to the nation. Wassalammulaikum Wr.Wb. Kepala BPMIGAS

VISION
Be a proactive and trustworthy partner in optimizing the benefits of the upstream oil and gas industry for all stakeholders while becoming one of the Nations engines in mobilizing different economic and industrial activities.

CORE VALUES
PROFESSIONAL
Act as a professional with strong commitment

RESPONSIVE
Promptly responding to inquiries and resolving issues

UNITY IN DIVERSITY
Synergizing the differences for greater achievements

DECISIVE
Taking Calculated risk within the authority

ETHICS
Conducting business by following the highest ethical standards consistently

NATION FOCUSED
Maximizing national capacity and capability

TRUSTWORTHY
Maintaining credibility to earn the trust of stakeholders Ir. R. Priyono

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EXECUTIVE HIGHLIGHTS
LAPORAN TAHUN 2011 BPMIGAS
PERFORMANCE HIGHLIGHTS 2010
Through effective planning and supervisory functions, and in line with the efforts of seeking a conducive investment climate for investors of upstream oil and gas industry, the Upstream Oil and Gas Executive Agency (BPMIGAS) succeeded in dealing with such a challenging year 2010 then closed the year with an encouraging performance. Contribution of the upstream oil and gas industry to the State Budget (APBN) has increased and could even lead to other sectors growth. Therefore, some accomplishments to note for the year 2010 were as follows: 1 Generated revenues of US$26.49 billion or 32.78% higher than 2009 revenues, which amounted to US$19.95 billion. The actual state revenue in 2010 also exceeded the targeted state budget for year 2010 totaled US$26.06 billion or 100.6%. Increased realization of the natural oil and gas lifting by 11.7% from 2,033 million barrels of oil equivalent in 2009 to 2,271 million barrels of oil equivalent per day by 2010. These figures could be achieved due to the successful attempts of BPMIGAS together with PSC Contractors in pushing down the declining rate of crude oil production of the average initial decline rate by 12% to 0.43%. Maximized the use of national banking system to support procurement of goods and services transactions in the upstream oil and gas sector and depository of Abandonment and Site Restoration (ASR) funding in the long term. During 2010, total transaction value we conducted through national banking system reached US$8.59 billion (around Rp76 trillion) and total deposited ASR funds reached US$167 million. This policy implementation has been started since late 2009 and was proven successful in strengthening the entire national banking sector. Maximized the use of domestic goods and services to support the upstream oil and gas industry. Domestic Containment Level (TKDN) of goods and services procurement in 2010 reached US$6.84 billion or 63.43% of total procurement value of US$10.79 billion. The realization was higher than year 2009 TKDN, which recorded 62% of total procurement value. Increased gas utilization to meet the increased domestic demand from 15.28 trillion cubic feet (TCF) in 2009 to 20.09 TCF in 2010. This volume increase lifted the domestic industry more efficiently while pertaining a high competitive capacity amidst the tightening global competition. BPMIGAS ensured that future production activities can be better managed to increase the commitment of PSC Contractor to undertake exploration drilling activities throughout 2010 that covered a total of 95 wells or 26.6% higher than year 2009 figure, wherein 75 wells were completed. The success ratio of exploration drilling in 2010 reached 46.27% and was managed to find a contingency reserve totaling 489.4 million barrels of oil equivalent. Increased cost efficiency initiative in upstream oil and gas sector through joint procurement activities with the PSC Contractors and through material transfer system (maximization of the use of material surplus, inactive assets and used material). In 2010, the achieved savings value resulted from the joint procurement initiative amounted to US$70.19 million or increased by 111% from US$33.20 million in year 2009. Meanwhile, total savings generated through material transfer amounted to US$34.80 million or increased by 27% from US$27.50 million in year 2009. 8 Improved planning and budgeting mechanisms of the upstream oil and gas industry by accelerating approval of Contractors Work Program and Budget (WP&B) to fasten the realization of the PSC Contractors field activities as scheduled. The 2011 WP&B has been approved on 16 December 2010 or earlier than the initial execution schedule that was dated 1 January 2011. Reformation of BPMIGAS organization that drove all programs toward a clearly directed and measured implementation, which in accordance with each departments roles and authority.

SIGNIFICANT REMARKS 2010

Many problems interfered the realization of upstream oil and gas industry during year 2010, mainly related to ongoing overlapping regulations. However, the following problems have been resolved : 1 The issuance of Government Regulation No.79/2010 on Cost Recovery and Tax Income for the Upstream Oil and Gas. Although this rule has been deemed legally uncertain by the PSC Contractors, but at the same time also deliver certainty to incomplete tax issues we dealt with during the past recent years. Issuance of the Minister of Environment Regulation No.19/2010 to replace the Minister Regulation No.04/2007 regarding Waste Water Quality Standard for Enterprises and/or Oil and Gas and Geothermal Activities, which have accommodated the PSC Contractors operational conditions as regards water quality standard. Enactment of the Minister of Finance Regulation (MFR) No.165/2010 to replace the MFR No.135/2009 has simplified material exchange process used by PSC Contractor and waste disposal mechanism, of which the approval can now be done directly by BPMIGAS and do not necessarily need other institutions/agencies approval (depending on the material value).

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CONSTRAINTS FACED BY UPSTREAM OIL AND GAS SECTOR

Various problems lie ahead our current journey, awaiting the accurate, quickly and comprehensive solutions that can disable any negative impacts that may be affecting our efforts in achieving future production targets including: 1 Among others, various laws and regulations have been issued by either the Central Government or Local Government, and that caused the following constraints: A. Spatial issues as stipulated by Law No.26/2007 regarding Spatial Planning. Based on that law, the Local Government was authorized to organize spatial planning. While the Local Government was in progress of setting out the Spatial Planning (RTRW), the ongoing upstream oil and gas business activities was however often overlooked. In line with the Regional Autonomy framework, various regulations that were issued by Local Government have apparently burdened the upstream oil and gas sector. The current overlapping of land and activities between activities of upstream oil and gas industry with the activities of coal mining, agriculture, plantation, forestry and community land management especially relating to the local peoples courtyards. 4 1

BUREAUCRACY REFORM TO ENHANCE BPMIGAS CAPABILITY

In effort of improving the performance of upstream oil and gas industry, BPMIGAS conducted a bureaucracy reform to create a more effective and efficient way to achieve the set production targets. The reforms include the following 8 (eight) aspects of : Improving the mindset and work culture through new core values comprising: P.R.U.D.E.N.T (Professional, Responsive, Unity in Diversity, Decisive, Ethics, Nation-focused, Trustworthy) Improving the ability of organizations to restructure the organization to be more effective and efficient in monitoring and controlling the upstream oil and gas Improving Corporate Governance by changing business processes, Standard Operating Procedures (SOP) and Standard Guidelines for Management Authority (PSKM) according to a new organizational form and by formulating and revising the Rules of Employment (PTK) Improving the quality of Human Resources (HR) through implementation of competencybased human resources management, by adding the number of workers accordingly to the required competency and adjustment of job descriptions to the newly reformed organization. Enhancing accountability by establishing and monitoring the performance measurement through Key Performance Indicators (KPI). Improving supervisory role through improved internal control systems to obtain better auditors opinion, which then be followed up by Indonesias State Auditors findings along with validation of the Code of Ethics and Whistleblower program. Providing inputs relating to legislation improvement, which include Shipping Law, Government Regulation on Cost Recovery and Upstream Oil and Gas Taxation Rules. Improving public services by accelerating the WP&B and AFE approval process as well as in conducting surveys regarding PSC Contractor satisfaction to BPMIGAS services.

B. C.

Gas utilization for domestic industry still found the following barriers, among others were: A. B. Determination of gas prices was still relatively low that it could not meet the minimum economical conditions required for the project. The limited availability of infrastructure to meet the particular needs of the domestic gas transmission and distribution network that linked the production field to gas consumers. Long-term export contracts that were not diverted domestically within a short time period. 7 5

C.

In general, the upstream oil and gas industry activities succeeded to reach the set targets and have been considered as revenue generator, while at the same time being the economic growth engine. Hence it is worth to say that this industry has then become one of Indonesias economic driving engines.

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UPSTREAM OIL AND GAS PERFORMANCE IN 2010

Achievement

OIL AND CONDENSATE LIFTING

954 ribu BOPD

(98.9%)
NATURAL GAS LIFTING Achievement

7681 BBTUD
(99.0%)
STATE REVENUE Achievement

US$26.22 Miliar
REALIZATION OF UPSTREAM OIL AND GAS IN 2010
(100,6%)

Realization of Upstream Oil and Gas in 2010

01

WORK AREA OF UPSTREAM OIL AND GAS INDUSTRY

WORK AREA OF UPSTREAM OIL AND GAS INDUSTRY
In line with the governments efforts to enhance oil and gas (O&G) discovery and reserves in new Work Area as well as in improving O&G production and lifting, we always seek to discover new work areas. There were 27 new work areas in 2010, which consisted of 21 O&G work areas and 6 (six) Coal Bed Methane (CBM) work areas. In addition, there were also some work areas that have been terminated due to incompletion of commitments. Given those activities, as of end 2010, Indonesia owned a total of 245 work areas comprising 67 production work areas and 178 others that were under exploration.

02

EXPLORATION ACTIVITIES
Exploration activity is carried out to search for more accurate and detailed information about conditions of the working areas as well as the O&G resources both in the Exploration and Production work areas. The exploration activities include geophysical activities (through 2D seismic and 3D seismic surveys), exploration drilling, coring and production examination. In parallel, the CBM work areas conducted extra drilling and dewatering activities.

G & G STUDY AND TSA

Both the Geology and Geophysics (G&G) study and Technical Assistance from Abroad (TSA) implementations were undertaken after approval from the Authorization For Expenditure (AFE). In 2010, there were 259 AFE G&G Studies and 36 AFE TSA explorations. Moreover, budgeting for the G&G Study and TSA exploration totaled US$78.95 million, which covered US$70.64 million (89%) for the G&G study allocation and US$8.31 million (11%) was allocated for the TSA.

ADDITIONAL WORK AREAS

GEOPHYSICS SURVEY
2006 2007 2008 2009 2010 For the 2D seismic survey, we have completed 89% or 27,606 km out of 31,181 km being planned. As for the 3D seismic survey, an area of 7,411 km2 has been realized, which represented 81% of 9,612 km2 being planned. The main constraint lied on land acquisition activities that will be involved to support successful seismic activity. BPMIGAS then coordinated with related agencies (mainly the BPN and the Ministry of Forestry) to overcome these obstacles.

Yeas

2005

New PSC

28

41

33

27

Production PSC

SEISMIC SURVEY REALIZATION

35000 30000 25000 20000 15000 10000 5000 0 2004 2005 2006 2007 2008 2009 2010

Meanwhile, the Exploration work areas consisted of 23 Coal Bed Methane (CBM) work areas, 150 O&G work areas and 5 (five) terminated work areas due to unfulfilled commitments. Those 5 (five) terminated work areas were Yapen (Nations Petroleum) and East Bawean II (Husky Oil), Rembang (Orna International Ltd.), Offshore Halmahera Maluku (Halmahera Petroleum Ltd.) and Donggala (Santos). Throughout 2010, BPMIGAS also provided recommendations to the government (O&G Directorate General) to determine the terms and conditions to be applied at 44 new O&G work areas and 8 (eight) CBM work areas. This activity was conducted ar part of BPMIGAS main responsibilities for providing inputs to the government prior to establishment of new work areas.

2D Seismic Realization (km)

3D Seismic Realization (km2)

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Realization of Upstream Oil and Gas in 2010

EXPLORATION DRILLING
Throughout 2010, the actual well drilling explorations totaled 95 wells or 75.4% of 126 wells being planned. In year 2010, total realization of the successful drilled exploration wells was 21% higher than the year 2009 figure. Some activities are still underway beyond what has been initially scheduled, and the delay was mainly caused by land acquisition and licensing issues. Moreover, those activities that were incomplete in year 2010 will be carried over into year 2011 realization.

Some of the main obstacles we faced last year were related to the procurement of supporting equipment needed in the seismic activity including rigs and ships (23%), licensing problems in the working area (13%), overlapping of activities such as with forestry (22%), social community problems (2%) and country border disputes (2%).

PROBLEMS FACED IN EXPLORATION WORK AREAS

Discovery of contingency reserves in year 2010 amounted to 489.4 million barrels of oil equivalent

DRILLING ACTIVITY REALIZATION

100 90 80 70 60 50 40 30 20 10
2003 2004 2005 2006 2007 2008 2009 2010 Total Well Realization Wildcat Well Realization Delineated Well Realization CBM Well Realization
In fulfilling the pasti commitment, North East Madura (NEM) III work area manager Anadarko proposed to the Directorate General of O&G as regards amendments to the pasti commitment, and has gained the Government approval (O&G Directorate) on specific issues related to the purchase of 3D seismic data for a 2,560 km2 area, which then was noted as meeting the past commitments. Due to all the problems we faced in the work areas, 44 Exploration areas have not been implemented accordingly to the pasti commitment, as it is stated in the contract. Meanwhile there were only 4 (four) Exploration work areas that have successfully met the pasti commitments in accordance with the signed contract terms and conditions, which prevailed in Batanghari in Jambi (CNOOC Batanghari Ltd.), Sekayu in South Sumatra (Star Energy (Sekayu) Ltd., Karang Agung in Musi Banyu Asin (PT Odira Energy Karang Agung) and Randugunting in West Java (PT Pertamina EP).

23%

32%

G&G Technique/ exploration strategy Local government permit Forestry overlapping Internal issues/ non-active Electricity/ Power quota Socio-community Rig/ ship supply, etc

2% 2% 19% 9% 13%

COMMITTED TO THE PASTI PROMISE

During year 2010, a firm compliance to the definitely (pasti) promise throughout the exploration work areas during the ongoing seismic activities experienced many on-field obstacles and that caused incomplete realization. For instance, 69% of the 2D seismic activity has been accomplished while the 3D seismic activity achieved 45% of the total plan.

DISCOVERY OF RESERVES
Through the well drilling activities conducted at 20 wells located in Exploration and Production working areas in year 2010, BPMIGAS founded 20 prospective wells containing promising oil and gas reserves. In total, we found about 140 million barrels of oil (MMBO) and 2,095 billion cubic feet of natural gas (BCFG) or equivalent to 490 MMBOE. To date, supported by the discovery of new petroleum reserves in 2010, which amounted to 140.2 MMBO and total production of 344.9 MMBO (945 MBOPD), the reserve replacement rate (RRR) for year 2010 reached 41%. In other words, each production of 1 (one) barrel petroleum was replaced only by 0.41 barrels of exploration results. Ideally, for a minimum production of 1 (one) barrel of oil can be replaced with 1 (one) barrel of exploration discovery.

WORK PLAN AND REALIZATION OF PASTI IMPLEMENTATION IN 2010

Production Test Dewatering CBM Drilling Coring Eks Drilling 3D Seismic (Km2) 2D Seismic (Km) 0 Realisasi 20 Rencana 26% 69% 40 60 80 100 0% 0% 9% 24% 26%

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Annual Report 2010

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Realization of Upstream Oil and Gas in 2010

03

PRODUCTION ACTIVITIES

RESERVES DISCOVERY IN 2010

JOB Working Area Wells Name Pondok Makmur-C Pondok Makmur-D Pondok Makmur-E PT. PERTAMINA EP Indonesia Jati Keling PrabuMenang PagarDewa Selatan-1 North Kedung Tuban-A Petro China International Jabung Ltd. Petro China International (Bermuda)Ltd. PT. Seleraya Merangin Dua Eni Muara Bakau BV. Anadarko Indonesia Nunukan Company OT. Chevron Pacific Indonesia JOB Pertamina-Petrochina East Java PT. Sumatera Persada Energi CITIC Seram Energy Limited Serica Kutei B.V. Jabung Kepala Burung Merangin II Muara Bakau Nunukan Rokan Tuban West Kampar Seram Kutai TOTAL Panen Utara-1 Sabar-3 North Walio-1 West Belani Ext.1 Jangkrik-1 Jangkrik-2 Jangkrik-3 Badik-1/ST1 Prima-1 Lengowangi-2A Pendalian-4 Nief Utara A-3 (USRD) Dambus-1 MMBO 1.1 7.6 1.9 3.3 15.5 0 0 7 2 2.3 9.4 0 0 0 88.5 0.7 0.1 1 0.1 0 140.2 BCF G MMBOE 0 0 0 0 0 12.6 12.7 6 23.1 0 38.7 729.8 318.4 426.7 492 0 0.075 0 0 35 1.1 7.6 1.9 3.3 15.5 2.1 2.1 8 5.8 2.3 15.8 121.6 53.1 71.1 170.5 0.7 0.1 1 0.1 5.8

FIELD DEVELOPMENT PLAN

During year 2010, BPMIGAS received 48 proposals for this field development conducted by the PSC Contractor (Plan of Development-POD). Through evaluation process, 32 documents have been approved, 9 (nine) documents are still under evaluation and 7 (seven) POD were returned. Most of the POD returned documents were lack of comprehensive data, which made the evaluation process difficult.

POD PROPOSED BY THE PSC CONTRACTOR IN 2010

9 7
Approved plan Returned plan Decision in-porgress

32
Out of all approved POD, it is expected that these fields development can reach 194.1 MMBO of oil production and 1533.74 BSCF of gas production. The costs required to develop the field amounted to US$3.33 billion.

2095.1 489.5

With the new findings, the amount of proven and potential reserves of oil and natural gas as of 1 January 2011 recorded 7.41 billion barrels of oil and 153.72 TSCF or equivalent to 33.04 billion BOE. Details of Indonesias oil and gas reserves are as follows:

RINCIAN BIAYA YANG TERCANTUM DALAM POD 2010

0.23

INDONESIA RESERVES STATUS IN 2010

Reserves Produced Proven
Oil+Condensate (MMSTB) GAS (Associated + Non Associated) (TSCF) Oil+Gas (MMBOE)

Not yet produced Proven Potential

Total

Potential

1.01
7.419,64 153,72

3.604,56 36,08

3.089,58 15,08

280,78 68,90

444,73 33,67

Dalam Miliar US$

Investment OPEX ASR

3.33
9.617,83 5.599,45 11.764,89 6.055,82 33.040,98

Given the current reserves findings, if we are producing at the current production capacity, thus, the Indonesian oil reserves can meet the energy needs demanded for next 12 years, while the natural gas can meet the next 46 years of gas demand.

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Annual Report 2010

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Realization of Upstream Oil and Gas in 2010

EXPLOITATION & WORKOVER OF WELL DRILLING

In effort of reducing the declining rate of the completed field production, the PSC Contractor have carried out additional well drillings (infill/insertion wells) as well as well maintenance. In 2010, total number of well drilling or exploitation activities reached 951 well drillings, which exceeded 933 wells as targeted for year 2010.

ENHANCED OIL RECOVERY (EOR) ACTIVITY

EOR is considered as an advanced drain technology adopting water injection, steam, chemicals, gases and microbes to enhance production of the already mature oil fields. In 2010, a number of PSC contractors strived to increase production using EOR technology through water injection, steam injection, gas injection and chemical injection. Through EOR activities, total oil production reached 332,717 BOPD.

WELL DRILLING PLAN AND REALIZATION

1400 1200 1000 800
Planned

EOR PROGRAM IMPLEMENTATION IN 2010

PSC Contractor Field
Water Flood PT CPI Minas, Bekasap, Bangko, Balam South, Telisa, Libo SE, Kota Batak, Pungut, Cebakan dan Aman Kaji Semoga Rantau, Talang Akar, Supa, Sago, TL. Jimar, Tanjung, Benakat, Benakat Timur, TT Barat, Beragai, Lirik, Kenali Asam, Tempino, Limau, Nglabo dan Kawengan Zamrud, Pusaka, Beruk, Peudada dan Sabak Handil Phase I dan II Krisna Upper BRF, Krisna Lower BRF, Widuri, Intan, Vita Anryani, East Widuri dan Zelda NE Air Serdang dan Guruh Total Water Flood Steam Flood 98,526 3,525 26,438 17,962 8,653 -

Tambahan Minyak (Incremental Oil) BOPD

Produksi Primer (Baseline) BOPD

600 400 200 0

2005 2006 2007 2008 2009 2010

Realization

PT Medco E&P PT Pertamina EP

PT BOB - BSP Total Indonesie

7,620 3,075 4,808 4,678 148,670 184,047 184,047 332,717

3,687 1,459 31,761 31,761

In year 2010, well maintenance activities were completed through work-over and well service to a total of 1,439 wells, which represented 97% of the targeted 1,487 wells. Most of the workover activities have been performed in PT CPIs working areas.

CNOOC JOB Pertamina Talisman

WORKOVER REALIZATION
1700 1650 1600 1550 1500 1450 1400 1350 1300

PT CPI

Duri dan NDD Total Steam Flood Total EOR

Jumlah Workover

WP&B Realization

Some EOR activities have been undertaken in Handil Field, East Kalimantan managed by Total E&P Indonesie by injecting gas into the reservoir. To date, this activity was stopped from proceeding further because the injected gas we normally use in production was being utilized to meet commitments to the buyers. Currently, some PSC Contractors are performing EOR studies. Among others, include, PT Chevron Pacific Indonesia who studied the Minas Field (using chemical) and PT Medco E&P who studied Kaji Semoga Field (using chemical). For that reason, BPMIGAS encouraged the PSC Contractors to increase their production using these technologies.

2009

2010

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Annual Report 2010

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Realization of Upstream Oil and Gas in 2010

04

OIL AND GAS PRODUCTION

In 2010, the actual of Indonesias oil and gas production amounted to 2.52 million barrels of oil equivalent per day (BOEPD) or 6.56% higher than year 2009 realization of production. That increase in gas production was considered significant as it recorded the highest level throughout Indonesian oil and gas history, which eventually boosted the overall oil and gas production. That increase in year 2010 natural gas production has also brought a notable production level as much as year 2003 production achievement. That represents a gradual increase in the decreasing production that have occurred since 2003. As of end September 2010, the oil pipeline operated by Indonesia Gas Transportation (TGI) experienced a broke down and that caused 3 (three) PSC Contractors to stop their production for several days as their pipes could not properly deliver their oil to Dumai storage tanks. The three PSC Contractors include PT CPI, PT BOB BSP and PT SPR Langgak. As a result, national gas production decreased to 166.5 thousand BOPD, which eventually took a long time and needed extra efforts to restore production to its initial level of production. Other operation disorders have contributed significantly to the declining oil production throughout 2010 was the crash incident of TO-40 owned by Kodeco Energy Co by an unknown ship who is still unidentified up to now. Due to improper functioning of the ship, eventually, the oil production decreased to 2,400 BOPD. Given the fact that most of the oil production facilities have been in operation for more than 20 years, incidents like unplanned shutdown were also being inevitable operation constraints. Due to the above mentioned various disorders, there were only 14 PSC Oil Contractors that could meet the targeted state budget, namely: Kodeco, Santos (Sampang), Vico, Medco (Tarakan), JOB Pertamina - PetroChina (Salawati), JOB Pertamina - Talisman OK, ExxonMobil Oil Ind., Chevron Indonesia, ConocoPhillips, JOB Pertamina, PetroChina East Java, PHE ONWJ, Pertamina, Total E & P Indonesie and PT CPI. To date, the actual oil and condensate production recorded 945 thousand BOPD in 2010 or 97.9% of the targeted state budget of 965 thousand BOPD.
2000 2001 2002 2003 Gas 2004 2005 2006 2007 2008 Minyak 2009 2010

REALIZATION OF OIL AND GAS PRODUCTION

2,750 2,500 2,250 2,000 Ribu BOEPD 1,750 1,500 1,250 1,000 750 500 250

Kondensat

Unplanned Shutdown

Project Involvement

Offtaker

New Project

Below Surface

Extension of Shutdown

Total

OIL AND CONDESATE

BPMIGAS WP&B has successfully gained approval prior to end of year, which has allowed the PSC Contractors to carry out production since early year 2010. The increasing production trend was indicated by the actual production recorded in January to September 2010, so that the average daily production can reach the budgeting target at around 965 thousand BOPD.
196
Seleraya & KEI JOBP - Tallsman (Jambi-Merang) CNOOC

282

12

71

OIL AND CONDENSATE PRODUCTION FOR YEAR 2010 - (BOPD)

APBN= 965 MBOPD

950,000 900,000 850,000

Pecah pipa TGI 7000 BOPD

14,043

2,496
BOPD

4,156
BOPD

800,000 750,000

57.8%

BOPD

80
BOPD

4,130
14.4%
BOPD

481
BOPD

25,946
100%
BOPD

9.6%

16%

0.3%

1.9%

Produk tidak terealisasi

JAN-10 FEB-10 MAR-10 APR-10 MAY-10 JUN-10 JUL-10 AUG-10 SEP-10 OCT-10 NOV-10 DEC-10

Frekuensi

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Annual Report 2010

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Realization of Upstream Oil and Gas in 2010

PETROLEUM PRODUCTION DECLINE RATE INITIATIVES

Most of the national petroleum production generated by the old O&G fields that have experienced natural production decline of about 7-12% per year. To push down the overall natural production decline rate, various efforts have been realized such as through intensification initiatives (among others were to increase seismic and EOR activities) as well as business expansion efforts by proposing new blocks to the O&G Directorate General.

NATIONAL GAS PRODUCTION

10,000 9,000 M 8,000 M 7,000 S 6,000 C 5,000

REDUCTION RATE OF PRODUCTION

4 2 0 -2 -4 -6 -8 -10 -12 Penurunan -14
Kenaikan (%)

F 4,000 D 3,000 2,000 1,000 2000 2001 2002 2003 Gas

Apart from the ongoing Tangguh project managed by BP Indonesia, the national gas production have also been contributed by the fields operated by Total E&P Indonesie in East Kalimantan, Pertamina EP in regions I, II and III, PHE, ConocoPhillips in Sumatra and Natuna, Vico Indonesia in East Kalimantan and other fields by Exxon Mobil in Aceh, Petrochina Jabung in Jambi, and Kodeco Energy.

Produksi Minyak

2004 2005 2006

2007

2008 2009

2010

(%)

2003

2004

2005

2006

2007

2008

2009

2010

Utilization of gas to meet domestic needs

Out of those various efforts being carried out so far, the production decline rate could be reduced from 8.4% in 2003 to only 0.43% in 2010.

PRODUCTION AND DISTRIBUTION OF GAS IN 2010 - [MMSCFD]

NATURAL GAS
During the past recent years, realization of natural gas production has been gradually increasing and in 2010 was realized at the highest level throughout the Indonesian oil and gas history, that was equal to 8,857 MMSCFD or 11% increase from year 2009 production which amounted to 7,962 MMSCFD. The increase in production was achieved after completion of Indonesias Tangguh project in Papua.

9,600 9,200 8,800 8,400 8,000 7,600 7,200 6,800 6,400 6,000
Jan Feb Mar Apr Mei Jun Jul Agt Sep Okt Nov Des Penyaluran Produksi

Lifting APBN = 7,758 MMSCFD

Throughout 2010, we experienced a relatively low gas production facility disorder considering that our natural gas production facilities that are still relatively new. The occurring production decrease mostly due to non-operational factors such as maintenance activities, equipment replacement and decrease of consumer demand.

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Annual Report 2010

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Realization of Upstream Oil and Gas in 2010

05

PETROLEUM AND NATURAL GAS LIFTING

PETROLEUM LIFTING
Realization of petroleum lifting in 2010 was 954 thousand BOPD. This achievement was 98.9% of the target set by the Government and the House of Representatives in the 2010 State Budget amounting to 965 thousand BOPD. Realization of petroleum lifting was higher than production due to the usage of stocks from previous year.

06

STATE REVENUE AND COST RECOVERY

Upstream oil and gas industries are among the main sectors that stimulate Indonesias economic growth. In 2010, state revenue from oil and gas sectors amounted to US$26,489 billion or an increase by 32.78% compared to revenue in 2009 which was US$19,950 billion. The above realization of state revenue in 2010 also reached beyond the state budget in 2010 which was US$26,060 billion. The main contributing factor for this achievement in state revenue was the realization of a lower cost recovery from the state budget target.

PETROLEUM LIFTING AND SUPPLY

Produksi /Lifting (ribu BOPD)

STATE REVENUE YEAR 2005-2011

13 10 7 4 1 -2

2.27 million BOEPD oil and gas lifting or increase by 11.7% from lifting realization in 2009

1.000 900 800 700 600 500 JAN FEB MAR APR MEI JUN JUL AGU SEP OKT NOV DES

Stok BBL (juta)

1.100

16

60 50

Miliar US$

40 30 20 10

US$ 26.49 billion of state revenue or 32.78% increase compared to state revenue in 2009
2005
Gross Revenue Cost Recovery

Production (BOPD)

Lifting (BOPD)

Total Stock (BBL)

2006

2007
Indonesian Share Net Contractor Share

2008

2009

2010

NATURAL GAS LIFTING

In the meantime, natural gas lifting increased by 11% to 7,681 BBTUD in 2010 from 6,943 BBTUD in year 2009. This increase in lifting is aligned with the increase in natural gas production throughout 2010. Natural gas lifting is utilized to meet both domestic and export needs. In 2010, there was an increase in export, which was due to the start of production of LNG Tangguh Refinery in Papua specifically dedicated for export.

The above State Revenue is exclusive of potential state revenue derived from indirect taxes such as Land and Property Tax, VAT, Local Tax, and Income Tax of employees working in upstream oil and gas industries which all amounts to Rp26.9 trillion.

DEVELOPMENT OF INDIRECT TAXES FROM OIL AND GAS INDUSTRIES IN 2006-2010

30,000 25,000 Miliar Rupiah

REALIZATION OF NATURAL GAS LIFTING

5,000 4,500 4,000 3,500
BBTUD

Tangguh 710 BBTUD

20,000 15,000 10,000 5,000 0

3,000 2,500 2,000 1,500 1,000 500 2003 2004 Export 2005 2006 2007 Domestik 2008 2009 2010

2006
Value Added Tax Property Tax

2007

2008

2009

2010

For the last decade of state revenue, upstream oil and gas industries have contributed 20% to 30% of the total state revenue. As a business entity, for the period of 2005 to 2010, upstream oil and gas industries have consistently shown an average of above 400% Revenue to Cost Ratio. This means that every US$1 paid as a cost can generate at least US$4. This condition shows that cost recovery paid from oil and gas proceeds is able to boost higher state revenue. Realization of cost recovery in 2010 amounted to US$12 billion, 1.5% below the state budget target which was US$12.2 billion.
BPMIGAS

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24

Realization of Upstream Oil and Gas in 2010

07

INVESTMENT REALIZATION
Investment in upstream oil and gas industries within the past 5 (five) years demonstrated a highly positive development, which was shown by the high amount of expenditures. Total expenditures disbursed in the period of 2006-2010 reached US$54.42 billion. At least 20% from the above mentioned value was invested in capital expenditures, which was a guarantee for the sustainability of oil and gas production level in Indonesia. The aforementioned Capital Expenditures are addition of state assets in the oil and gas industries. The reinforcement of regulation without considering the vessels duties and functions, have caused operational disruptions to occur rather significantly. For instance there were several drilling vessels that have completed their contract period, yet they must immediately leave Indonesian water although they have not yet completed their activities. Several PSC Contractors also faced difficulties in leasing seismic vessels used for drilling purpose in 2011, as domestic companies are not yet able to provide the vessels as required. Government Regulations No 79 year 2010 regarding Reimbursable Operational Cost and Enforcement on Income Tax in Upstream Oil and Gas Business Sector. Although this regulation provides several legal assurances in taxation (enforcement on provisions of lex specialist for PSC Contractor exploration) and provides more flexibility in the usage of cost recovery without restriction (capping), however, investors view that the regulation still contains provisions that dishonor the sanctity of contract. Law No 26 year 2007 regarding Spatial Organization. Based on the aforementioned Law, Local Governments are authorized to organize their respective regional spaces. However in the establishment of Regional Spatial Plan, activities from upstream oil and gas sector are often disregarded as they are not viewed as vital national objects. Their presence have only been considered as regular projects by private companies. Law No 32 year 2009 regarding the Environment. Enforcement of this Law has created issues for upstream oil and gas operations when a ministerial regulation, Ministerial Regulation No.04 year 2007 being issued. The problem mainly lied in Article 2 Appendix I, which stated that waste water quality standard/reproduced water can only be disposed to the environment if its temperature is already below 40 degrees Celsius. Meanwhile other industries including geothermal/oil refinery/LNG refinery/LPG refinery are still allowed to dispose with maximum temperature of 45 degrees Celsius. As a result of such change, existing production equipment must be renovated, hence relevant PSC Contractor must provide additional cost and time for procurement of equipment. Eventually this regulation created a burden for the PSC Contractors, however, the problems can be overcome by means of a policy allowing additional time for contractors to renovate their equipment. There are still some local regulations that conflict with the central governments regulations, therefore, burdening the implementation of activities in upstream oil and gas at regional level. Overlapping of land for upstream oil and gas and other activities. The issue of land acquisition to support upstream oil and gas activities is one of the main disruptions that caused investment plan not being able to be implemented in 2010. To settle this issue, several steps have been undertaken by BPMIGAS, for instance by coordinating with the Minister of Forestry (for cases on land acquisition that intersect with forestry zone), coordinating with National Land Registry and establishing an ad hoc team to directly assist PSC Contractors team in acquiring land from the community. This last method has proven to be effective when assisting the process of land acquisition for MCL project in Cepu.

REALIZATION OF UPSTREAM OIL AND GAS INVESTMENT

14 12 10 8 6 4 2
2006 2007 Capital 2008 Non Capital 2009 2010

Juta US$

*) As of 22 February 2011, the 2010 data was still considered provisional

Compared to the investment done by industries from other sectors, investment in upstream oil and gas industries is the biggest. Its role in increasing Gross Domestic Product (GDP) and economic growth is highly significant, hence the positive trend in investing in upstream oil and gas industries must be maintained through a favorable investment policy.

INVESTMENT CHALLENGES
Throughout 2010, there were still several challenges that hindered the realization of investment in upstream oil and gas. Most of the challenges emerged as a result of the issuance of a regulation that did not suit the situation and condition of Indonesias upstream oil and gas industries nor correspond with existing regulations. The result of such overlapping of regulations is rather substantial for the realization of investment, as upstream oil and gas industries demanded clarity in regulations for better assurance in investment, bearing in mind that the total amount invested is reasonably high. Several new regulations have proven to be directly disruptive of the production process as PSC Contractor was charged to add cost that was relatively high in a fairly short time. Legislation No. 17 year 2008 regarding Shipping required effective implementation of cabotage principle by year 2011, at the latest, for all types of vessels operating in Indonesian sea. Those issues emerged due to the fact that the use of vessels in upstream oil and gas industries are being mandatory requirement such as seismic, well drilling and maintenance. Up to today, no single national company is able to provide what is being required as we need several years time to build it.

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2
PELAKSANAAN PROYEK HULU MINYAK DAN GAS BUMI

01

ONSHORE PROJETCS IMPLEMENTATION

FULL SCALE DEVELOPMENT OF BANYU URIP FIELD
The development of Banyu Urip Field at the Cepu Block Onshore working area was conducted by Mobil Cepu Limited (MCL). The construction of the project was divided into 2 (two) phases, namely early production facilities and full-scale construction. The target for early production stage was for petroleum production to reach approximately 20 thousand BOPD by the end of 2009, while the target for full-scale phase was the production of approximately 165 thousand BOPD by the end of 2013. The early production stage was completed on 31 August 2009 with an estimated production level of 1,700 BOPD. Production could then be increased gradually so that throughout 2010 the project has produced an average production of 18,500 BOPD. Meanwhile, in order to support the realization of full-scale projects, throughout 2010 BPMIGAS approved the project procurement plan, namely procurement of production facilities (Engineering Procurement Construction/EPC-1), provision of pipes on land (EPC-2), provision of pipes at sea (EPC-3), provision of floating storage and offloading (EPC- 4) and provision for supporting infrastructure (EPC-5). At the end of 2010, tender process for the five EPCs was underway and the auction winner is scheduled to be announced in early April 2011. Procurement of a 700-hectare land to support the project implementation has also increased considerably compared to previous years. This achievement was the result of intensive cooperation between BPMIGAS team and the District Land Office of Tuban and Bojonegoro in processing the letters and map areas of the acquired land. At the end of 2010, land acquisition for the Central Field Facilities (CFF) has reached 73% and land acquisition for Right of Way (ROW)/onshore pipeline was able to be completed approximately 84%. Meanwhile land for infrastructure facilities (EPC-5) of 204 hectares had been 100% acquired with assistance from locally-owned enterprise in Bojonegoro District. All payments and signing of the Deed of Release of Land Rights is equipped with supporting documents.

A
Several upstream oil and natural gas projects that were implemented in 2010 are categorized as main projects. This classification takes into account the investment value needed to implement the projects, the output that will be produced by such projects or supporting state-of-the-art technology that will be used. Some parts of the projects are located offshore and some are onshore. BPMIGAS and PSC Contractor strive to ensure that the projects can be implemented on time to achieve the target for oil and natural gas production.

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Pelaksanaan Proyek Hulu Minyak dan Gas Bumi

DEVELOPMENT OF JAMBI MERANG PROJECT

Construction of Jambi Merang Project in South Sumatra was implemented by JOB Pertamina Talisman Jambi Merang. Implementation of the project which included 2 (two) fields, namely Pulau Gading and Sungai Kenawang was expected to yield 120 BBTUD of natural gas and 12,500 BOEPD of condensate. The natural gas will be partly used to support operational needs of Duri Field managed by Chevron Pacific Indonesia (CPI) for steam flood purposes in order for Duri Fields production target to be achieved. Meanwhile the rest of the natural gas will be used to meet the needs of industries in West Java. Approximately US$464.4 million investment was needed to implement the project, which among others was utilised for: Building natural gas production facilities in Pulau Gading in the form of separator facility with a capacity of 95 MMSCFD (feed gas). Building Central Gas Production Facilities in Kenawang River in the form of separator and natural gas purification facilities, as well as Condensate Recovery with a capacity of 155 MMSCFD. Installation of natural gas distribution pipeline from Kenawang River Gas Plant to pipelines operated by PT Transportation Gas Indonesia (TGI), along 14 km in order for natural gas to be streamed to Duri Field, PKB PDPE Batam and South Sumatra. Installation of distribution pipelines for natural gas and condensate from Pulau Gading to Kenawang River Gas Plant along 11.5 km as well as condensate distribution pipelines from Kenawang River Gas Plant to North Geragai Facilites (usage of shared facilities with PetroChina Jabung) along 110 km. Until the end of 2010 the construction of Kenawang River Central Gas Production Facilities and Pulau Gading Gas Production Facilities has reached 99.2%, pipe-connecting (tiein) to North Geragai Facilities reached 77.1% and tie-in to the TGI gas pipeline reached 20.8%.The entire project is scheduled for completion by the first semester of 2011.

SINGA FIELD DEVELOPMENT

Development and construction project of the Central Processing Plant (CPP) Singa Field, which was conducted by Medco E & P Lematang, was located in South Sumatra Province. Projects were undertaken to support the production of Singa-1 Field, Singa-3 and Singa-4 that were expected to produce approximately 50 MMSCFD of natural gas. Based on the sales agreement that has already been signed, natural gas will be used by PT Perusahaan Gas Negara (PGN). Construction work had commenced in January 2008 and was completed at the end of 2010 as it has produced approximately 30 MMSCFD of natural gas from Singa-3 Well. Overall completion of the project was delayed from its original plan, which was December 2009. This was due to the delay in completion of Singa-1 and Singa-4 wells drillings, hence the supply of natural gas for commissioning activities could not be undertaken.

NORTH DURI DEVELOPMENT (NDD) AREA-12

North Duri Field is located in Riau Province and is operated by PT Chevron Pacific Indonesia (PT CPI). With a view to maintain and increase field production, Area-12 was developed in 2010, which was also part of the development of Area-13 and Area-14. Area-12 has commenced production since 2008. The development of this area is expected to produce approximately 34 thousand BOPD in 2011. The scope of work carried out as part of NDD Area-12s development activities included building a test station, CVC (Casing Vapor Collection), Degassin, piping systems, electrical and instrumentation as well as construction of Area-12 main road to facilitate mobilization to the field. Investments that were reserved for this project was approximately US$207.7 million, while the estimated cost of the project to completion was approximately US$168.4 million. At the end of 2010, completion of the project has reached 99.2%. Finalization of work includes performance improvement of supporting facilities that are unrelated to the main facility.

DEVELOPMENT OF BETARA BCD-4 PROJECT

Betara Project in Jambi Province was implemented by PetroChina International Jabung Ltd. BCD-4 Project is a continuation of the Betara Field development project with a view to benefit from burned natural gas (flaring) from associated Betara South West Area and West Betara as well as construction of petroleum pipeline with a capacity of 9300 BOPD. The construction of pipeline was done to substitute transporting of petroleum that has been done by truck (temporary trucking). The works include compressor installation, flowlines and gathering system for wells and installation of vapor recovery system. At the end of December 2010 the implementation of the project reached 95.34% and was expected to be completed in the second quarter of 2011. Investment for the construction of the BCD-4 production facilities is estimated at US$122.5 thousand.

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Pelaksanaan Proyek Hulu Minyak dan Gas Bumi

02

OFFSHORE PROJECTS IMPLEMENTATION

INDONESIAN DEEPWATER DEVELOPMENT (IDD)
IDD Project is a development of 5 (five) natural gas fields in Makassars deep water (between 975 m - 1785 m) in 4 (four) working areas, namely Ganal, Rapak, Makassar Strait and Bakau Estuary. The fields that were developed include Gendalo, Maha, Gandang, Gehem and Bangka Fields. Gendalo Field is a unitization between Ganal working areas and Makassar Strait; Maha Field is a unitization between Ganal working area, Makassar Strait and Bakau Estuary, while Gehem Field is the unitization between Ganal working area and Rapak and Bangka Field in Rapak Working Area. The operator for this PSC unitization implementation is Chevron Indonesia Company (CICo). These fields development has been done in an integrated manner to meet the domestic and export needs for natural gas. The natural gas allocated for export would be initially processed into LNG at the LNG Bontang Refinery, which is also located in East Kalimantan. The project scope consisted of wells drilling and construction of production facilities. The production facilities that will be developed are: subsea flowline will be built in Bangka Field from the wells headed to the West Seno Floating Production Unit (FPU) (existing); FPU, subsea completion and production pipeline will be built at Gehem Field headed to Santan Terminal. Meanwhile, some facilities will be built in Gendalo Field that is also utlized as a Hub; those facilities include FPU, subsea completion and production pipeline headed to Santan Terminal. It is scheduled that in the 3rd (third) quarter of 2014, the delivery of 120 MMSCFD of natural gas and condensate of 2,880 BOPD to consumers will begin from Bangka Field. Production will be increased gradually, therefore by 2017 natural gas production will reach its peak of 924 MMSCFD and condensates will amount to 23 thousand BOPD. Afterwards, the production will decline until it reaches economic limit in 2028. Investment for the development of IDD Project is estimated to cost US$6.98 billion, which will be used to finance drilling and construction of production facilities. In the meantime to reduce the environmental impact resulted from the activities, CICo has also prepared the EIA Terms of Reference, which is expected to be approved by the Ministry of Environment by the end of 2011.

MINAS SURFACTANT FIELD TRIAL 2

Projects implemented in Minas Field by PT CPI is a study to gather information needed for implementation of a large scale Enhanced Oil Recovery (EOR) program. To assist the process of extracting natural oil from Minas Field, PT CPI currently uses water flooding technology, which is by injecting hot water into the reservoir so that the oil is pushed to the surface. However, such technology has not been able to lift the entire oil from the reservoir. Minas Field is estimated to still contain petroleum of more than 4 (four) billion barrels which can not be recovered by means of water flooding. The application of surfactant technology/EOR polymer (chemical) is expected to assist the extraction of 841 million barrels of petroleum. Investment cost for this project is estimated to be US$157.3 million, which will be used for the construction of production facilities, wells drilling, procurement of chemical substances and project management. For pilot project purpose, the ongoing development wells included chemical injection wells, production wells, monitor wells, S-sand injection well and coring wells. Until the end of 2010, implementation of the overall project has reached 66.2%, and it is expected that the first injection activities can be done at the end of March 2012.

DEVELOPMENT OF SOUTH SEMBAKUNG NATURAL GAS FIELD

Development of South Sembakung Field, which is located in Simenggaris Onshore Block in the northern part of East Kalimantan Province, is conducted by JOB Pertamina Medco Pty Simenggaris. Ltd. Based on the Plan of Development (POD) approved by BPMIGAS, the project cost is approximately US$22 million. Field construction is done through the installation of pipes and gas manifold to distribute production from wells with a production of 25 MMSCFD, headed for Methanol Bunyu Refinery (KMB), which will be built by Pertagas - Medco Gas Consortium. Production activities are scheduled to be carried out in December 2011. In late 2010, the progress of the project has reached 10.03%, which is in line with the set target.

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Pelaksanaan Proyek Hulu Minyak dan Gas Bumi

DEVELOPMENT OF ABADI MASELA GAS FIELD

Abadi Natural Gas Field was discovered in December 2000 through drilling of Abadi # 1 exploration well at Masela Block operated by INPEX. Abadi Field is located in West Southeast Maluku District (MTB), in the Arafura Sea, located approximately 350 km east of Timor Island with depth of sea ranging between 400-700 meters. The Government (Minister of Energy and Mineral Resources) has issued approval of the First POD for Abadi Field Masela Block on 6 December 2010. The project was developed by using Floating LNG with a capacity of 2.5 MTPA. The first phase of field construction was designed with an estimated investment cost of US$4.99 billion and an operational cost of US$4.01 billion. Natural gas production is expected to be achieved in 2016 with an average production of 355 MMSCFD for 30 years. The initial production of 7,106 BOPD condensate will be increased gradually to 8,194 BOPD between year 2020 to 2041 period. After the above period, production is expected to decline until year 2049.

TUNU FIELD DEVELOPMENT

Tunu Field is a giant field with a length of approximately 75 km and an estimated width of 18 km on the banks of the Mahakam Delta, East Kalimantan. Tunu Field is operated by Total E&P Indonesie (TEPI) based on the Mahakam Production Sharing Contract (TEPI and INPEX, each holds 50% shares). This field supplies LNG Bontang Refinerys natural gas needs (for further export) and for domestic consumers, such as PT Pupuk Kaltim and PLN. Development of Tunu Field was carried out in phases. During 2010, development activities were conducted at Tunu Project Phase 11, Tunu Project Phase 12 and Tunu Project Phase 13A. TUNU PHASE 11 The development of Tunu Phase 11 is the construction of compression facilities, manifolds and utilities so that the level of natural gas production from the Tunu South and Tunu North wells can still be maintained. This project was carried out due to natural decline in wellhead pressure from 30 barg to 10 barg (Low Pressure). Through the construction of this facility, natural gas production could be increased back amounting to 200-250 MMSCFD. The entire project was successfully be completed in late June 2010 with a total investment of approximately US$554 million. TUNU PHASE 12 Tunu Phase 12 Facility is a Gathering Testing Satellite (GTS) & Wellhead Platform (WHP) facilities to accommodate additional wells in an effort to increase production of 405 MMSCFD. The project was completed in late April 2010 with a total investment of approximately US$108 million, thus several wells had also been successfully produced. Meanwhile, well drillings have been done in phases, in accordance with the design that has been created. TUNU PHASE 13A The development of Tunu Phase 13A is a project for the development of Gathering Testing Satellite (GTS) & Wellhead Platform (WHP) facilities to accommodate additional wells in an effort to increase production to 270 MMSCFD. The entire project was completed in early June 2010 with an estimated total investment of US$103 million. The gas production generated from several wells is flowed through the existing trunkline pipes. To date, well drilling activities have been carried out in stages in the existing designated WHPs.

DEVELOPMENT OF APN E AND APN F GAS FIELDS

APN E and APN F Gas Fields are located in the Offshore North West Java working area operated by Pertamina Hulu Energy Offshore Northwest Java Ltd (PHE ONWJ). Investment being allocated for the construction of production facilities for this development project is estimated to cost US$97.26 million. The development of APN E/F Gas Fields was done to increase gas production in order to meet the increase in consumer demand, for example, to meet the needs of Pupuk Kujang. The entire project construction is scheduled to be completed by December 2011.

DEVELOPMENT OF GAJAH BARU-NATUNA SEA BLOCK A FIELD

Gajah Baru Field is located in the southern part of Natuna Sea Block A working area, operated by Premier Oil Natuna Sea B.V. (PONSBV). The development of this field is based on the POD approval for Gajah Baru, Iguana and Naga Fields on 14 April 2008 with a total investment cost for the production facilities of US$873 million. In addition, particularly for Gajah Baru Field development, an investment of US$418 million will be used for Central Processing Platform (CPP), Wellhead Platform (WP), pipeline and Onshore Receiving Facilities (ORF). Gajah Baru Field is developed to meet the commitment of providing natural gas to domestic consumers in Batam area, which are PT PLN and PT UBE as well as foreign consumer, namely Sembgas (Singapore). Year 2011 is the year we are committed to deliver natural gas from Gajah Baru Field. At the end of 2010, development of the project had reached 74.7%.

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PECIKO FIELD DEVELOPMENT

Peciko Field is located 25 km southeast of Senipah, East Kalimantan, operated by Total E&P Indonesie (TEPI) based on the Mahakam Production Sharing Contract (TEPI: 50% and INPEX: 50%). The entire production in Peciko Field is distributed to Onshore Processing Central Senipah to be further processed (after segregation and treatment are done) in order to meet the specifications required for natural gas, petroleum/condensate and waste water. The Peciko Field development project, which was implemented in 2010, consisted of Peciko Phase 6 LP Compression Project and Peciko Phase 7A Project.

SOUTH MAHAKAM FIELD DEVELOPMENT

South Mahakam Field is located 58 km southwest of Peciko Field or 100 km from Senipah, East Kalimantan. South Mahakam Field is operated by Total E&P Indonesie (TEPI) based on the Mahakam Production Sharing Contract (TEPI: 50% and INPEX: 50%) that is received by the entire production of South Mahakam Field which is then flowed to Onshore Processing Central in Senipah, for separation and treatment processes, before natural gas is delivered to Bontang. The South Mahakam Field development project was implemented to support the development of South Mahakam Field Phase 1 & 2 in order to be able to produce 128 MMSCFD of natural gas and 5,900 BOPD of condensate by 2012. Total investment for the production facilities construction of South Mahakam Phase 1 and Phase 2 amounted to US$382.59 thousand. At the end of 2010, the project has reached 16.26% progress and it is estimated that the project can be completed in the first quarter of 2012.

PECIKO PHASE 6 LP COMPRESSION Peciko Phase 6 LP Compression Facility Project is a compression facility development in anticipation of a natural decline from 30 barg to 12 barg (Low Pressure) in wellhead pressure in Peciko Field, so it is expected that gas production from the field can be maintained at 333 MMSCFD in 2015. The entire project was completed in early May 2010 with an investment of approximately US$178 million. With this project, wells in Peciko Field that are already in a state of low pressure can now be compressed in LP Compression train. PECIKO PHASE 7A Peciko Phase 7A Project is an additional extension platform conducted in several existing platforms in Peciko Field to accommodate additional wells in an effort to increase production to 85 MMSCFD in 2010 and 156 MMSCFD in 2011. Total investment of Peciko Phase 7A Project amounted to US$46.56 thousand. It is expected that the project is due for completion in November 2011. In December 2010 the project has achieved 86.78%.
Image L10. Peciko Phase 7A Extension Platform

DEEPENING UNDERWATER GAS PIPELINE (PGBA) 16 PROJECT KODECO ENERGY

Kodeco Energys 16 gas pipeline distributes natural gas from Poleng Processing Platform (PPP) to the Onshore Receiving Facility (ORF). This gas pipeline was built to support the Gas Expansion Project Phase 2 by Kodeco Energy, which started operation in June 2009. The PGBA lays across the West Surabaya Shipping Lane (APBS) in 2 (two) points, namely kilometer point (KP) KP 35-36 and KP 44-46 with depth of 16 meters Low Water Spring (LWS). In anticipating any disruption occured along the shipping lanes, Kodeco buried those pipes reaching -19 meters LWS. The burial began on 19 October 2010 and is due for completion on 17 February 2011. The target completion of this project is worth US$17 million, which may likely be delayed due to extreme weather conditions.

DONGGI SENORO PROJECT DEVELOPMENT

Senoro Field and Matindok Area operated by PSC Contractor JOB Pertamina-Medco (Tomori) were initially discovered in 1988. These fields are targeted to begin production by 2014, with an average production capacity at approximately 415 MMSCFD. Natural gas supply is allocated to meet the needs of PLN (approximately 25 MMSCFD), PT Panca Amara Utama (PAU) fertilizer plant (approximately 55 MMSCFD) and to be processed into LNG at Donggi Senoro LNG refinery (approximately 335 MMSCFD). At the end of 2010, BPMIGAS has signed Seller Apointment Agreement (SAA) concerning gas allocation concept and the DMO, along with the approval of the GSA signing.

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3
DOMESTIC COMPONENT USAGE INCREASED BY 14% JOINT PROCUREMENT SAVINGS INCREAS BY 111% OPTIMILIZATION OF ASSETS UTILIZATION INCREASED BY 27% TRANSACTION THROUGH STATE OWNED BANK INCREASED BY 18% ASR FUND SAVINGS INCREASED BY 27%

NATIONAL CAPACITY EMPOWERMENT & K3LL

National Capacity Empowerment & K3LL

01

UTILIZATION OF DOMESTIC GOODS AND SERVICES

The utilization of domestic goods and services in the upstream oil and gas activities significantly increased in 2010 compared to 2009 both by volume as well as percentage. The improvement was the result of BPMIGAS efforts in improving the PSC contractors commitment to maximize the use of domestic goods and services.

PROCUREMENT OF GOODS / SERVICES - SAVING EFFORTS

Since mid-2008, BPMIGAS has continually improved its cost-efficient upstream oil and gas operation through a well coordinated collaboration between the procurement function among PSC Contractors. Such colaboration was initiated by the Supply Chain Management (SCM) Forum. The procurement cooperation manifested through joint procurement contract such as rig leasing, transportation infrastructures (land, sea and air), joint procurement of spare parts of heavy equipment and machines with similar brands, joint use of shorebase facilities and other operational support facilities as well as utilization of excess goods required by PSC Contractors. The procurement cooperation is likely to have been carried out particularly for PSC Contractors who have adjacent working area with similar operational characteristic. As a result, BPMIGAS managed to save US$70.19 million through joint procurement in 2010 or increased by 111% compared to the saving outlined in 2009 amounted at US$33.20 million. The improvement was subsequently the outcome of more active participation from PSC Contractors in the SCM Forum. Moreover, the savings made through joint procurement can also be acquired from material transfer valued at US$34.80 million which rose 27% compared to 2009 of US$27.50 million. The savings made by material transfer have indicated how effective assets management as a result of excess materials, idle assets and used materials utilized by the PSC Contractors through material transfer method.

Around 63% of the upstream oil and gas products and services procurement value was generated domestically.

As an illustration, the value of domestic goods and services procurement in 2010 was US$6.84 billion or 63.43% of the total procurement value of US$10.79 billion. PSC Contractors actual domestic expenditure, 71.9% of which was dominated by procurement expenditure. It is indicated that the national supporting of upstream oil and gas service company posseses great opportunity to develop its capability and competitiveness. In order to encourage the use of domestic goods and services component, BPMIGAS regulates the procurement of goods and services that can only be conducted by national companies or foreign companies that have collaborated with domestic suppliers of goods and services. The regulation has proven to be effective in protecting national interests, despite the fact that BPMIGAS provides ample authorizations to PSC Contractors in terms of procurement agreement from US$2 million to US$5 million.

NILAI PENGADAAN DAN TKDN

12,000 Juta Us$ 10,000 8,000 6,000 4,000 2,000 0 %TKDN 2006 43% Service 2007 54% Product 2008 43% 2009 49% 2010 63%
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Effective saving efforts in managing the upstream oil and gas materials have resulted in costeffecient operations valued at US$104.99 million

PROCUREMENT COST SAVING AND ASSET OPTIMIZATION 2010

COLLABORATIVE PROCUREMENT SAVING JOB ASSET OPTIMIZATION

80 70 60 US$ Juta 50 40 30 20 10 0 2009 Target 2010 Realization

40

US$ Juta

35 30 25 20 15 10 0 2009 Target 2010

40%

39%

Realization

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National Capacity Empowerment & K3LL

02

ASSET MANAGEMENT
At the end of 2010, the total assets used to support the upstream oil and gas operational activities was US$6.09 billion of the total acquisition of US$31.23 billion. The value of this acquisition was multiplied by 4.4% compared to the acqusition value at the end of 2009 of US$27.01 billion. During the five (5) years period, the upstream oil and gas assets have raised national assets at the average of 9% per-year.

03

UTILIZATION OF NATIONAL BANKING IN 2009

TRANSACTION FOR GOODS AND SERVICES PROCUREMENT
Since 2009, BPMIGAS started to compel PSC Contractors to utilize national banks service to support their procurement of goods and services. This policy was applied with the intention to provide upstream oil and gas industry a maximum benefit for the country, among others the raising circulation of money in national banks and enhancing national banks ability to support financing upstream oil and gas business. Since the enactment of the policy, transaction value through national banking system began to expand. In 2009, procurement transaction through national banks was amounted to US$3.93 billion (or around Rp35.4 trillion). In 2010, the transaction multiplied to US$4.63 billion (or Rp41 trillion) or increased by 18%. Thoroughly, since 2009, national banks have been coping with procurement transaction of upstream oil and gas for the amount of US$8.56 billion or Rp77 trillion.

OIL AND GAS INDUSTRY ASSET VALUE

35 30 25
Miliar US$

20 15 10 5 2006 Yield Value Accumulated Depreciation 2007 2008 2009 Book Value 2010

UTILIZATION OF NATIONAL BANK SERVICE IN PSC CONTRACTOR PROCUREMENT

2009

13% 7% 2% 11% 67%

Mandiri US$2.63 miliar BNI US$419.69 juta BRI US$63.35 juta Syariah Mandiri US$291.30 juta Mandiri / BNI US$522.35 juta

National banking sector was strengthened to support the oil and gas activity.

In order to protect assets from non-operational and operational risks, all assets are insured. The process of insurance coverage is done through national insurance company underwriter, which automatically become members of the consortium of the major underwriter. Such approach is to empower domestic insurance company as well as to enhance retention covers by national insurance company. In 2010, cost of premium coverage paid for the upstream oil & gas was US$29.78 million or decreased by 21% compared to premium coverage that had been paid in 2009 for the amount of US$37.95 million. Cost of premium reduction in 2010 was an achievement for BPMIGAS as it had been supporting insurance closure for the last three years since 2009. Consequently, the amount of premium paid by the Indonesian upstream oil and gas industry was not influenced by the tendency of the worlds increased insurance coverage occurred in 2010 due to major work incidents in the petroleum activities (particularly the recent oil spill incident in BP operational area at the Mexican Gulf) as well as some of the natural disasters within that year.

2010
4% 16%

1% Mandiri US$3.65 miliar BNI US$737.91 juta BRI US$166.27 juta Syariah Mandiri US$68.76 juta

79%

43

79%

Annual Report 2010

BPMIGAS

44

National Capacity Empowerment & K3LL

04

HUMAN RESOURCE MANAGEMENT

TENAGA KERJA
Number of Indonesian workers (TKI) and foreign workers (TKA) in the upstream oil and gas industry greatly depends on the number and type of activities performed during the year. Accumulatively, number of workers in the PSC Exploration and Production Contractors shrinked by 1.6% in 2010. The numbers of PSC Exploration Contractors were down by 29.4% compared to 2009. As for the details, number of Indonesian workers had dropped from 2,233 workers to 1,601 workers, whilst foreign workers had dropped from 252 workers to 152 workers. Meanwhile, for PSC Production Contractor, the number of employment rose to 1.5% compared to 2009. As for the details, numbers of Indonesian workers increased from 21,520 workers to 21,727 workers, whilst foreign workers also rose from 649 workers to 776 workers.

PLACEMENT OF ABANDONMENT AND SITE RESTORATION FUNDS

Abandonment and Site Restoration (ASR) Funds are the amount of funds that PSC Contractors should reserve in order to permanently suspend the operational of production facilities as well as the other supporting facilities and eliminate its ability to be reactivated as well as to perform environmental restoration in the upstream oil and gas operational area. In 2009 BPMIGAS directed ASR fundraising through a joint account between BPMIGAS and the PSC Contractors in the national banking system. Of this policy, the amount of ASR Funds that were stored in the national banks had increased. In 2009, the ASR fund reached US$132 million and rose 27% to US$167 million in 2010.

ASR FUND PROGRESS IN THE NATIONAL BANKING SECTOR

The increase in employment numbers at PSC Production Contractors has been identified since 2009, following the improvement in three major upstream oil and gas projects activities, namely Cepu Block development by Mobil Cepu Ltd, Indonesia Deepwater Development (IDD) by Chevron Indonesia Company (Cico) and Masela by Inpex.

34%

32%

34%

2009
16%

50%

2010
34%

Based on the approval of Work Program and Budget (WP&B) for year 2011, which was issued at the end of 2010, total employment of exploration will be increased along with the signing of new working areas contracts.

REALIZATION OF TKA & TKI IN 2010 - PRODUCTION JOB

30.000 25.000 Orang 20.000 15.000 10.000 5.000 0 2006 2007 2008 2009 2010 2011

Bank Mandiri

Bank BRI

Bank BNI

Efforts to involve national banks in the activities of upstream oil and gas industry both to save the ASR funds or procurement transaction of goods and services were aimed to improve the quality of national banking liquidity to be able to play an active role in credit distribution, both in credit investment and working capital particularly for the oil and gas industry as well as the entire real sector. Opportunity to obtain credit loans from the banks in the oil & gas sector is still widely open. Based on Bank Indonesia record, from 2003 2009, loans that were given by the national banks to the mining sector (including upstream oil and gas sector) was only 3.8% for credit investment and 2% for working capital loans (Bank Indonesia, 2009).

REALIZATION OF TKA & TKI IN 2010 - EXPLORATION JOB

2500 Orang 2000 1500 1000 500 0 2006 2007 2008 2009 2010 2011

Note: 1. All the years 2006 to 2010 data were based on 2010 CDM report. 2. Year 2011 data was based on the total number of recommended TKA & TKI stated in 2011 WP&B.

45

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National Capacity Empowerment & K3LL

CAREER DEVELOPMENT
In order to monitor Indonesian workers career development in the PSC contractors management and to ensure transfer of technology in the upstream oil and gas business activities, BPMIGAS designed Career Development Monitoring program (CDM). Through the CDM program, BPMIGAS appraises contractors performance on personal expenses, manpower planning, career development, training development, opportunities for international assignments for workers (for instance through swapping program, overseas job assignment, technical development exchange, internationalization), succession plan and so forth. In 2010, the monitoring results indicated that 3 (three) major PSC Contractors with the best program include Medco E&P Indonesia (MEPI), PT Chevron Pacific Indonesia (CPI) and PT Pertamina EP. While the other 3 (three) minor PSC contractors with the best program was BP Indonesia, Santos and Pearl Energy. In overall, the program development implementation for Indonesian workers plunged in 2010. The main factors were due to the policy of post-crisis contraction budgets from the PSC Contractors headquarter.

REALIZATION OF TKI DEVELOPMENT PROGRAM IN 2010

250

Another effort is by swapping foreign workers employed at the PSC contractors with declining production rate with Indonesian workers in the attempt to maximize the use of local resources as to limit the numbers of foreign workers posted at PSC Contractor exploration. BPMIGAS also encourages the management of PSC Contractors to develop Indonesian workers career, hence they will be able to replace the various positions that were previously taken by foreign workers, such as leadership position, surface operations, subsurface, drilling, wells and completion as well as in engineering & projects discipline.

200

150 Orang

DEVELOPMENT OF INDUSTRIAL RELATIONS

100

In order to foster industrial relations management, BPMIGAS, made an attempt to expedite the approval of the Company Regulations (PP) and the Collective Labor Agreement (CLA) proposed by the PSC Contractors in 2010 by observing the latest developments. Furthermore, BPMIGAS also reevaluated the salaries and benefits of all employees in the upstream oil and gas industry and ensured compliance to current procedures and standards.

50

0 2008 2009 2010

Internationalization Swapping

Job Assignment TDE

Dispute cases concerning industrial relations were hardly occurred. Most cases were generally associated with third-party workers request to be assigned as permanent workers. However, all cases have been resolved through negotiation process. BPMIGAS evaluation have indicated results that all PSC Contractors confronted by third-party demand have yet to possess a clear job description that divided the workers core business functions with the non-core business functions. Therefore, in order to improve industrial relations in the upstream oil and gas industry, BPMIGAS required PSC Contractors to have clear job descriptions with monitored performance through HR audits and CDM.
BPMIGAS

In order to confirm Indonesian Human Resource development work as planned, BPMIGAS will evaluate the effectiveness of the use of foreign workers in the beginning of 2011 while ensuring that foreign workers are employed in major upstream oil and gas projects and were given KPI targets to support project acceleration.

47

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National Capacity Empowerment & K3LL

05

ENVIRONMENTAL-ORIENTED DEVELOPMENT
STUDY PRACTICE
To minimize the impact of upstream oil and gas activities to the environment, Government Regulations require PSC Contractor to conduct some preliminary assessment before starting the activities. One of the requirements is to set up Environmental Impact Assessment (AMDAL) analysis. AMDAL is an asseseement of the activities impact towards the environment. AMDAL is constructed during site development by examining aspects of physical-chemical, ecological, socio-economic, socio-cultural and public health. Basic implementation refers to Government Regulation No.27 of year 1999 concerning Environmental Impact Analysis. In 2010, 8 (eight) PSC Contractors submitted the AMDAL documents (which consisted of KAANDAL, ANDAL-RKL-RPL) as well as the Revised AMDAL document (RKL-RPL Addendum). Until end of year 2010, 7 (seven) of them were approved by the Ministry of Environment (MoE), whereas 1 (one) document was still pending for approval.

EIA APPROVAL PROCESS FOR 2010 PSC CONTRACTORS

PSC Contractors
Genting Oil Natuna Pte. Ltd. Pertamina Hulu Energi ONWJ JOB Pertamina PetroChina East Java Pearl Oil (sebuku) Ltd. Kondur Petroleum S.A. Total E&P Indonesie Kalila (Bentu) Ltd. & Kalila (Korinci Baru) Ltd. Chevron Pacific Indonesia

Document Title
AMDAL, development of oil field in Ande-Ande Lumut, Northwest Natuna Block RKL/RPL Development of Oil & Gas Field in North West Java (ONJW) Offshore Block in North West Java Offshore and DKI Jakarta KA ANDAL Development of Oil & Gas Field in Tuban Block, Phase IV- West Area in Bojonegoro Regency and Tuban Regency, East Java Province EIA development of Ruby Gas field in Sebuku Block, Makassar Strait RKL/LPL additional development of oil field and natural gas of Kuaru and South Padang, Merbau Regency, Meranti Island Regency, Riau Province RKL / LPL additional activities of oil and natural gas exploration in the Contract Mahakam Site, South Mahakam and Balikpapan Base, East Kalimantan Province Development Plan of Gas Field at Kalila (Bentu) Ltd. Mining Site at Pelalawan Regency, Kampar Regency and Pekanbaru, Riau Province Andal, RKL & RPL of oil production development and natural gas in Minas Siak Areal Minas, Kotabatak Patapahan and Libo, Riau Province

Status
In progress di KLH Sudah disetujui KLH Sudah disetujui KLH

Furthermore, by carrying out the provisions as stipulated by the laws and regulations, the PSC Contractors are required to conduct Environmental Baseline Assessment (EBA). Liabilities drafted in the PSC should be performed by the PSC Contractors in the beginning of their site activities. The objective is to identify preliminary environmental data, thus it would be a base for site development as well as to provide preliminary mitigation strategy should contamination takes place. In 2010, out of 32 EBA studies submitted by the PSC Contractors, 17 of them had been deemed to meet EBA criteria.

Sudah disetujui KLH Sudah disetujui KLH Sudah disetujui KLH Sudah disetujui KLH

OIL SPILL PREVENTION

During year 2010, there were no major oil spill incident (above 15 barrels), both onshore and offshore. This was such an achievement, considering that in recent years such disasters often occured in the upstream oil and gas industry. This achievement was the outcome of BPMIGAS and PSC Contractors effort in working with other agencies through several handling exercise and preventive campaign titled Journey to Zero Incident.

Sudah disetujui KLH

OIL SPILL INCIDENT IN 2010

No 1 2 Spilled Area Onshore Offshore 2009 10 6 2010 0 0

The PSC Contractors that are still in the exploration stage must compile a study on Environmental Management Efforts (UKL) and Environmental Monitoring Efforts (UPL). The implementation refers to the Minister of Environment Regulation No. 13 Year 2010. In 2010, there were 114 studies of UKL/UPL for PSC Contractors activities which were evaluated by BPMIGAS to be submitted and approved by the Ministry of the Environment or the related Environmental Agency at the provincial or regency level, of which 50% of them have been approved by relevant agencies.

As for preventive measures, BPMIGAS and PSC contractors renewed their Standard Operating Procedure (SOP) on oil spill prevention. This is a combination of onshore oil spill handling procedure and offshore oil spill handling procedure.

49

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50

National Capacity Empowerment & K3LL

06

COMMUNITY DEVELOPMENT PROGRAM

In order to accelerate community self-reliance development in the surrounding oil and gas mining area, the PSC Contractors conducted community development programs. However, over the issuance of Minister of Energy and Mineral Resources Regulation No.22 Year 2008 concerning Types of Upstream Oil and Natural Gas Business Activity with Non-Recoverable Cost to the Production Sharing Contract Contractors, prohibiting community development programs to be included in the operational costs. Therefore, BPMIGAS divided the implementation of community development program into 2 (two) categories. The objective is to distinguish the social development programs, which will be allocated as operating costs in order to comply with existing regulations and social development activities (community development) which will be funded by PSC Contractors headquarters budget.

ENVIRONMENTAL PERFORMANCE ASSESSMENT

Every year the Ministry of Environment (MoE) announced companies ratings on Enviromental Compliance Performance Program for the upstream oil and gas activities. There were major improvements in the quality of environmental management by companies involved in the program during the 2010 assessment. One of the indicators was no more Black rank amongst the PSC Contractors ever since all the contractors installed-Wastewater Treatment Plant (IPAL). The number of contractors with PROPER rank also increased from 56 participant areas to 59 participant areas.

PSC CONTRACTOR PARTICIPATION THROUGH PROPER

Assessment Tahun
Black Red Red Blue Blue Green Gold Total

SOCIAL SUPPORT PROGRAM

2010
0 Tidak Taat 11

2008
1 3 2 12 27 7 0 52

2009
1 5 5 29 17 10 0 67

The Social Support Program (PSPO) is a community development activity conducted by the PSC Contractors to support site operations at the working production area. This activity has been also carried out to meet the AMDAL-related regulations or other regulations that should be complied with. In practice, PSPO was divided into 4 (four) types of programs namely infrastructure, compensation for activities that correlates with permits/land use and regulatory compliance. The programs that correlate with infrastructure covering road construction/repairment, electrical installation and information centre construction. While the programs that correlate with compensation covering renovation/repairment of public facilities, compensation over the effects of operations toward public health, environmental or security, land compensation, overlapping land, project socialization and relocation project. The programs that were related to permit covering societys needs in the form of donations, services and development.

48 Taat

11 0 70

SOCIAL PROGRAM TO SUPPORT OPERATION ACTIVITY IN 2010

In the effort of encouraging HSE performance, BPMIGAS also awarded Best HSE Performance Award to the PSC Contractors. The assessment was based on the PSC Contractors Work Safety data and PROPER for 2009 period as well as MoE Assessment for year 2009. From the evaluation results, the best HSE Performance award was rewarded to PT. Chevron Pacific Indonesia Block Siak (for the category over 10 million of work hours), Chevron Indonesia Co.Makassar Block (for the category between 2-10 million of work hours) and the Energy Star (Kakap) Ltd.Kakap Block (for the category under 2 million working hours).

6%
Regulatory compliance Rp 97,85 Billion

47% 22%

Compensation Rp 52,44 Billion Infrastucture Rp 46,39 Billion Permit Rp 12,81 Billion

25%

51

Annual Report 2010

BPMIGAS

52

National Capacity Empowerment & K3LL

SOCIAL DEVELOPMENT ACTIVITIES

Community development activities or CD is a development approach to encourage participation and direct involvement of local residents in the process of development. By this approach, all joint communities would be synergized with local governments businesses and other stakeholders so as to improve local communities standard of living. Thus, local residents own initiative should become the focus of the CD. Generally, the CD can be categorized into community charities such as disaster relief, community service such as infrastructure development, training and development local communities potential. In recent years, the CD has been developed into sustainable development, where its focus on development was not just confined to humans but also the environment; and it also not just confined to the development with the economic aspects but also industrial aspects. If the activities are classified into executed activities, then the CD programs for the Upstream Oil and Gas sector were divided into 5 (five) areas, namely the economic field (to assist the government to empower the community in an effort to improve the economy), education and cultural affairs (in the form of scholarships, to have a complete cultural facilities and educational infrastructure, sports) and in health affairs (to support improvement efforts in public health), social and public facilities (to support 7% development of social infrastructure, the public facilities within the operational area) and environmental affairs (to support the environmental awareness program.)

In 2010, some of the PSC Contractors that only carried out CD activities without PSPO were ConocoPhillips (Natuna, South Jambi), Kodeco Energy, CITIC Seram Energy, PremierOil (Natuna Sea) Ltd., PearlOil (Tungkal) Ltd., PT. Medco E&P - Tarakan. In 2010, the actual realization of PSPO and upstream oil and gas CD had reached Rp311.2 billion or 35% higher compared to actual realization of Rp231.1 billion in 2009.

The following chart indicates the cost composition of PSPO and Community Development in 2010.

PROGRESS OF COMMUNITY DEVELOPMENT PROGRAM IN 2010 FOR UPSTREAM O&G

350 300 250
Miliar Rp

COST COMPOSITION FOR PSPO AND COMMUNITY DEVELOPMENT IN 2010

6% 11% 12% 41%
Economy Rp 41,91 Billion Education Rp 30,07 Billion Environment Rp 11,91 Billion Social and Public Facilities Rp 11,25 Billion Health Rp 6,65 Billion

200 150 100 50 0

2005 Budget 2006 2007 2008 Realization 2009 2010

30%

53

Annual Report 2010

BPMIGAS

54

National Capacity Empowerment & K3LL

07

SAFETY OF VITAL OBJECTS

SECURITY OBSTRUCTIONS
All assets that have been utilized to support the upstream oil and gas industry operations were integrated in the national vital assets category, as it has important role to the nation in terms of economic, political, social, cultural, defense and security aspects. Security obstruction toward these assets will cause losses for the country. Since June 2010, numbers of security obstructions were significantly increased. It was even higher compared to the last 5 (five) years. As of the identification conducted, some matters that can potentially raised problems include : Uncertified land wherein most lands used for supporting the upstream oil and gas industry have not been certified and caused annexation of land, especially in the Right of Way (ROW) pipeline; barren land and land adjacent to community activities. Lack of stakeholders comprehension (especially around the area of oil and gas industry) toward the status of assets managed by the PSC Contractors. One of the examples of obstruction occurred at COPI working area was road access blockage in Suban Well#4 that was due to unsettle dispute over land. Consequently, it had caused the closing of Suban Well#4 which caused significant loss for the country. Blockage also took place at Gunung Kembang, operated by Medco E&P, which caused production loss of 7 MMSCFD. Security obstructions also occurred in PT Pertamina EP Sumbagsel working area, where most of oil pilfering was done using Pertagas Tempino Plaju pipelines.

TOTAL SECURITY OBSTRUCTIONS EXPERIENCED BY SOUTH SUMATRAS PSC CONTRACTORS IN 2010

9% 10%
Medco E&P (Sumbangsel)

NUMBER AND TYPE OF SECURITY OBSTRUCTION IN 2006-2010

1200 1000
Jumlah Gangguan

16%

37%

Pertamina EP (Mayoritas Sumbangsel) Conoco Phillips Indonesia Inc. (Sumbangsel) Chevron Pacific Indonesia (Riau) Vico Indonesia (Kaltim)

28%

800 600 400 200 0

2006 2007 2008 2009 2010 Total Obstruction Oil and Gas Equipment Robbery Oil and Gas Operation Obstruction

Based on the site observation where most security obstruction occurred in South Sumatra, particularly on-site of ConocoPhillips Indonesia Inc. (COPI) and Pertamina EP areas. Common obstructions were crude oil pilfering and area blockage within the site.

55

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National Capacity Empowerment & K3LL

INTEGRATED SECURITY SYSTEM

Obstructions rate in PHE ONJW working area operating in West Java area however had shown a significant decline. Over the years, the criminal rate, especially theft in ONWJ working area was among the highest of more than 100 times of incidents and had caused loss of hundreds of millions of dollars. Yet, the obstruction was managed to be kept at the minimum in 2010. Some preventive efforts have been taken to eliminate obstructions and one of them was to establish security based community, a new form of security approach involving local communities, government and security apparatus in resolving or settling conflicts. At the end of 2009, PHE ONWJ signed an agreement with West Java Regional Police Office to secure the operational area. Moreover, cooperation was also constructed with the surrounding communities (majority was fishermen community) to be involved in securing the areas. The mechanism was conducted through community development activities, where the company provides revolving credit to purchase outboard motor boats for the communities with the agreement to maintain assets or file a report in case of any theft. These efforts were considered effective as the fishermans report have in fact caused some robberies to be stopped and theft rate were cut down. The company had also communicated the upstream oil and gas activities to local apparatus and local parliament in order to increase awareness and encourage community participation in protecting the upstream oil and gas assets. Local government is fully aware that the ease of performing business activities will increase Regional Government Budget through profitsharing mechanism.

TOTAL ROBBERY AND LOSSES IN PHE ONJW WORKING AREA

50 45 40 35
Jumlah Peristiwa

Jan 450 400

Nilai Kerugian (x1.000 US$)

Feb Mar Apr Mei Jun Jul Agt Sep Okt Nov Des

350 300 250 200 150 100 50 2008 2009 Lost Value
In 2010, BPMIGAS issued regulation for PSC Contractors with the intention of reducing detriments due to obstruction in oil & Gas working areas. The regulations concern about optimization of collaboration with the Joint Operation Handling Units (Satlakpamber), development of a system called PSC Contractors Safety Management Standard and its related activities, enhancement of security through regulatories, safeguard, escort and patrol (TURJAWALI) in the working areas as well as to cultivate a sense of security ownership of all contractors and residents in the surrounding site areas in order to establish a community-based security system.

30 25 20 15 10 5 0
2010

57

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BPMIGAS

58

Professional Responsive Unity in diversity Decisive Ethics Nation Focused Trustworthy

4
THE BEGINNING OF BPMIGAS BUREAUCRACY REFORM

INTERNAL BPMIGAS

Internal BPMIGAS

BPMIGAS continued its transformation process to become a world class government agency equipped by competent and professional human resources (HR) in supporting the Companys upstream business activities in the oil and gas sector to generate maximum revenue for the state. To achieve these objectives, BPMIGAS has made various efforts to reform the bureaucracy, including organizational restructuring, strengthening organizational capability, training and development to reinforcing employees supervision through preventive and curative efforts (post-audit). Reinforcing supervision has become one of the main agenda to be addressed in order to ensure that transformation process goes as planned. Preventive effort in the supervision area, among others, requires all leaders and employees of BPMIGAS to sign a moral pledge called Integrity Pact before performing duties and obligations in a professional manner.

In

2010,

Another preventive effort is the establishment of Government Internal Control System Task Force (SPIP), which aims to control and support internal performance improvement of BPMIGAS in particular as well as PSC Contractor in general. SPIP involves all functions at BPMIGAS and is responsible for providing input to management in order to improve the internal control system within BPMIGAS. To strengthen the auditors function, BPMIGAS also applied Internal Control Unit (UPI) in charge of auditing the economic aspect as well as the efficiency and effectiveness process at BPMIGAS. These efforts were made by adding competent human resources and strengthening the position of the organization.
Performance

PERJALANAN BPMIGAS MENUJU VISI ORGANISASI

Pengapalan pertama LNG Tangguh Realisasi penerimaan negara 2007-2009 selalu diatas target APBN Menawarkan 4 KPI organisasi BPMIGAS kepada Dep Keu 2009 Realisasi komitmen TKDN untuk pengadaan barang dan jasa mencapai 49% Realisasi penggunaan perbankan nasional tahun 2009 adalah US$ 3,93 miliar WP&B 2010 disetujui sebelum tahun berjalan DI tahun 2009, 55.46% gas bumi dimanfaatkan untuk domestik Jumlah KKKS sampai dengan 245 2010 Realisasi komitmen TKDN untuk pengadaan barang dan jasa mencapai 69% Realisasi penggunaan perbankan nasional 2010 sampai US$ 7,87 miliar. WP&B 2011 disetujui sebelum tahun berjalan

Establish World Class Organization

Mengintegrasikan seluruh fungsi transaksional SDM, HR, PMA, TI di bawah naungan BPMIGAS- Indonesia Incorported Peningkatan sektor riil yang didorong adanya finansial dari pendapatan migas yang dapat digunakan untuk permodalan di bidang migas Melembagakan inovasi dan perbaikan lebih lanjut (continous improvement) Melakukan pertukaran business opportunities, bukan hanya jual beli komoditas, akan tetapi memanfaatkan adanya kesempatan bisnis ke dalam negeri Dengan diperoleh devisa dari penjualan SDA migas, dan tumbuhnya industri penunjang di dalam negeri sehingga akan menjadi penggerak kemajuan ekonomi bangsa, sehingga BPMIGAS menjadi lokomotif. 2017
BPMIGAS

Scale Up Operations
Perbaikan yang berkesinambungan untuk proses bisnis (continous improvement) Peluncuran program untuk memaksimalkan pasoka domestik barang dan jasa oleh industri penunjang migas dalam negeri Peningkatan programprogram ICT (eg. data realtime dari KKKS) Peningkatan kapabilitas organisasi dan industri dalam mengantisipasi keperluan skill tertentu (eg. Deepwater, CDM) Sinergi antara CSR dan Bright & Green di lokasi fasilitas produksi

Transformation in Progress
Penyelarasan dan implementasi proses bisnis, kewenangan, job desc, manual, dan KPI Implementasi program peningkatan kapabilitas organisasi Peningkatan kerja sama dan keterbukaan kepada stakeholders Implementasi ICT Blueprint Penandatanganan MOU dengan berbagai lembaga pemerintahan Memulai internalisasi core values

Immediate Fixes
Peluncuran Misi, Visi, dan Core Values baru Reorganisasi BPMIGAS (pembentukan CPMR, PPA, PBO, Perwakilan) Peluncuran program bekerja berdasarkan KPI (KPI based) Peluncuran inisiatif peningkatan TKDN Peluncuran program penggunaan bank umum nasional untuk menangani transaksi finansial industri hulu migas

2009

2010

2011

2015

61

Annual Report 2010

62

Internal BPMIGAS

01

EMPOWERING BPMIGAS ORGANIZATIONAL CAPABILITY

The organizational capabilities empowerment is one of the efforts made to improve the competence of BPMIGAS organization in monitoring and controlling the upstream oil and gas business activities to meet the organizations objective and goals. Several efforts were undertaken throughout 2010 such as restructuring of organization to be more effective in monitoring and controlling, improving the organizational good governance practices, enhancement of human resources quality, strengthening accountability as well as improvement of public services. In effort of improving good corporate governance, BPMIGAS has revamped the business process, elucidated each functions duties and authorities (job descriptions), improved the Management Authority System Guidelines (PSKM), refined the process of setting and supervising staffs and oversee the divisions Key Performance Indicator (KPI), improved management administration, as well as synchronized the Standard Working Procedures (PTK) to be fully integrated with one another in accordance with the applicable laws and regulations. In order to ensure reformation process to run as planned, BPMIGAS carried out a preliminary survey as regards the organization performance before planning out the working program. A survey conducted in early 2010 revealed how BPMIGAS staffs have lack of consideration toward the PSC Contractors, which resulted in delays in responding to PSC Contractors complaints. To follow up the survey result, BPMIGAS has made various efforts to improve performance, among others were disseminating the organization values to every employee, namely Professional, Responsive, Unity in Diversity, Decisive, Ethics, Nation Focused and Trustworthy (P.R.U.D.E.N.T). The objective is to encourage all BPMIGAS employees to apply the new core values in their behavior and working activities toward the achievement of pursue the organizations final objectives and goals.

To keeping up the employees spirit in line with proper implementation of the new values, the management has awarded 35 BPMIGAS employees from various functions that have demonstrated PRUDENT core values. The award was presented at the closing ceremony of 2010 BPMIGAS Working Meeting held in December 2010. The completion of business processes, job description and SOP in 2010 has produced 877 business processes and 82 job description functions. In addition to that, there were 28 approved SOPs, while the other 10 are still in the pre-development phase. That accomplishment was due to the full support and active participation of all divisions at all levels shown during the discussion and preparation phases. In 2010, BPMIGAS had also started to monitor implementation of KPIs that have been implemented since September 2009. The performance measurement resulting from the monitoring activities were quantified in numbers of achievement divided by number of working days. The monitoring results were then reported directly to management on a monthly basis. In order to comply with the principles of effective and efficient good corporate governance, BPMIGAS also set a standard of administrative management, both in the process of sorting and ordering records, storage, maintenance and destruction of administration records. Every employee and secretary must attend the Public Administration Management (PAU). In 2010, the socialization of new PAU recorded 36% of total employees. The process will continue in the following years targeting all employees.

KPI target for all employees and leaders

Organization redeployment as part of bureaucratic reform

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BPMIGAS

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Internal BPMIGAS

02

HUMAN RESOURCE MANAGEMENT

To meet the strategic environment dynamics of the upstream oil and gas business, in 2010, BPMIGAS prepared an HR road map management program. Based on the roadmap, human resources development program will be implemented in 2011 and is expected to achieve targets in 2015. In the process of organizational expansion, BPMIGAS also hires professional and experienced oil and gas personnel. The objective is to fill the labor gap in level 6 (six) employees, whose numbers are still insufficient. The needs to supply experienced and skilful personnel are required to prepare the organization within the next 5 (five) years to replace officials who are in their retirement stage.

ROADMAP PROGRAM PENGELOLAAN SDM BPMIGAS

Horizon 1 : Build the Foundation Horizon 2 : Capability Alignment Horizon 3 : World Class HR

WORKERS DEMOGRAPHY BASED ON LEVEL AND AGE

200 180 160 140 120 100 80 60 40 20 0

2011
Tujuan Fokus area pengembangan akan dilakukan terhadap area pengelolaan SDM yang paling critical terhadap bisnis dan memiliki gap terbesar antara As-Is dan To-Be Initiatives Manajemen Kompetisi Pengelolaan Kinerja Pengembangan Karir Pembelajaran Rewards Succession Planning Human Capital Infrastructure Organization & Workplace Design Manajemen Perubahan

2012
Tujuan Capability Alignment akan dilakukan dengan implementasi terhadap rancangan yang sudah dibangun di tahun pertama, termasuk roll-out ke seluruh organisasi Initiatives Implementasi 1 tahun siklus performance Knowledge Management Employee Relations

2013-2015
Tujuan Meningkatkan kapabilitas organisasi untuk menjadi World Class HR Periode stabilisasi untuk area pengelolaan SDM yang telah diimplementasikan Initiatives Periode stabilisasi untuk area pengelolaan SDM yang telah diimplementasikan Human Capital Strategy Workforce Planning Rekrutmen

UC <30 th

09 31-35 th

08

07 36-40 th

06 41-45 th

05

04

03 51-54 th

02 >54 th

01

46-50 th

MPP WORKERS ANALYSIS BY LEVEL FOR THE PERIOD OF 2011 - 2015

20 18 16 14 12 10 8 6 4 2 0 Jumlah Pekerja MPP

ORGANIZATION EXPANSION
The first step to achieve World Class Human Resource (HR) as one of the key requirements to be a professional government agency division of the organization is to expand the organization to support all employees in meeting the Companys objectives and goals as applied. The Companys decision to add more employees is adjusted with the organizational structure, which is designed on the base of the recently reformed business processes. The most apparent functional change was the adding of new Evaluation and Legal Consideration (EPH) sector. The Deputy of EPH Division will oversee the Legal Consideration Division, Division of Evaluation, Reporting and Information Technology as well as the VP of Representative Management who are being assigned in the working areas of the PCS contractors. Changes in the organization also focus on strengthening the key areas, namely Planning, Operational and Financial Control and to ensure full cooperation from the supporting fields of General sector as well as Evaluation and Legal Consideration sector in order to operate effectively.

01

02 2011

03 2012

04 2013

05 2014

06 2015

07

08

09

UC

CAREER DEVELOPMENT PROGRAM

To meet the needs of Head of Sub-division level officials, BPMIGAS accelerated career development program for some of its employees from level 5 (five) and 6 (six) to be promoted as Head of Sub Division level. Employees who have been promoted hold a proven record of good performance with the required competencies, demonstrate maturity, managerial and leadership attitude.

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Internal BPMIGAS

For a comprehensive organization overhaul, BPMIGAS ran a full range of its existing human resource management system evaluation throughout 2010. The evaluation results were used as the base for the improvement of BPMIGAS Human Resource Management SOP, especially with regard to competency management, performance, career development to serve as a learning point for employees to avoid large competency gap in the organization as occurred in the previous years.

500 450 400 350 300

Notes: 1. Costs of Workers & Professionalism Enhancement 2. Office Set-up & Rental 3. On-the-job Facilities 4. Operational Management 5. Business Assessment and Development 6. Development of Management Information System 7. Overseas Trip Allowance 8. Other Activities 9. Office Relocation Costs

Employees Competency Development Activities toward Organizational Improvement

Until the end of 2010, BPMIGAS Human Resource Management SOP improvement process had reached the existing HR management assessment and has been developed accordingly to the desirable conditions and the working plans in order to meet the expected Human Resource management system. The SOP improvement is due for completion by mid-2011. In supporting the transformation process, several activities have been conducted toward the set target. One of them was to enhance employees competency. During 2010, BPMIGAS has compiled with several compulsory training programs for their employees. Employees at the staff level received more trainings than the top-level officials. Head of divisions received the least trainings compared to lower-level officials. Compulsory trainings must be attended by all employees at all level and divisions. Some of the compulsory trainings include negotiation skills, managerial skills and some others. Special trainings will be given upon employees request after further selection process, by which the approval is based on the job description function.

Juta Rp

250 200 150 100 50t 1 2 3 4 5

7 100%

8 82,64%

9 97,98%

%Realization

99.17% 99,68% 84,70% 84,48% RAPB-RK

85,74% 54,74%

Budget Realization

BPMIGAS FACILITIES AND INFRASTRUCTURE

03

REALIZATION OF OIL AND GAS BUDGETS AND EXPENDITURES

The total amount of BPMIGAS budget in 2010 was Rp901.17 billion and US$10.06 million or totaling at Rp901.17 (using Rp9,300 exchange rate). The total budget was approved based on the Minister of Finance Decree No.S-200/MK.02/2010 dated 6 May 2010. On top of that, through the Decree No.S-578/MK.02/2010 dated 23 November 2010, the Finance Minister had also approved an additional budget which amounted to Rp48.09 billion for office relocation costs. The office relocation was an urgent need required to improve services in the upstream oil and gas industry as well as to respond to the growing organizational challenges. Budget realization for 2010 amounted to Rp880.45 billion or 92.47% of the total approved budget. Absorption of the 2010 budget was surpassed the previous years budget of 86.73% or equivalent to Rp665.10 billion. That was due to the properly constructive plan and the more focused working program that have been carried out in 2010.

The emergent expansion of PSC Contractor to the current 245 units added to the growth of BPMIGAS operational needs in supporting the execution, monitoring and control of oil and gas upstream activities. To support the achievement of BPMIGAS performance toward lifting, cost recovery control and state revenue targets, the Company needs adequate infrastructures, especially an office building that can accommodate the existing number of employees. In addition to that, as part of the institutions responsibility for managing strategic minerals that are included in the national vital object, the need to maintain the data confidentiality has become increasingly important. For that, after about 9 (nine) years of occupying the old office building at Patra Jasa on Jl. Gatot Subroto Kav.32-34, BPMIGAS officially moved to a new building located in Wisma Mulia on Jl Gatot Subroto No.42, South Jakarta. This new office is providing more comfort and safety to the work place, so for that reason, it is expected that the new atmosphere can boost BPMIGAS employees performance in managing PSC Contractors.

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LIST OF INDONESIAS UPSTREAM O&G WORKING AREAS PRODUCTION WORKING AREAS AND DEVELOPMENT
OPERATOR
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 INDONESIA PETROLEUM LTD. PETROCHINA INTERNATIONAL BANGKO LTD. PT. MEDCO E&P RIMAU CAMAR RESOURCES CANADA INC. EXXONMOBIL OIL IND. INC. LAPINDO BRANTAS INC. KALREZ PETROLEUM (SERAM) LIMITED PT CHEVRON PACIFIC INDONESIA CONOCOPHILIPS (GRISSIK) LTD. BOB PERTAMINA BUMI SIAK PUSAKO CHEVRON INDONESIA COMPANY PT. PERTAMINA HULU ENERGI GEBANG & SUMATRA (COSTA) PETROCHINA INTERNATIONAL JABUNG LTD. CONOCOPHILLIPS (SOUTH JAMBI) LTD. STAR ENERGY (KAKAP) LTD. PT.MEDCO E&P INDONESIA PETROCHINA INTERNATIONAL (BERMUDA) LTD. KALILA (KORINCI BARU) LTD. PT.MEDCO E&P INDONESIA TOTALFINAELF E&P INDONESIE CHEVRON MAKASSAR LTD. KONDUR PETROLEUM S.A PREMIER OIL NATUNA SEA B.V. CONOCOPHILIPS INDONESIA INC. LTD. PT. MEDCO E&P MALAKA MOBIL EXPLORATION IND. JOB PERTAMINA-TALISMAN (OGAN KOMERING) PERTAMINA HULU ENERGI ONWJ LTD HESS (INDONESIA-PANGKAH) LTD. TRIANGLE PASE INC. JOB PERTAMINA-GOLDEN SPIKE INDONESIA, LTD. PT PERTAMINA EP PT. CHEVRON PACIFIC INDONESIA CNOOC SES LTD. JOB PERTAMINA-PETROCHINA SALAWATI SANTOS (SAMPANG) PTY LTD. PETROSELAT, LTD.

WORKING AREAS
ATTAKA BANGKO RIMAU BAWEAN N. SUMATRA, CONTRACT AREA B BRANTAS BULA SIAK CORRIDOR CPP EAST KALIMANTAN GEBANG JABUNG SOUTH JAMBI B KAKAP CENTRAL SUMATRA (KAMPAR) KEPALA BURUNG KORINCI BARU LEMATANG MAHAKAM MAKASSAR S. OFF. AREA A MALACCA STRAIT NATUAN SEA BLOCK A SOUTH NATUNA SEA B AREA A, N. SUMATRA NSO/NSO Ext. OGAN KOMERING OFF. NORTH WEST JAVA PANGKAH PASE PENDOPO-RAJA INDONESIA ROKAN SOUTH EAST SUMATRA SALAWATI SAMPANG SELAT PANJANG

38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67

ENERGY EQUITY EPIC (SENGKANG) PTY. LTD. CITIC SERAM ENERGY LIMITED JOB PERTAMINA - MEDCO TOMORI SULAWESI PT. MEDCO E&P INDONESIA TOTAL E&P INDONESIE JOB PERTAMINA-PETROCHINA EAST JAVA PEARL OIL (TUNGKAL) LTD. PERUSDA BENUO TAKA KODECO ENERGY COY. JOB PERTAMINA-HESS JAMBI MERANG SANTOS (MADURA OFFSHORE) PTY. LTD. KANGEAN ENERGY INDONESIA LIMITED VICO MOBIL CEPU LTD PT SARANA PEMBANGUNAN RIAU-KINGSWOOD CAPITAL LTD KALILA BENTU SEGAT LTD BP. BERAU LTD BP MUTURI HOLDINGS BV BP. WIRIAGAR LTD. ELNUSA BANGKANAI ENERGY LTD. CHEVRON GANAL LTD. PC KETAPANG II LTD PC MURIAH LIMITED CHEVRON RAPAK LTD PEARL OIL (SEBUKU) LTD. HUSKY OIL (MADURA) LTD. JOB PERTAMINA-MEDCO SIMENGGARIS PTY.LTD PT. SELE RAYA MERANGIN DUA INPEX MASELA LTD. MANHATTAN KALIMANTAN INVESTMENT PTE. LTD.

SENGKANG SERAM NON BULA SENORO TOILI TARAKAN TENGAH TUBAN TUNGKAL WAILAWI WEST MADURA JAMBI MERANG MADURA OFFSHORE ONS. & OFF. KANGEAN SANGA-SANGA CEPU LANGGAK BENTU SEGAT BERAU MUTURI WIRIAGAR BANGKANAI GANAL KETAPANG MURIAH RAPAK SEBUKU ONS.& OFF. MADURA STRAIT AREA SIMENGGARIS MERANGIN II MASELA TARAKAN OFFSHORE

O&G EXPLORATION WORKS: 145 WORKING AREAS

OPERATOR
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 TITAN RESOURCES (NATUNA) INDONESIA, LTD. CONOCOPHILIPS WARIM Ltd. CONTINENTAL- GEOPETRO (BENGARA-II) LTD. ENI (Ex.Shell bv.,Lasmo,Eni,Chevron) LUNDIN SAREBA BV. NATIONS PETR.BV.(Ex.Ramu Inter.,Exspan,Rarmu) ENI AMBALAT LTD. MEDCO (Ex.Petroner,Exspan) ENI KRUENG MANE, LTD STAR ENERGY (BANYUMAS) LTD. PACIFIC OIL & GAS KISARAN ANADARKO PAPALANG, LTD. ANADARKO POPODI LTD ENI MUARA BAKAU BV PEARL OIL (Ex.Sebana) PT MEDCO E&P MERANGIN SOUTH MADURA EXPLORATION COMPANY LTD. MITRA ENERGY (BILITON) LIMITED SALAMANDER ENERGY (BONTANG) PTE. LTD TATELY NV. PEARL ENERGY PTY LTD. SANYEN OIL

WORKING AREAS
NORTH EAST NATUNA WARIM BENGARA II BUKAT SAREBA ROMBEBAI AMBALAT BENGARA I KRUENG MANE BANYUMAS KISARAN PAPALANG POPODI MUARA BAKAU BULU MERANGIN I SOUTH MADURA BILITON BONTANG PALMERAH WEST SALAWATI ANAMBAS

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70

23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77

CAHAYA BATU RAJA ALTAR RESOURCES, S.A. SELE RAYA ENI BULUNGAN, B.V. PT. EASCO EAST SEPANJANG IRIAN PETR. LTD. (Ex.Waropen Perkasa) GENTING OIL NATUNA PTE. LTD. ANADARKO INDONESIA NUNUKAN COMPANY TROPIK ENERGY PT. KUTAI ETAM PETROLEUM TRANSWORLD EXPL. LTD. ENDEAVOUR ENERGY (BENGKULU) PTY LTD. BUNGA MAS INTERNATIONAL COMPANY PAN ORIENT (ex. BPREC) GREENSTAR ASSETS LTD. ZARATEX N.V. STAR ENERGY SENTOSA (Sebatik) LTD. SUMATERA PERSADA ENERGI MARATHON INTERNATIONAL PETROLEUM INDONESIA LTD. EXXONMOBIL EXPLORATION AND PRODUCTION SURUMANA LTD. CONOCO PHILL. (AMBORIP VI) LTD. CNOOC BATANGHARI LTD RANHIL JAMBI INC. PTE LTD TATELI BUDONG-BUDONG N.V JAPEX BUTON LTD. WEST NATUNA EXPL. LTD. ODIRA ENERGY KARANG AGUNG CONOCOPHILLIPS (KUMA) LTD. SERICA KUTEI BV PT HEXINDO (ex. INDELBERG HEXA PERKASA LEMANG) PETROJAVA NORTH KANGEAN INC INDOREACH EXPL. LTD. STAR ENERGY (SEKAYU) LTD MITRA ENERGY (IND. SIBARU) LTD PT MOSESA PETROLEUM PANDAWA PRIMA LESTARI PT KALIMANTAN KUTAI ENERGI SIGMA ENERGY PETRONAS PERTAMINA HULU ENERGY KARAMA EXXONMOBIL EXPLORATION AND PRODUCTION INDONESIA (MANDAR) LTD. ADITYA NUGRAHA PRATAMA ENERGY LAMPUNG TALISMAN (South Makassar) ltd. TOTAL E&P SE MAHAKAM PREMIER OIL H B.V M3NERGY GAMMA SDN BHD TIARA BUMI PETROLEUM INSANI BINA PERKASA PERTAMINA EP RANDUGUNTING GENTING OIL KASURI PTE. LTD. LUNDIN RANGKAS B.V. MURPHY SOUTH BARITO LTD. CNOOC PALUNG ARU ENI WEST TIMOR LIMITED CONOCOPHILLIPS (ARAFURA SEA BLOCK INDONESIA) LTD LUNDIN BARONANG B.V

AIR KOMERING BARITO BELIDA BULUNGAN EAST SEPANJANG MANOKWARI NORTH WEST NATUNA NUNUKAN PANDAN SEINANGKA-SENIPAH SERUWAY BENGKULU BUNGAMAS CITARUM EAST KANGEAN LHOKSEUMAWE SEBATIK WEST KAMPAR PASANGKAYU SURUMANA AMBORIP VI BATANGHARI BATU GAJAH BUDONG-BUDONG BUTON DUYUNG KARANG AGUNG KUMA KUTAI LEMANG NORTH KANGEAN PARI SEKAYU SIBARU TONGA WAIN WEST SANGATTA ENREKANG KARAMA MANDAR OFFSHORE LAMPUNG I SAGERI SOUTH EAST MAHAKAM TUNA UJUNG KULON WEST AIR KOMERING ALAS JATI RANDUGUNTING KASURI RANGKAS SOUTH BARITO SOUTH EAST PALUNG ARU WEST TIMOR ARAFURA SEA BARONANG

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132

MARATHON INDONESIA (BONE BAY) LIMITED PT PUTINDO BINTECH LUNDIN CAKALANG B.V CJSC SINTEZMORNEFTEGAZ PEARL OIL (EAST MURIAH) LTD SERICA EAST SERUWAY BV EXXON MOBIL EXPLORATION & PRODUCTION INDONESIA (GUNTING) LTD PEARL OIL (TACHYLYTE) LTD PT KARYA INTI PETROLEUM SPE PETROLEUM LTD SPC E & P UPSTREAM PTE LTD HUSKY OIL NORTH SUMBAWA LTD MURPHY SEMAI OIL CO.LTD; PT. SUMA SARANA HESS(INDONESIA-SEMAI V)LTD BLACK GOLD INDONESIA LLC ACG (SOUTH BENGARA II) PTE.LTD RANHILL PAMAI TALUK ENERGY PTE. LTD NIKO RESOURCES (SOUTH EAST GANAL I) LTD SALAMANDER ENERGY (SE SANGATTA)LTD GUJARAT STATE PETROLEUM CORP. LTD. BLACK GOLD SOUTH MATINDOK LLC RADIANT BUKIT BARISAN E&P CHEVRON WEST PAPUA I LTD CHEVRON WEST PAPUA III LTD NIKO RESOURCES (OVERSEAS II)LTD THREE GOLDEN ENERGY WEST TUNGKAL EXXON MOBIL EXPLORATION & PRODUCTION INDONESIA CENDRAWASIH LTD. NORTHEN YAMANO TECHNOLOGY OIL NIKO RESOURCES (OVERSEAS XVI) LTD. MARATHON INDONESIA (KUMAWA) LTD; PT HARPINDO MITRA KHARISMA SARMI PAPUA ASIA OIL LTD. ARCHIPELAGO RESOURCES PT ENERGI MINERAL LANGGENG REALITO ENERGI NUSANTARA CORELASI HESS (INDONESIA SOUTH SESULU) LTD. AWE (TERUMBU) NZ LTD. ORCHARD ENERGY (WEST BELIDA) LTD. TALISMAN ASIA LTD Konsorsium Petronas - Pertamina NIKO RESOURCES (HALMAHERA KOFIAU) LTD. BLACK GOLD EAST BULA LLC. NIKO (WEST PAPUA IV) LTD.. PT Brilliance Energy. PT Sele Raya Energi Baruna Nusantara Energy Ltd Repsol Exploracion S.A. NIKO RESOURCES (CENDRAWASIH BAY III) LTD. NIKO RESOURCES (CENDRAWASIH BAY IVI) LTD. PT. Sargas & Vega Cakra Nusa Darma (SKKMG) Ltd NIKO RESOURCES (SUNDA STRAIT I) LTD. Konsorsium PT. Baruna Recovery Energy - AWE Ltd Konsorsium Bumi Hasta Mukti - Fortune Energy

BONE BAY BUTON I CAKALANG EAST BAWEAN I EAST MURIAH EAST SERUWAY GUNTING KERAPU LIRIK II MADURA MAHAKAM HILIR NORTH SUMBAWA II SEMAI II SEMAI III SEMAI V SERAM SOUTH BENGARA II SOUTH CPP SOUTH EAST GANAL I SOUTH EAST SANGATTA SOUTH EAST TUNGKAL SOUTH MATINDOK SOUTH WEST BUKIT BARISAN WEST PAPUA I WEST PAPUA III WEST SAGERI WEST TUNGKAL CENDRAWASIH, PAPUA EAST PAMAI, RIAU KOFIAU, WEST PAPUA KUMAWA MALUKU, WEST PAPUA LAMPUNG 3, SUMATERA SELATAN NORTHEN PAPUA, PAPUA PASIR, KALIMANTAN TIMUR SOUTH EAST MADURA, JAWA TIMUR SOUTH BLOCK A, SUMATERA UTARA SOUTH SESULU, KALIMANTAN TIMUR TERUMBU, JAWA TIMUR WEST BELIDA JAMBI, SUMATRA SELATAN ANDAMAN III WEST GELAGAH KAMBUNA HALMAHERA KOFIAU EAST BULA WEST PAPUA IV SULA I BLORA NORTH MAKASSAR STRAITR CENDRAWASI BAY II CENDRAWASI BAY III CENDRAWASI BAY IV PURI Sakakemang Sunda Strait I North Madura Mandala

133 134 135 136 137 138 139 140 141 142 143 144 145

PT. Leogryph Indonesia PT. Kalisat Energi Nusantara PTTEP Malunda Ltd. PTTEP South Mandar Ltd. Konsorsium Talisman - PTTEP Ltd Konsorsium Talisman - PTTEP Ltd Ephindo Oil and Gas Holding Inc Konsorsium Awe Limite-PT Baruna Recovery EnergyPT Silo Maritime Perdana Mitra Energy Limited BP Exploration Indonesia Limited Black Platinum Investment ltd. KONSORSIUM LUNDIN OIL AND GAS B.V. SALAMANDER ENERGY (INDONESIA) LTD MURPHY OVERSEAS VENTURES INC.

Karapan Long Hubung Bagun Malunda South Mandar Sadang South Sageri North Songkang Titan Bone North Arafura Sokang South Sokang Wokam

GMB EXPLORATION: 23 WORKING AREAS

OPERATOR
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 MEDCO SEKAYU RIDLAUTAMA MINING UTAMA SAMANTA MINERAL PRIMA Sangatta West CBM Inc. PT Indobarambai Gas Methan PT. Barito Basin Gas Newton Energy Capital Limited PT.Visi Multiartha PT. Artha Widya Persada PT. Ogan interior Gas PT. EAST OGAN METHANE ARROW ENERGY (TANJUNG ENIM) PTE LTD. PT SATUI BASIN GAS PT SIGMA ENERGY BUMI - BLUE TIGER CO. LTD. PT TRISAKTI GAS METHAN konsorsium PT Trans Asia Resources-PT Jindal Stainless Indonesia Virginia CBM Indonesia Ltd. Indon CBM Ltd. PT Pertamina Hulu Metana Sumatera 2 dengan PT Trisula CBM Energy Konsorsium Bumi Perdana Ltd dan Glory Wealth Pacific Ltd. Konsorsium . PT Pertamina Hulu Energi Metana Sumatera I (PHE Metra I) & PT Indo Gas Methan (IGM) Konsorsium PT Medeo CBM Pendopo & Dart Energy (Muralim) Pte Ltd PT Pertamina Hulu Energi Metan Tanjung II (PT PHE Metan Tanjung II)

WORKING AREAS
GMB SEKAYU GMB BENTIAN BESAR GMB INDRAGIRI HULU GMB SANGATTA I GMB BARITO BANJAR I GMB BARITO BANJAR II GMB KUTAI GMB SANGATTA II GMB TABULAKO GMB OGAN KOMERING GMB OGAN KOMERING II GMB TANJUNG ENIM GMB KOTABU GMB PULANG PISAU GMB BARITO TAPIN GMB BARITO GMB SANGA-SANGA GMB RENGAT GMB MUARA ENIM GMB BATANG ASIN GMB Muara Enim I GMB Muralim GMB Tanjung II

TERMINATION PROCESS: 10 WORKING AREAS

OPERATOR
1 2 3 4 5 6 7 8 9 10 NATIONS PETROLEUM (YAPEN) B.V. HUSKY OIL EAST BAWEAN LTD. ORNA INTERNATIONAL LTD. HALMAHERA PETROLEUM LIMITED SANTOS (Ex.Totalfina elf,Total,Santos,Chevron) INPAROL (INDONESIA PAPUA PETROLEUM) PTE. LTD. ANADARKO INDONESIA COMPANY CHEVRON (Ex. Unocal) PETRONAS CARIGALI LAMPUNG II Ltd. PEARL OIL (K) LTD.

WORKING AREAS
YAPEN EAST BAWEAN II REMBANG HALMAHERA DONGGALA ASMAT NORTH EAST MADURA-III EAST AMBALAT OFFSHORE LAMPUNG II KARANA