SKK Migas 2016 Annual Report Highlights Strong Performance

2016
ANNUAL REPORT
SKK Migas Head Office
Wisma Mulia Building 35th Floor

Jl. Gatot Subroto No. 42
Jakarta 12710
PO BOX 4775
Indonesia
Phone:
(+62-21) 29241607
Fax:
(+62-21) 29249999
www.skkmigas.go.id
INTRODUCTION
04 SKK Migas Vision and Mission
05 Core Values
06 SKK Migas Oversight Committee Chairman
Foreword
08 SKK Migas Oversight Committee
10 Chairman of SKK Migas Foreword
12 SKK Migas Management
16 SKK Migas Organization Structure
17 Condition of Upstream Oil and Gas Activities
in Indonesia
20 Executive Summary of Annual Report 2016
CHAPTER I
SKK MIGAS
PERFORMANCE
CONTENT
24 Oil and Gas Contract Areas
26 Resources and Reserves
29 PSC Contractors Commitment
38 Investment of Exploitation and Exploration
PSC Contractors
40 Oil and Gas Production/Lifting Activities
45 Distribution of Oil and Gas Revenues
46 Efficiency on Cost Recovery
2 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

CHAPTER II CHAPTER IV
EFFORTS TO INCREASE EMPOWERING
PRODUCTION AND NATIONAL CAPACITY
RESERVES 118 Optimization of Crude Oil Production for
Domestic Refineries
52 New Projects
124 Increasing Gas Supply to Meet Domestic
53 Efforts to Increase Oil and Gas Production Demands
and Reserves
128 Utilization of Local Goods and Services
60 Exploration Discovery
131 Dispute Settlement
66 Sharing Knowledge Forums
132 Involvement of State / Regional-Owned
80 Cooperation with Other Institutions Banks in the Oil and Gas Business Activities
134 Management and Development of
CHAPTER III PSC Contractors Human Resources
MAJOR UPSTREAM
PROJECTS
90 Jambaran Tiung-Biru Project
CHAPTER V
PT Pertamina EP Cepu INTERNAL SKK MIGAS
92 Indonesia Deepwater Development Project 140 Audit Report from the Supreme Audit Board
Chevron Indonesia Co. (BPK-RI)
96 LNG Abadi Project 141 Continuous Improvement in the Governance
Inpex Masela Ltd. Aspect of the Organization
99 Tanggguh Train-3 Project 147 Information and Communication
BP Berau Ltd. Technology System
102 Jangkrik Project
Eni Muara Bakau
163 ATTACHMENT
108 Donggi Matindok Project
PT Pertamina EP CONTRACT AREAS
112 Madura BD and MDA-MBH Projects
Husky Cnooc Madura Ltd.
SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 3

VISION AND MISSION
VISION
To become a proactive and trustworthy entity, as well as the
primary mobilizer in the development of the upstream oil and gas
industry for the greatest welfare of the nation and state.
MISSION
Supervise and control the implementation of the Production
Sharing Contracts of upstream oil and gas activities to ensure
the effectiveness and efficiency of upstream oil and gas
business activities while maintaining environment sustainability;
Synergize stakeholders and Production Sharing Contract

Contractors to increase oil and gas production and reserves;
Work towards a conducive working culture through synergy,

coordination and application of change management,
knowledge, and technology systems;
Support and develop the national capacity to compete in

national, regional, and international levels;
Increase state revenue to give maximum contribution to the

national economy, and to develop and strengthen Indonesias
upstream oil and gas industry position.

CORE VALUES
As a form of commitment and seriousness in the development of upstream oil and gas
industry in Indonesia, SKK Migas hold values called P R U D E N T described as follows:
P ROFESSIONAL
Think and act according to the standards of the job
R ESPONSIVE
Provide timely and prompt response with a positive and
acceptable conduct in performing the job.
U
NITY IN DIVERSITY
Able to accept, recognize, appreciate, and synergize diversity to
achieve agreed goals.
D ECISIVE
Able to make decisions within the designated level of authority
based on rational and professional judgement and by considering
implication/risks from the decisions taken.
E THICS
Act in accordance to the norms, regulations, and business ethics
in performing the duties, functions, and authorities of the position.
N
ATION FOCUSED
Understand and strive to maximize national capacity in decision
making and implementation of activities.
T RUSTWORTHY
Can be trusted and reliable in performing the duties, functions, and
authorities of the position.

SKK MIGAS OVERSIGHT
COMMITTEE CHAIRMAN
FOREWORD
The year 2016 was not an easy year for the upstream oil and gas industry of Indonesia. The realization of world oil prices
lower than in previous years, making the previously prepared work plan should be evaluated thoroughly. Efficiency, being
the keyword of the upstream oil and gas industry to survive without lowering the operating target and ignoring safety and
environmental standards.
Thanks to God Almighty, the results of upstream oil and gas industry performance throughout 2016 were encouraging.
Production achievement were more than targeted and no significant work accidents occurred.
Achievement of activities to support medium and long term performance, reflected through business performance to reduce
decline rate and increase reserves, also exceeded the target. Therefore I convey my highest appreciation to business
executives and all stakeholders who continued to give full support to the sustainability of this industry.
Going forward, I invite all upstream oil and gas business executives to keep hand in hand to further improve the production
performance and operations efficiency because the challenges we face are also getting bigger. The government supports

efforts to improve performance, through structuring regulations to make industry more efficient and
generate maximum revenue for the government and business world. Things that have been done,
among others, simplify the licensing, review the fiscal system, and examine the various incentives and
facilities that are possible to be applied in the upstream oil and gas industry.
I hope, by establishing a closer synergy among stakeholders, it is expected that the upstream oil and
gas industry can offer better performance for the state and the nation.
IGNASIUS JONAN
SKK Migas Oversight Committee Chairman

SKK MIGAS
OVERSIGHT COMMITTEE
SKK MIGAS OVERSIGHT COMMITTEE CHAIRMAN VICE CHAIRMAN OF SKK MIGAS

OVERSIGHT COMMITTEE
IGNASIUS JONAN was inaugurated as Minister of Energy ARCANDRA TAHAR, PH.D. was inaugurated as Vice
and Mineral Resources ("EMR") on 14 October 2016. Minister of Energy and Mineral Resources on 14 October 2016.
Previously he served as Minister of Transportation Indonesia Previously Arcandra served as the Minister of EMR.
from 27 October 2014 to 27 July 2016. He also served as Arcandra completed his Bachelor degree in Mechanical
President Director of PT Kereta Api Indonesia (Persero) in Engineering at Bandung Institute of Technology ("ITB") in 1994,
2009 until 2014. then worked at Andersen Consulting. Furthermore, Arcandra
attended Postgraduate and Postdoctoral lectures at Ocean
Ignatius Jonan is an alumnus of Bachelor Degree in Accounting Engineering Texas A&M University, USA until completion.
S1, Economics and Business Faculty from UNAIR, graduated Arcandra's career includes Noble Denton Technical Advisor,
in 1986 then continued to Fletcher School, Tufts University, Reserach Specialist Technip Offshore, Lead FloatTec
USA. Hydrodynamics LLC, Principal and President of Asia Pacific
AGR Deepwater Development System, Principal Horton
Wison Deepwater and President Petroneering. Arcandra Tahar
is the owner of five patents in the field of offshore design.

MEMBER OF SKK MIGAS OVERSIGHT COMMITTEE MEMBER OF SKK MIGAS OVERSIGHT COMMITTEE
THOMAS TRIKASIH LEMBONG was inaugurated as the MARDIASMO was inaugurated as Vice Minister of Finance
Head of the Investment Coordinating Board on 27 July 2016. since 27 October 2016. Prior to that he served as Expert
He previously served as Minister of Trade from August 2015 Staff of the Minister of Finance for State Expenditures
to July 2016. Tom Lembong began his career at Morgan in 2004-2006, Director General of Fiscal Balance at
Stanley and Company as Sales and Trading Associate in the Ministry of Finance in 2006-2010, Head of the
1994. He then worked at Division Equities Morgan Stanley, Financial and Development Supervisory Board ("BPKP") in
Singapore, Senior Manager of Corporate Finance Department 2010-2014, and National Board Chairman of the Institute of
Makindo, and Investment Banker at Deutsche Securities Indonesia Chartered Accountants since 2010 until now. From
Indonesia. From 2002 until 2005, Tom Lembong served as 1 December 2014 to 6 February 2015, he was entrusted as
Division Head and Senior Vice President of the Indonesian the Acting (Plt.) Director General of Taxes of Ministry of Finance.
Bank Restructuring Agency. He also worked with the Principia
Management Group, and became a Managing Partner and He graduated from the Faculty of Economics Gadjah
CEO of Quvat Management, a private equity fund manager Mada University ("UGM") in 1981. He then continued
established in 2006. his study at the University of Bridgeport, Connecticut,
USA with a Master of Business Administration degree
Tom Lembong received a Bachelor of Arts degree from in 1989. He achieved a PhD degree from the School
Architecture and Urban Design at Harvard University in of Public Policy, University of Birmingham, UK in 1999.
Cambridge, USA in 1994. He was also selected as Young
Global Leader by the World Economic Forum in 2008.

CHAIRMAN OF SKK MIGAS
FOREWORD
Assalaamu'alaikum Warrahmatullaahi Wabarakaatuh
Similar to the previous year, 2016 was also tough and challenging year for the upstream oil and gas industry, primarily as a
result of the continuous decline in oil prices since the third quarter of 2014. The drop of oil prices led to a drastic decrease
of oil and gas exploration and production activities in different parts of the world. Most oil and gas companies were forced
to restructure their expenditures, some projects had to be canceled or postponed, operating costs trimmed, downsizing
everywhere. The oil price was only in the range of US$30 per barrel in early 2016. The total investment of upstream oil and
gas industry nationally also showed a downward trend in the last two years, i.e. from US$20.4 billion in 2014, US$15.3 billion
in 2015 to US$11.02 billion in 2016 (unaudited).
Despite of the challenging situation, stakeholders still strive to pull their maximum efforts in order to keep the Indonesian
upstream oil and gas sector continues to survive in the midst of low world oil prices. In fact for the first time since 2008,
national oil production has inclined from an average of 786 Thousand barrels of oil per day ("Mbopd") in 2015 to 831 Mbopd
in 2016.

This should take into account all of our hard work to contain the natural decline rate of production
of oil and gas fields in Indonesia, which most are categorized as mature field. On behalf of
SKK Migas, I express my deepest gratitude and appreciation to the Production Sharing Contracts
("PSC") Contractors as well as other parties who have provided support in maintaining the sustainability
of upstream oil and gas activities in Indonesia.
The 2017 work program and budget ("WP&B") discussions held for two months at the end of 2016
had formulated an agreement between SKK Migas and PSC Contractors on the upstream oil and
gas industry target. The government had also set the main indicator target of the upstream oil and
gas sector as stated in the 2017 State Budget ("APBN"). We certainly hope that these targets can be
achieved.
Finally, we would like to thank the support from all stakeholders and components of the nation. The
performance record in this annual report is a form of our accountability for the support and trust given to
us. We still hope the support in the upcoming years so that the upstream oil and gas sector would still
be able to devote a great performance in delivering the maximum added value for the state and nation.
We need to be more efficient, faster, and cooperate!
Wassalaamu'alaikum Warrahmatullaahi Wabarakaatuh

AMIEN SUNARYADI

SKK MIGAS
MANAGEMENT
CHAIRMAN OF SKK MIGAS
"As the supervisor and controller of the industry that becomes

the national economy driver, SKK Migas must be careful in
providing professional judgement. The best performance
had been given by SKK Migas in 2016 and we will continue to
provide support for the government policy in the upcoming
years."
AMIEN SUNARYADI was inaugurated as the Chairman of

SKK Migas on 21 November 2014. Born in 1960,
he managed to earn degrees from Indonesia State College
of Accountancy ("STAN") and College of Business
Administration, Georgia State University, Atlanta.
He began his career by working as a civil servant
at the Finance and Development Supervisory
Agency ("BPKP").

VICE CHAIRMAN OF SKK MIGAS
Sanctity of a contract is a necessity that is firmly

held by SKK Migas. However, the unstable economic
condition from 2014 to 2016 required SKK Migas to
be more flexible in order to meet the availability and
sustainability of oil and gas energy for the entire country
to the remote areas of Indonesia.
M.I. ZIKRULLAH was inaugurated as the Vice Chairman of

SKK Migas, after serving as SKK Migas Deputy for Business
Support Management on 17 July 2014 until 28 April 2015. He also
serves as Deputy for Commercial Management and Chief Executive
Audit. Born in Bogor in 1961, he obtained master degree in Law
from Universitas Indonesia ("UI").
SECRETARY OF SKK MIGAS
"SKK Migas in running the State Budget is required to be more

efficient, transparent, and accountable. Since 2016, in order
to increase public trust to the upstream oil and gas industry,
SKK Migas undertaking internal improvements and sharing
knowledge to stakeholders and other parties."
BUDI AGUSTYONO was inaugurated as the Secretary of

SKK Migas on 15 May 2015 after serving as SKK Migas
Deputy for Financial Management. Born in Jakarta
in 1958, Budi obtained his undergraduate degree in
Accounting from Universitas Indonesia in 1985 and then
earned his master degree in Management program from
UGM in 1999.

DEPUTY FOR PLANNING
MANAGEMENT OF SKK MIGAS
"The success of the performance and achievement of

SKK Migas to exceed the State Budget Revision lifting
target in 2016 was a result of solid teamwork and
professional performance in their field."
GUNAWAN SUTADIWIRIA was inaugurated as SKK Migas Deputy

for Planning Management on 7 May 2015 after serving as Advisor
for Chairman of SKK Migas since October 2014. Born in Jakarta in
1962, he earned a degree in Petroleum Engineering from Universitas
Trisakti, master degree in Petroleum Engineering from ITB and
earned a PhD in Petroleum Engineering from Texas A&M
University, USA.
DEPUTY FOR OPERATIONS MANAGEMENT

OF SKK MIGAS
"Thank God for the permission of Allah SWT, hard work

of all workers of upstream oil and gas industry, and
support of stakeholders, achievement of oil and gas
production could exceed the target of State Budget
Revision 2016. We hope to be a blessing for the Unitary
State of the Republic of Indonesia."
MULIAWAN was inaugurated as SKK Migas Deputy for

Operations Management on 8 February 2013. Born in Jakarta
in 1961, he received his undergraduate degree in Exploration
Mining Engineering from ITB and his master degree in Manajemen
Program from UGM.

DEPUTY FOR FINANCIAL MANAGEMENT
OF SKK MIGAS
"Despite the fall in oil prices, SKK Migas had surpassed

the government's production targets. This was due to
the spirit of cooperation, faster and more efficient work
demonstrated by SKK Migas and its key partners,
PSC Contractors and decisive and effective leadership
of the Minister of EMR. "
PARULIAN SIHOTANG was inaugurated as SKK Migas Deputy

for Financial Management on May 2015. Born in 1963, he earned
scholarship from the Government of Indonesia to study Accountant
at STAN, earned scholarship from the World Bank for Master of
Accountancy from Case Western Reserve University, Cleveland,
United States of America and PhD from Dundee University, UK in
2003. Before joining SKK Migas in 2008, the accountant who was
the best graduate of LEMHANAS in 2014 worked as an Auditor at
BPKP.
DEPUTY FOR BUSINESS SUPPORT

MANAGEMENT OF SKK MIGAS
"The decline in the economic level of upstream oil and

gas activities due to the decline in oil prices had forced
the industry to cut off activities in the field and manage
personnel in 2016. Nevertheless, SKK Migas continued
to work better in streamlining upstream oil and gas
activities, one of the steps by launching Centralized and
Integrated Vendor Database ("CIVD") that facilitates
providers of goods / services and PSC Contractors by
reducing the administration of the tender process. "
RUDIANTO RIMBONO was inaugurated as SKK Migas Deputy

for Business Support Management on 7 May 2015. He received his
undergraduate degree in Civil Engineering ITB in 1989 and Magister
Project Management program UI in 2009, he joined SKK Migas since
2004.

SKK MIGAS
ORGANIZATION STRUCTURE
BASED ON DECREE NUMBER: KEP-0032/SKKO0000/2013/S0 AND DECREE NUMBER: KEP-0045/SKKO0000/2015/S0
(SKK Migas Organization Structure per 15 January 2015, up to Division level)
CHAIRMAN
VICE CHAIRMAN
EXPERT ADVISORS MANAGEMENT
REPRESENTATIVES
SECRETARY INTERNAL
AUDIT
PROGRAM AND AUDIT WORKING

REPORTING DIVISION GROUP
PUBLIC RELATIONS
DIVISION
INTERNAL SERVICES
DIVISION
DEPUTY FOR PLANNING DEPUTY FOR OPERATIONS DEPUTY FOR FINANCIAL DEPUTY FOR COMMERCIAL DEPUTY FOR BUSINESS
MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT SUPPORT MANAGEMENT
EXPLORATION PROJECT RISK CRUDE AND HUMAN

DIVISION MANAGEMENT MANAGEMENT CONDENSATE RESOURCES
EVALUATION AND AND FACILITY AND TAXATION COMMERCIALIZA- DIVISION
DEVELOPMENT MAINTENANCE DIVISION TION DIVISION PSC
DIVISION DIVISION ACCOUNTING NATURAL GAS CONTRACTORS
EXPLOITATION PRODUCTION DIVISION COMMERCIALIZA- SUPPLY CHAIN
DIVISION OPERATIONS OPERATIONAL TION DIVISION MANAGEMENT
DIVISION COST AUDIT PLAN OF DIVISION
WORK PROGRAM
AND BUDGET OPERATIONS DIVISION DEVELOPMENT LEGAL ADVISORY
MANAGEMENT SUPPORT DIVISION GOVERNMENT COMMITMENT AND FORMALITIES
DIVISION ENTITLEMENT REALIZATION DIVISION
SURVEY AND MONITORING
DRILLING DIVISION AUDIT DIVISION INFORMATION
DIVISION SYSTEM
MANAGEMENT
DIVISON
SKK Migas also has 5 Representative Offices namely:

1. Representatives of Northern Sumatera in Pekanbaru, 4. Representatives of Kalimantan and Sulawesi in
Riau; Balikpapan, East Kalimantan;
2. Representatives of Southern Sumatra in Palembang, 5. Representatives of Papua and Maluku in Sorong,
South Sumatra; West Papua.
3. Representatives of Java, Bali, and Nusa Tenggara in
Surabaya, East Java;

CONDITION OF UPSTREAM
OIL AND GAS ACTIVITIES
IN INDONESIA
The drop in oil prices has led to a slowdown in global oil and gas exploration and production activities over the past two years.
Oil and gas companies were forced to restructure their expenses, investment plans were postponed because they were
considered not economically riable with the level of oil prices that were considered insufficient to stimulate investment. According
to Wood Mackenzie's study in 2015 there had been a 20% reduction in global upstream oil and gas investment from 2014, and
in 2016 there was a 30% decrease in investment spending compared to 2015. This shows that progressively the upstream oil
and gas investment in 2016 only reached 56% of 2014's investment.
In Indonesia alone, besides taking place as the main source of national energy supply, until now oil and gas is still the main
source of state income after tax, which implicates upstream oil and gas sector target as a parameter in the macro assumption
of State Budget. In quantity (volume), oil and gas demand continues to increase. According to the projection of the National
Energy Council ("DEN"), by 2015, of the total primary energy demand of 166 Million tonnes of oil equivalent ("Mtoe"), 46% was
supplied by oil and 23% by gas. The national primary energy demand in 2025 is estimated at 412 Mtoe, still to be supplied
predominantly by oil and gas (25% oil and 22% gas).

PROJECTION OF NATIONAL PRIMARY ENERGY NEEDS RUEN
TARGET
2050
KEN TARGET 2025 2050
24%
Energy Role As a development capital
EBT Mix 23% 31%

2050
Energy Supply >400 Mtoe >1.000 Mtoe 1.030 MTOE
Power Plants >115 GW >430GW 25% 31%
Energy Elasticity <1 <1

RUEN
Electricity / Capacity / Year 2,500 kWh 7,000 kWh TARGET
2025
Electrification Ratio ~100% ~100% 20%
22%
2025
412 MTOE
PRESENT 30%
CONDITION 23%
26%
2015
25% New and Renewable Energy ("EBT")
166 MTOE
23% Crude oil
46%
Natural gas
5% Coal
Source: DEN, 2016
It is a misperception saying Indonesia is a rich country in oil and gas. The share of national oil and gas reserves and production
compared to the world:
Indonesia's proven oil reserves of 3.6 Billion barrels (including condensate) are only 0.2% of the world's total oil reserves of
1,684 Billion barrels;
Indonesia's proven gas reserves of 103 Trillion standard cubic feet ("Tscf") are only 1.6% of the world's total gas reserves of
6,559 Tscf;
Indonesia's oil production, which in 2016 was at an average level of 831 Thousand bopd, was only 0.9% of the world's total
oil production at 91.7 Million bopd. Indonesia's gas production in 2016 was at an average level of 8.2 Billion standard cubic
feet per day ("Bscfd") of only 2.4% of the world's total gas production at 342.4 Bscfd.
With current national oil and gas production level, if no additional or new reserve is discovered, Indonesian oil will be exhausted
within 11 years, and gas will be exhausted within 40 years.
About 90% of the national oil production portion comes from the depleted mature fields, many of which have been in
production since and before the 1970s. The old field even has a decline rate of production up to 24% every year. The rate of
natural decline in oil production nationally at the level of 20% per year is now managed to be held below the 3% level. With
great effort through drilling activities, acceleration of completion of production facility projects in new fields, work over and well
services, optimization of maintenance of production facilities, and the application of enhanced oil recovery ("EOR") technology.
For the first time since 2008, the oil production rate in 2016 inclined 5.7% mainly due to the full production of Banyu Urip Field.

Unfortunately, the volume produced is not offset by the additional volume of new reserves from the exploration side.
In the last five years (2012-2016) there had been a decline in the number of exploration well drilling from 119 wells in 2012 to
only 43 wells in 2016.
Many production facilities equipments of oil and gas fields are already old. About 65% of pipelines, 57% offshore platforms,
55% of tanks and pressure vessels, 44% of rotary equipment, and 35% of turbomachinery were older than 1980. Higher
operating costs are required to maintain the reliability and integrity of production equipment and to ensure the requirements of
health, safety, and environmental protection ("HSE") are met. The national downstream gas infrastructure was also inadequate,
resulting in the excess of LNG cargoes to be sold in the spot market, and there could even happened a halt of gas production
to preserve the LNG plant in order to avoid top tank.
As a consequence of the various conditions presented above, the main challenges faced by the national upstream oil and gas
sector are:
the decline rate in production;
operating costs tend to be higher;
reserve replacement ratio ("RRR") that is smaller than one;
longer time intervals ranging from resource discovery to field commercialization.
Strategies to increase production and reserves are pursued in the following way as the diagram below:
STRATEGIES
The addition
of long-term
production
The addition of
Drilling development
medium-term
Workover and well services
production
Optimization of production
facilities maintenance
Acceleration of project onstream
Reactivation of old wells
Massive exploration
Unconventional
Accelerated Hydrocarbon
realization of POD
The addition Application of EOR
of short-term technology
production
EFFORTS WHICH SHOULD BE DONE SIMULTANEOUSLY

Regulations and
Governance
ENABLER
Technology
Economics
People &
permits
Good
The strategy can be achieved if regulations and permits are easy, adequate economic level for investors, supported by
competent technology and human resources, and fulfills good governance rules in running corporate governance and business
processes.

EXECUTIVE SUMMARY OF
ANNUAL REPORT 2016
Key Performance Indicators (KPI) are as follows:
NO OBJECTIVES
1 To contain the decline rate of production
2 To increase the oil and gas reserves
3 To achieve the oil and gas lifting target
4 To control the cost recovery
5 To achieve state revenue
6 To improve the governance system

The year 2016 gave new hope, with the improvement of world oil prices condition, which pushed up
the economic of the upstream oil and gas industry to become more stable than the previous fiscal
period. This was showed by PSC Contractors through the adjustment of development programs, and
consequently affected the achievements of key indicators based on WP&B namely; decline rate, lifting,
cost recovery, and state revenue. For the first time, lifting targets could be achieved mainly due to the
full scale of Banyu Urip. However with oil prices that are still below US$60 per barrel, efforts to optimize
activities and fixed costs were done sustainably and still prioritize programs to hold the decline rate.
TARGETS REALIZATION % ACHIEVEMENT

YTD 31 Dec 16*
The average decline rate of national oil production is < 5% -5.8% Achieved
The achievement of Reserve Replacement Ratio in 2016 for oil and gas is 60% 63.68% Achieved
(barrel oil equivalent)
a. Realization of Oil Lifting: 820 Mbopd 829.18 Mbopd 101%
b. Realization of Gas Lifting: 6,440 MMscfd 6,606 MMscfd 103%
c. Realization of Oil and Gas Lifting: 1,970 Mboepd 2,009 Mboepd 102%
Actual cost recovery: US$ 10.4 Billion US$11.99 Billion 115%

(ref. Limited Cabinet Meeting)
Actual state revenue: US$ 10.9 Billion US$9.42 Billion 86%
a. SKK Migas 2016 Financial Statement obtained Unqualified Opinion Adverse Opinion Not Achieved
(PSAK 09 was
revoked in 1998,
and PSL was in
accordance with
PSAK 24)
b. Implementation of ERP could produce: Financial Statement Report of SKK Migas 4 financial Achieved
statements of ERP
that was accountable, transparent, and integrated / SAP applications
c. Presentation of complete and accurate data of production and lifting of oil, 98.5% Achieved
condensate and natural gas from the Integrated Operating System ("SOT")
*Actual operational status of 6 February 2017

CHAPTER I
SKK MIGAS 2016
PERFORMANCE
22 SKK MIGAS 2016 PERFORMANCE | SKK MIGAS ANNUAL REPORT 2016

SKK MIGAS ANNUAL REPORT 2016 | SKK MIGAS 2016 PERFORMANCE 23
A.
OIL AND GAS
CONTRACT AREAS
One of the Governments effort to increase oil and gas reserves and production is by adding new contract areas ("CAs")
through the signing of Production Sharing Contract ("PSC"). In 2016, SKK Migas has signed 1 PSC of Unconventional Oil
and Gas ("UOG") exploration CA and 1 transfer in management conventional oil and gas CA.
OIL AND GAS CONTRACT AREAS 2003-2016
350
300
250
200
150
100
50
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Unconventional Exploration CA 7 20 23 42 54 55 55 58 54
Conventional Exploration CA 59 76 79 80 110 132 141 155 172 179 187 183 170 141
Exploitation CA 51 54 57 59 59 64 67 67 73 75 79 80 84 85
Total CA 110 130 136 139 169 203 228 245 287 308 321 318 312 280
In 2016, there are 85 exploitation CAs and 195 exploration CAs, either conventional or unconventional. Additionally, the
Government approved the termination of 34 PSCs and another 33 PSCs were undergoing termination process, resulting in a
total of 280 PSCs at the end of 2016.

THE DISTRIBUTION OF CONTRACT AREAS
IN 2016
SHALE TERMINATION PROCESS

TOTAL EXPLOITATION HC* CBM** EXPLORATION CONVENTIONAL UOG
ONSHORE 150 CAs 44 CAs 6 CAs 46 CAs 49 CAs 3 CAs 2 CAs
OFFSHORE 95 CAs 29 CAs - CA - CA 41 CAs 25 CAs - CA
ONSHORE / 35 CAs 12 CAs - CA - CA 20 CAs 3 CAs - CA

OFFSHORE
ACTIVE UOG CA ACTIVE OIL & GAS CA TERMINATION

52 CAs 110 CAs PROCESS 33 CAs
PRODUCTION CA
71 CAs
EXPLOITATION CA CONVENTIONAL EXPLORATION CA + UOG
85 CAs 195 CAs
DEVELOPMENT CA
14 CAs
TOTAL CONTRACT AREAS

280 CAs
* SHALE HC: shale hydrocarbon ** CBM: coal bed methane
Information of change throughout 2016:

1. There are 1 conventional exploration CA transfer in management and 1 unconventional exploration CA were signed PSC on
25 May 2016.
2. Semai IV, Halmahera II, Cendrawasih Bay II, Cendrawasih Bay III, Cendrawasih VII, Bengkulu I- Mentawai, and Sekayu CA
under termination process.
3. Sibaru, SW Birds Head, CBM Sekayu, South Mandar, West Aru I, west Aru II, Warim, CBM Batang Asin, CBM Bentian Besar,
North Sumbawa II, SE Tungkal, NE Natuna, Titan, Citarum, Amborip VI, Arafura Sea, Seruway, CBM Indragiri Hulu, CBM Tabulako, Seram,
Bone bay, West Sageri, East Bawean I, Offshore Lampung I, Kumawa, Semai V, Karama, East Ambalat, West Tungkal, Biliton,
South Barito, SE Ganal I, South Matindok, East Kangean CA already approved termination from the Minister of EMR.

B.
RESOURCES AND
RESERVES
(RESERVE REPLACEMENT
RATIO)
The decline of national oil and gas reserves continued to occur within 2006 to 2016. SKK Migas along with PSC Contractors
seek to contain the decline rate through the increase of various exploration programs.
INDONESIAS OIL AND GAS RESERVES

AS OF 1 JANUARY 2016
PRODUCED NOT YET PRODUCED

RESERVES TOTAL
PROVEN POTENTIAL PROVEN POTENTIAL
1. Oil (MMstb) 3,142.74 3,541.10 164.16 403.10 7,251.11
2. Gas (Bscf) 32,811.94 16.879.02 68,411.94 25,960.80 144,063.70
a. Associated 4,968.23 3,706.58 680.08 457.72 9,812.61
b. Non Associated 27,843.71 13,172.44 67,731.86 25,503.08 134,251.09
National oil and gas reserves are generally distributed all around the archipelago from Sumatra to Papua with the tendency
of bigger volume of reserves in the west area than the east area, in total as of 1 January 2016, the oil reserve (3P) is 7.251,11 Million
standard barrels ("MMstb") and the gas reserve (3P) is 144 Trillion standard cubic feet ("Tscf").
On the other hand, national hydrocarbon prospective resources are still considerably large, for a total of in place national
hydrocarbon recoverable resources of 3.1 Billion standard barrels ("Bstb"), meanwhile for gas 48 Tscf, where the three largest
resources are located in Java, Papua, and Sumatra area.

OIL AND GAS RESOURCES MAP
1 JANUARY 2016
1.1
152
1,923
5.3 23.8 2
2.3 11.3
181
0.7
121
101
637
3.2 1
0.3
OIL RECOVERABLE RESOURCES (MMstb)

TOTAL = 3,118
GAS RECOVERABLE RESOURCES (Tscf)
TOTAL = 48
In order to improve the status from Resources to Proven Resources, an acceleration of more intensive exploration program
is required. Ideally, one barrel of oil and gas equivalent produced should be replaced by one barrel of oil and gas equivalent
discovered. The rate of new reserve discovered to the reserve produced is called the reserves replacement ratio ("RRR").
Based on 48 approved proposals of plan of development ("POD"), put on production ("POP"), and/or plan of further
development ("POFD") and addition of other reserves from Banyu Urip Field-ExxonMobil Cepu Limited ("EMCL") at 49 Million
barrels of oil ("MMbo"), in 2016 earned the achievement of RRR 64% with the breakdown of oil RRR by 99% and gas by 39%.
OIL AND GAS RRR (BOE)
250%
217%
200%
150%
130%
PERSENTASE RRR
112%
99%
100%
74%
67% 60% 64%
34% 51%
50%
Oil and Gas RRR

0% RRR Target
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

OIL RRR
160%
139%
140%
120%
99%
100%
PERCENTAGE RRR
82%
80%
62% 63% 58%

60%
52%
47%
40% 32%
23%
20%
0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Oil RRR
RRR Target
GAS RRR
350%
310%
300%
250%
PERCENTAGE RRR
200%
180%
150%
130% 127%
100% 90%
69% 71%
50% 39%
35%
17%
0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Gas RRR
RRR Target

C.
PSC CONTRACTORS
COMMITMENT
EXPLORATION COMMITMENT
CONVENTIONAL OIL AND GAS

Until the end of 2016 there are 110 active conventional oil and gas exploration CAs consisting of 95 CAs that have
entered their 3rd contract year or more and are not under termination process, which can be measured to fulfill their
firm commitments. Of these 95 CAs, 42 CAs have met all their firm commitments and 53 CAs have not met their
firm commitments.
EXPLORATION COMMITMENT
IN THE EXPLORATION CA THROUGHOUT 2016 AND ITS OBSTACLES
CA are less than 3 years,

110 CAs active conventional oil and gas CA have fulfilled their Firm Commitment
Exploration 95 CAs 3 years CA have not fulfilled their Firm Commitment
53 CAs 42 CAs 15 CAs
12 Exploitation CAs
(Have not fulfilled their Firm Commitment)
28 CAs
35 CAs
16% 25 CAs 42 CAs 16%
23% 24%
Obstacles in Fulfilling the Obstacles in Execution of

16% Exploration Activities of 17% 30 CAs
Firm Commitment 25 CAs
53 CAs - December 2016 110 Oil and Gas Exploration
CA - December 2016
17% 16%
27 CAs 27 CAs
27% PSC Contractor Portfolio

26%
Subsurface & Data
42 CAs Internal PSC Contractor
45 CAs
Equipment Availability & Operation
*note : 1 CA can have more than 1 obstacle Regulation & Social

Every year, SKK Migas assessing PSC Contractors whose Exploration CAs have entered their 3rd contract year and
thereafter (excluding CAs under termination process), in which the assesment is based on the following criteria, including
minimum (basic/mandatory) and proven exploration (advance).
Based on the results of the assesment, on 18 May 2016 SKK Migas awarded to the following PSC Contractors who
experienced a change of status or performance improvement, as follows:
3 CAs received the Green Category
Randugunting CA-PHE Randugunting, Wain CA-PT Pandawa Prima Lestari, and Batu Gajah CA-
Ranhil Jambi Inc. Pte Ltd
7 CAs received the Blue Category
Ujung Kulon CA-M3nergy Gamma Sdn. Bhd., Mahakam Hilir CA-Cue Kalimantan Pte Ltd, Kuala Pambuang CA-
PT. Mentari Pambuang Internasional, Bohorok CA-Bukit Energy Bohorok Pte Ltd, East Sepinggan CA-
Eni East Sepinggan Ltd., Udan Mas CA-Krisenergy (Udan Emas) B.V, Bala-Balakang CA-Krisenergy (Tanjung Aru) B.V.
ASSESMENT ON THE PERFORMANCE OF EXPLORATION COMMITMENT

FOR EXPLORATION CA IN 2016
30
27
26
25
22
20
20 18 18
17 16
15
12 12
10
5
2 2
0
BLACK RED PINK BLUE GREEN GOLD
Assesment in July 2016 against 97 CAs

Assesment in Dec 2016 against 95 CAs
Remark:
only performed G&G study or did not perform any firm commitment
performed a small part of the firm commitment
performed major part of the firm commitment
fulfilled all firm commitment
Blue Category that has discovered hydrocarbon under technical discovery category
Blue Category that has discovered potential economical reserves

In addition to awards given to exploration PSC Contractor, exploitation PSC Contractor was awarded on 18 May 2016 based
on achievement of exploration performance in conventional oil and gas exploitation CA,
as follows:
Fast and effective exploration efforts to POD-1 (2013 - 2016): Lemang CA-PT Hexindo Gemilang Raya and Pandan CA-
PT Tropik Energi Pandan;
Sustainability of active exploration (2013- 2016) and minimal sleeping area, Madura Offshore CA-
Santos (Madura Offshore) Pty. Ltd. and Pangkah CA-Saka Energy (Indonesia-Pangkah) Ltd.
UNCONVENTIONAL OIL AND GAS

Until the end of 2016, there were 54 UOG exploration CAs consisting of 46 coal bed methane ("CBM") CAs and 6 UOG-
Shale Hydrocarbon CAs. Out of 46 CBM CAs, 2 CAs were under termination process, totalling 52 active UOG Exploration
CAs.
Out of these 52 CAs, 47 CBM CAs have entered their 3rd contract year or more and are not in the termination process,
hence the fulfillment of their firm commitment can be assessed. The fulfillment of firm commitment for the 47 CBM CAs
indicates that 8 CBM CAs have managed to fulfill all of their firm commitments and 39 CBM CAs have not yet fulfilled their
firm commitments.
UOG EXPLORATION CA STATUS IN 2016
5 83%
39
3rd contract year or more 47 CAs 3 years CA who have fulfilled their
CA (not under termination firm commitment
process)
CA who have not fulfilled
Below 3rd contract year their firm commitment
CA
17%
47 47 8
52 CAs
Active Non-Conventional Oil and Gas Exploration
Outstanding firm commitments in 38 UOG CAs

TOTAL
280 CAs G&G 45 Activities
Corehole 76 Activities
33 Exploratory 64 Activities
52 Prod. Test 47 Activities
New Prod. Test Well 9 Wells
Active conventional oil and
gas exploration CA Dewatering 7 Activities
Exploitation CA
Active UOG CA
CA under termination
(Conventional & UOG)
110 85

Every year, SKK Migas also conducted an assessment towards the PSC Contractor of Exploration UOG CAs who
have entered their 3rd year contract or more (not in the termination process CA), in which the assessment is based on
the achievement of firm commitments activities throughout 2016. Based on the results of the assessment, SKK Migas
categorized achievement of PSC Contractors firm commitments activities of exploration UOG CAs during 2016 as follows:
FIRM COMMITMENT OF UOG EXPLORATION CA STATUS

IN 2016
GOLD GREEN BLUE PINK RED BLACK
Basic Category Fulfillment of Firm Commitment, Financial, and EBA
Firm Commitments Firm Commitments Firm commitments Firm Commitments There is no realization of All CAs being in
realization 100% realization > 80% and realization 50% < x < realization 25% < x < Firm Commitments and the return process
(and there is a have conducted drilling 80% or just performed 50% or just performed have entered into a 3rd or inactive
realization of the of exploration wells G&G study or conduct G&G study and have year contract until 6th
work commitment), (including dewatering) drilling of exploration entered into a 3rd year year contract
have conducted and have entered into a wells but have not contract until 6th year
dewatering and 3rd year contract until 6th performed dewatering contract
data required for year contract and have entered into a
development 3rd year contract until 6th
year contract
GMB KUTAI GMB SANGATTA II GMB SANGATTA I GMB MUARA ENIM II GMB MELAK GMB PULANG PISAU
MENDUNG III
GMB OGAN GMB TANJUNG ENIM GMB RENGAT GMB KAPUAS I GMB BARITO TAPIN
KOMERING GMB WEST
GMB BARITO GMB SUBAN II GMB KAPUAS II SANGA SANGA
GMB OGAN
KOMERING II GMB MUARA ENIM I GMB KUTAI BARAT GMB AIR KOMERING
GMB KOTABU GMB MUARA ENIM III GMB KUTAI TIMUR GMB BONTANG
GMB MUARA ENIM GMB KAPUAS III GMB MELAK BENGALON
MENDUNG I
GMB SANGA SANGA GMB BELIDA GMB KUALA KAPUAS I
LEMATANG
GMB TANJUNG II GMB AIR BENAKAT III GMB MURALIM
GMB KUTAI II
GMB SIJUNJUNG GMB BARITO BANJAR I MNK CENTRAL
GMB SUBAN I BANGKANAI
GMB BARITO BANJAR II
GMB TANAH LAUT
GMB BANGKANAI I
GMB BANGKANAI II
GMB BANGKANAI III
GMB BANGKANAI IV
GMB KUALA KAPUAS II
GMB AIR BENAKAT I
GMB AIR BENAKAT II
GMB BELAWA
GMB SEKAYU II
MNK SUMBAGUT
MNK PALMERAH
MNK SELAT PANJANG
MNK SAKAKEMANG
MNK KISARAN

PERFORMANCE APPRAISAL OF EXPLORATION COMMITMENT IN
UOG EXPLORATION CA IN 2016
COMPARATIVE ASSESSMENT OF JULY VS DECEMBER 2016
30
25 24
20
20
15
10
10 8 8 8
6 6 7
5 3 3
2
0
BLACK RED PINK BLUE GREEN GOLD
Assessment in July 2016 towards 51 CAs

Assessment in Dec 2016 towards 54 CAs

EXPLOITATION COMMITMENT
In 2016, SKK Migas issued 3 POD-1 as follows:

1. POD-1 Badik and West Badik Field-Nunukan Contract Area have been approved by Minister of Energy and Mineral
Resources ("EMR") through letter No. 2713/12/MEM.M/2016 on 30 March 2016;
2. POD-1 Kinanti Field-Pasir CA have been evaluated by SKK Migas and the recommendation letter has been issued to the
Minister of EMR through letter No. SRT-0985/SKKO0000/2016/S1 on 30 December 2016;
3. POD-1 (Revision) Tangguh Train 1 and 2-Berau, Wiriagar and Muturi CA have been evaluated by SKK Migas and the
recommendation letter has been issued to the Minister of EMR through letter No. SRT-0984/SKKO0000/2016/S1 on
30 December 2016.
Nunukan CA-PHE Nunukan is the only exploration CA that received approval for the its POD-1 from the Minister of EMR.
With that approval, the number of exploitation CAs increased to 85 CAs. Until December 2016, SKK Migas issued approvals
for 48 PODs that have been delivered to PSC Contractors consisting of 1 POD-1, 7 PODs, 37 POFDs, and 3 POPs. The
estimation of investment and operating cost incurred by PSC Contractors, oil and gas production, as well as the state
revenue from those PODs, are described as follows:
ESTIMATED OPERATING COST, INVESTMENT, AND STATE REVENUE

FROM THE POD APPROVAL IN 2016
POD in 2016
Item Oil, MMbo Gas, Bscf Item MMUS$
2016 Cummulative 217.60 859.23 Investment 4,156.88

Production
Operation 4,614.79
ASR 224.04
State Revenue 11,274.08
From 2003 until 2016, SKK Migas has approved 495 POD/POFD/POPs. However from those 495 POD/POFD/POPs,
71 POD/POFD/POPs are not active due to the POD has been finished (off and no production), therefore it needs to be
revised, turned into POD, or cancelled due to technical and economic problems. So in total there are 424 active POD/POFD/
POPs with an estimated cumulative oil and gas production of 3,113.39 MMbo and 51,493.04 Bscf.

OIL AND GAS PRODUCTION BASED DISTRIBUTION POD/POFD/POP
ON POD/POFD/POP 2003-2016 2003-2016
9%
20%
25%
POD-1
Oil, MMbo POD
Gas, MMboe POFD
POP
33%
38%
75%
POD/POFD/POP APPROVAL AND PROFILE

2003-2016
60 600
50 500
40 400
30 300
POD
POD
20 200
10, 100
- -
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Active POD Inactive POD Cumulative POD

ADDITIONAL OIL PRODUCTION PROFILE BASED ON
POD/POFD/POP 2003-2016
800
700
600
500
MMBO
400
300
200
100
-
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Oil
ADDITIONAL GAS PRODUCTION PROFILE BASED ON

POD/POFD/POP 2003-2016
20.000
18.000
16.000
14.000
12.000
BSCF
10.000
8.000
6.000
4.000
2.000
-
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Gas

WORK PHASE UNDER THE POD/POFD/POP APPROVAL
2003-2016
EXPLORATION EXPLOITATION
Conceptual Design Eng.

Study (FEED)
Construction (EPCI) Production & Operation
POD I/POD/POFD Economic Limit

Effective Date (start FEED) start EPCI Onstream End PSC
O
PRE POD
I
FEED
II
EPCI
III
PRODUCTION
Oil Production, bopd
Gas Production, MMscfd
Gov. Cash Flow, MMUS$
IV
PSC Cum. Cash Flow, MMUS$
EXECUTION EXECUTION
SCOPE OF WORK (POD) DONE
158 POD 22 POD 63 POD 181 POD

D.
INVESTMENT OF
EXPLOITATION AND
EXPLORATION
PSC CONTRACTORS
INVESTMENT OF EXPLOITATION PSC CONTRACTOR
In 2016, investment in the upstream oil and gas sector reached US$11.02 billion, or 78% from the target of 2016 Revised
Work Program & Budget ("WP&B"), and decreased 25% compared to the realization in 2015, mainly influenced by crude
oil prices that below US$60/bbl level. The investment used to finance exploration activities amounted to US$0.6 billion (6%),
well development activities amounted to US$1.4 billion (12%), production activities amounted to US$8.1 billion (74%)
and administration activities amounted to US$0.9 billion (8%). It is identified that from its composition, the majority of the
investment in the upstream oil and gas sector is allocated for production and development activities amounted US$9.5 billion
or 86% of the total investment of upstream oil and gas in 2016.
REALIZATION TABLE OF UPSTREAM OIL AND GAS

INVESTMENT EXPLOITATION CA
25,000
20,000 18,987 19,235
10% 9%
16,541
14,772
9% 21%
15,000 22%
13,986
3%
5%
JUTA US$
21%
20%
22% 11,021
6%
10,000
12%
64%
64% 62%
69%
66%
74%
5,000 Administration
Production
Development
7% 6% 6% 6% 8% 8%
- Exploration
2011 2012 2013 2014 2015 2016* Total Expenditures
*) Data in 2016, temporary investment realization based on the financial monthly report ("FMR") December 2015 as of 6 February 2017
*) Source of Data: Consolidated Financial Statement of PSC Contractors (unaudited)

Continuity of industrial investment in the upstream oil and gas exploitation CAs became priority to maintain a production profile
and the portfolio of oil and gas reserves, as well as generate positive impact to the process of increasing national capacity
in domestic oil and gas supporting industry. Therefore, it needs commitment from all related parties to collectively maintain a
conducive investment climate.
INVESTMENT OF EXPLORATION PSC CONTRACTOR
Until the end of 2016, the cumulative investment in exploration CAs reached US$0.24 billion, or decreased 55% compared
to the realization in 2015. The low realization of PSC Contractors investment in the exploration stage, is mainly still caused by
the decline of world oil prices, and also due to operational constraints.
Other latest challenges dealt with the current prospect of oil and gas reserves in Indonesia which are mostly situated in the
eastern part of Indonesia and mainly in deepwater. This leads to be technically more difficult to find new oil and gas reserves
and requires a considerably bigger cost. Therefore, it is necessary to offer investors more attractive incentives so they will
be interested to invest in exploration activities, especially in the eastern part of Indonesia and in the area of deepwater. Good
infrastructure support is also required to help the acceleration of activities considering that the exploration locations are
situated in remote areas. SKK Migas continues to provide awareness to stakeholders about the importance of exploration
activities because, new oil and gas reserves will not be discovered without exploration.
REALIZATION OF UPSTREAM OIL AND GAS INVESTMENT

EXPLORATION CA
2,500
2,120
2,000
MILLION US$
1,500
1,391
1,356
Administration
89%
1,132 Exploration
1,000
Total Expenditures
87%
88% *) Temporary data of investment realization
89% 526
500 outlook of exploration PSC Contractor
237 2016 as of 6 February 2017
89%
83% *) Source of Data: Consolidated Financial
11%
12% 13% 11% 11% 17% Statement of PSC Contractors
-
2011 2012 2013 2014 2015 2016* (unaudited)

E.
OIL AND GAS
PRODUCTION AND
LIFTING ACTIVITIES
Indonesias current oil and gas production is still dominated by gas, and for the last couple of years have surpassed the
national crude oil production. This condition is predicted to continue in years ahead.
NATIONAL OIL AND GAS PRODUCTION PROFILE
Dominated by Oil Dominated by Gas

MBOEPD
OIL
Achievement in 2016, national oil and condensate production reached 831 Thousand barrels of oil per day ("Mbopd") and
increased 45.3 Mbopd compared to 2015 (785.8 Mbopd). Meanwhile national gas production at 7,938 million standard
cubic feet per day ("MMscfd"), decreased 140 MMscfd compared to 2015 (8,078) MMscfd. In 2016, total production of
Indonesias oil, condensate, and gas at 2,213 Thousand barrels of oil equivalent per day ("Mboepd"), decreased 15 Mboepd
compared to 2015 (2,228 Mboepd).
Realization of oil and gas lifting at 829.18 Mbopd or 99.8% of total oil and condensate production through 2,301 shipment
and pipe distribution. Meanwhile gas has been distributed at 6,606 MMscfd or 83.5 % of total crude oil production.

Gas has been distributed for domestic demand at 2,947 MMscfd and exported at 3,681 MMscfd.
Closing stock at the end of 2016 was at 8.56 Million barrel ("MMbbls") or higher 729 Thousand barrel ("Mbbls") compared
to the opening stock at 7.83 MMbbls in January 2016.
There were 708 production disruptions (including consumer and external factor) that results in opportunity loss of oil
production at 7,084 bopd, where most of it was caused by disruption in production facility at 91% or at 6,448 bopd.
NATIONAL OIL AND GAS PRODUCTION PROFILE
1,400
1,200
1,000
800
MBOEPD
600
400
200
Oil (Mbopd) Gas (Mboepd)
The national rate of production for natural gas contributes 59% of the national oil and gas production. Based on the long term
production forecast, it will continue to increase until 2020, which will reach 68% in 2022 and continue to increase until 85%
in 2050.

OIL AND GAS ACTUAL PRODUCTION
Until 31 December 2016, Indonesias oil and gas actual production has reached 2.21 Million barrels of oil equivalent per day
("MMboepd"). This achievement was measured from the evarege oil and condensate production at 831 Mbopd, while the gas
production at 8.08 MMscfd.
When the period 2010 to 2015 there was a decline rate in production, in 2016 happened to turn into an incline on the
production rate by 5.8 %. This is due to major contribution of EMCL that succeeded to operate 2 trains at the optimum rate.
In addition there is also oil/condensate production contribution from 3 new onstream fields which are: Bangka Field-
Chevron Rapak on 16 August 2016; Akatara Field-Hexindo on 17 November 2016; and Kerendan Field-Ophir Bangkanai
on 11 January 2016.
DECLINE / INCREASE RATE OF PRODUCTION 2008 - 2016
1,200
2.9%
977 0.4%
1,000 4.5%
949 945
902 4.7%
860 4.1%
824 4.3% 0.4% -5.8% 831
789 786
800
MBOPD
600
400
200
2008 2009 2010 2011 2012 2013 2014 2015 2016*
Project Project
1. The rupture of 1. CPI's unrecovered Onstream:
gas pipeline PT. 1. No return of CPI Onstream:
production level as a 1. EMCL 2
TGI to CPI, BOB production level as a result 1. EMCL-CPF
result of the rupture Train Full
and SPR dated of the rupture of the TGI online
of the TGI pipeline 2. South
29 Sept 2010 pipeline (Duri Field) 2. GG Field
(Duri Field) Sembakung
2. Kodeco (PHE 2. The delay in the decision PHE ONWJ,
2. Effects of delayed Field JOB
WMO), Hit of of new operator, Kodeco/ 3. Bukit Tua
decision of new Simenggaris
40th platform PHE WMO Field Petronas
operator, Kodeco / 3. Kerendan
dated 12 August 3. Fire of FSO Lentera Ketapang
PHE WMO Field Ophir
2010 Bangsa in CNOOC 4. Pematang
3. High decline in
4. Leaks of Hose and SBM Lantih Field
Tunu and Peciko
in Star Energi, Camar, MontD'Or Oil
Field - TEPI
Kangean and Pertamina 4. Damage to
EP-TAC PAN PSC production facilities
Contractors

OIL AND CONDENSATE PRODUCTION PERFORMANCE IN 2016
950,000
23/4/16: 28/4/16: 4/6/16: 27/8/16: 23/10/16: 20&22/11/16: 16/12/2016:
CPI: Power EMCL: total shutdown 2 EMCL: GTG trip TEPI: PPA TEPI: CNOOC: WIDP TEPI: PPA shutdown, CPA ESD-
Outage Train for Injection TEPI: Bekapai & shutdown HEOR Comp Tank Cleaning 0, OWTU Cleaning, and prod BRC
BP: TAR-7 system Tie-in sisinubi ESD & Pigging Problems restrained at Bontang
916,468
900,000
Jan: 819 Feb: 840 Jan: 847 Apr: 821 May: 841 June: 839 July: 831 Aug: 833 Sep: 833 Oct: 834 Nov: 825 Dec: 811
MBOPD MBOPD MBOPD MBOPD MBOPD MBOPD MBOPD MBOPD MBOPD MBOPD MBOPD MBOPD
869,169 841,476
833,174 837,073 827,963
850,000
829,306
824,074 811,764
800,000
BOPD
28/8/16:
TEPI: PPA ESD-1
real test
750,000
14/9/16:
TEPI: Prod BRC
restrained at
Bontang
28/12/16:
700,000 27/10/16: 29/11/16: 1/12/16: 10/12/16:
TEPI:
Prod BRC
TEPI: CNOOC: WIDP CNOOC: TEPI & VICO: restrained
7/1/16: 3/7/16:
Prod BRC Tank Cleaning WIDP Tank Prod BRC at Bontang,
EMCL: CPF EMCL: Power
restrained TEPI & VICO: Cleaning restrained Curtailment
shutdown, Outage CPF
at Bontang Prod BRC CPI: Stock at Bontang due to HI
EOE
650,000 shipping
16/1/16: 24/2/16: 10-11/6/16:
CPI: pigging
activities,
restrained
at Bontang
restrained at
some area
CPI: congeal
problem
PT Badak
CPI: stock
pump off
EMCL: EMCL: Power EMCL: Black Out fluctuations CPI: Congeal to avoid restrained
2015: EOE & EPF failure (GTG B pumping to Problem congeal to avoid
1/1/16:
786 MBOPD contract and D off) Dumai congeal
CPI: Power
expiration
600,000
1 Dec 15 1 Jan 16 1 Feb 16 1 Mar 16 1 Apr 16 1 May 16 1 Jun 16 1 Jul 16 1 Aug 16 1 Sep 16 1 Oct 16 1 Nov 16 1 Dec 16
State Budget/Revised State Budget WP&B

Production Revised WP&B
GAS PRODUCTION PERFORMANCE IN 2016
9,500
7/7/16: Copi Grissik; 9/8/16: TEPI: shutdown 23-24/9/16: BP Berau: 28/11/16: 12/12/16:
Prolong Test Dayung; for pigging activities shutdown 2 train due to CPGL & PCJL: Low demand buyer TEPI: PPA partial shutdown
KEI: Low demand buyer power tripped buyer CNOOC: BANA TAR Project
9,000
20/12/16:
15-16/11/16:
TEPI: SPU
TEPI: CPU ESD
shutdown
8,500
7,776
8,000
8,060 8,050 8,009
7,522 7,850
MMSCFD
7,500
7,576
8/5/16: Copi Grissik;
7,119 Suban shutdown; JOBPTJM;
Problem in DSLNG
7,000 6,772
6,882
6,840
6,492 6,470
6,500
6,256
6,000 8/1/16: JOB Tomori: 9/2/16: TEPI: 1/5/16: Copi Grissik; 13/9/16: 21/11/16: 3/12/16:
DSLNG Tripped maintenance Peciko Dayung total shutdown BP Berau: Train-1 trip CPGL: Low JOB PMTS:
demand buyer Maintenance
DSLNG
5,500
2015: 5/1/16: BP Berau: 2/2/16: TEPI: Leaks of 23/4/16: BP TAR-7, 27&28/8/16:
8,078 MMSCFD shutdown Train 2 flange 36 in PPA KEI: comp. shutdown TEPI & Mubadala: PPA shutdown and pigging
5,000
1 Dec 15 1 Jan 16 1 Feb 16 1 Mar 16 1 Apr 16 1 May 16 1 Jun 16 1 Jul 16 1 Aug 16 1 Sep 16 1 Oct 16 1 Nov 16 1 Dec 16
WP&B WP&B Gas Supply

Production Gas Supply
State Budget/Revised State Budget Revised WP&B

OIL LIFTING AND GAS DISTRIBUTION
Oil and gas lifting shall mean oil and/or gas production which has been sold/distributed. The average oil lifting realization
on the period of January to December 2016 was 829.18 Mbopd or 101.1% of the 2016 revised state budget targeted at
820 Mbopd. The actual gas distribution in the same period was 6,606 MMscfd of the 2016 revised state budget targeted
at 6,440 MMscfd, equivalent to 1,150 Mboepd.
OIL AND GAS LIFTING

OF JANUARY-DECEMBER 2016
2,500
2,135
2,095
2,054 2,071
2,015 2,013 2,023 2,015
2,000
1,962 1,970
1,900
1,856
1,500
MBOEPD
1,000
500
-
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Oil 711 772 923 794 824 878 802 857 820 819 833 913
Gas 1,145 1,244 1,211 1,218 1,076 1,217 1,160 1,196 1,203 1,151 1,182 1,158
Total 1,856 2,015 2,135 2,013 1,900 2,095 1,962 2,054 2,023 1,970 2,015 2,071
Average 1,970 1,970 1,970 1,970 1,970 1,970 1,970 1,970 1,970 1,970 1,970 1,970
*) Temporary outlook data of 2016 oil and gas lifting

as of 6 February 2017 (unaudited)

F.
DISTRIBUTION OF
OIL AND GAS REVENUE
REVENUE DISTRIBUTION IN UPSTREAM OIL AND GAS SECTOR
111 112
80 120
105 96
80
60
16% 17%
17% 48 40
16%
WAP ICP (US4/BBL)

40
BILLION US$
40
59% 58%
55% -
52% 14%
13%
40%
20 38%
(40)
25% 25% 28% 32% 46% 49%
- (80)
2011 2012 2013 2014 2015 2016
Cost Recoverable 15.22 15.54 15.92 16.27 13.73 11.99
Total GOI Take 35.92 35.44 31.16 26.60 12.05 9.42
Net Contractor Share 10.16 10.32 9.41 8.26 4.29 3.11
Gross Revenue 61.30 61.30 56.49 51.13 30.07 24.52
*) Temporary outlook data of upstream oil and gas revenue distribution in 2016
as of 6 February 2017 (unaudited)
The state revenue from upstream oil and gas sector on the period of 1 January to 31 December 2016 was US$9.42 billion
consisting of revenue from oil in the amount of US$5.3 billion and revenue from in the amount of US$4.1 billion, or equal to 86%
of the state revenue targeted in 2015 at US$10.9 billion. The amount of the state revenue is 38% of the total revenue generated
by upstream oil and gas industry. The state revenue decreased 21% compared to 2015, also followed by the decline in cost
recovery at 13%.
Indonesian Crude Price ("ICP") is relatively still low, caused the ratio of state revenue (Total GOI Take) to gross revenue below
50%, while the average ratio of PSC Contractor revenue (Net Contractor Take) to gross revenue is 13%. This indicated that the
government still received sufficient profit, but the return on investment ("ROI") from PSC partners decreased. Therefore, it needs
the support of the government in providing a more modest deregulation, as well as fiscal incentives selectively to maintain a
conducive and profitable investment climate in the upstream oil and gas industry.

G.
EFFICIENCY ON
COST RECOVERY
Operating cost control continues to be done in order to reach the most effective and efficient level, thereby contributing to the
optimal production/lifting and state revenue from the upstream oil and gas sector. In 2016, the actual investment disbursed
by upstream oil and gas industry was US$11.02 billion. Meanwhile, the cost recoverable to PSC Contractors in the same
period reached US$11.99 billion.
Expenditure budgeted and spent is aimed to maintain the national oil and gas production profile, thus it is used to support
production acitivities, conducting work over dan well service, as well as perform maintenance activities of production facilities.
The activities of development drilling and additional production facilities executed more selectively and efficiently, taking into
account the economics of the project, and also some development drilling activities have been delayed to the next fiscal
period.
Throughout 2016 some saving had been carried out to maintain the continuity of operations in the upstream oil and gas
in facing the challenges of low world oil prices. The steps taken for saving are through the strategy of joint procurement;
optimizing joint utilization of assets; which applied mainly to the PSC Contractors having adjacent areas; negotiating prices
with providers of goods/services; as well as reevaluating the economics of projects which were affected by the oil prices.

PROCUREMENT SAVING
Procurement saving of goods and services by PSC Contractors in 2016 reached US$1,614 million from the target of
US$55 million. The savings can exceed the target due to shared saving and price negotiation/contract value (rig, engineering,
procurement, construction, and installation ("EPCI"), ship, oil country tubular goods ("OCTG")-pipeline and other services).
SAVING FROM JOINT PROCUREMENT

IN 2016
1,800
1,600
1,400
1,200
MILLION US$
1,000
800
600
400
200
-
2009 2010 2011 2012 2013 2014 2015 Dec-2016
Target 20 50 80 125 165 150 100 55
Realization 33.20 70.90 99.70 147.96 109.70 89.11 351.50 1,613.52
SAVING FROM JOINT PROCUREMENT

IN 2016
1,750
US$1,585.22
1,500
1,250
MILLION US$
1,000
750
500
250
US$7.89 US$20.41
0
Joint Procurement Change of Procurement HPS/OE Value Comparison
Strategy with the Deal Value

OPTIMIZING ASSET UTILIZATION
Saving value of optimizing aset utilization in 2016 amounted to US$51 million from target US$35 million, consisting of activity
of materials transfer amounted US$12.9 million, the saving from the ex-used assets amounted US$13 million, and the saving
from cost sharing of facility sharing agreement ("FSA") amounted US$25 million.
OPTIMIZING ASSET UTILIZATION

IN 2016
4,000,000
3,000,000
2,000,000
1,000,000
0
transfer/lease saving (used item)
Throughout 2016, in addition to asset utilization through the transfer of material, there are 10 FSA approved by SKK Migas.
9 of them are FSA between PSC Contractors, while 1 FSA is an utilization agreement of PSC Contractor is facility by
a third party beyond the upstream oil and gas industry, which is the utilization agreement of Matak Exclusive Airport of
ConocoPhillips Indonesia Inc. Ltd. by PT. Travel Express Aviation Services (Xpressair).

02 EFFORTS TO INCREASE PRODUCTION AND RESERVES | SKK MIGAS ANNUAL REPORT 2016
CHAPTER II
EFFORTS TO
INCREASE
PRODUCTION
AND RESERVES
SKK MIGAS ANNUAL REPORT 2016 | EFFORTS TO INCREASE PRODUCTION AND RESERVES 03
A.
NEW
PROJECTS
The completion of the oil and gas production facilities project was expected to increase the national oil and gas production.
SKK Migas handled 70 ongoing upstream oil and gas projects throughout 2016. Among them there are 6 large scale
projects which are Banyu Urip Project, Jambaran Tiung Biru Project, Jangkrik-Jangkrik North East Project, Tangguh Train-3
Project, IDD Bangka-Gendalo-Gehem Project, and LNG Abadi Project.
A total of 8 upstream oil and gas development projects were onstream in 2016 and can generate additional installed capacity
of oil and gas production facility of approximately 193,700 barrels of oil per day ("bopd") and 481 Million standard cubic feet
per day ("MMscfd").
ONSTREAM OIL AND GAS DEVELOPMENT PROJECTS

2016
PRODUCTION CAPACITY
INSTALLED
NO PROJECT PSC Contractors ONSTREAM
OIL GAS
(BOPD) (MMSCFD)
1Q 2016
1 Banyu Urip, Train B ExxonMobil Cepu 185,000 -
(all trains)
Petronas Carigali
2 Bukit Tua, ORF - 70 1Q 2016
Ketapang 2 Ltd.
3 Donggi Gas Plant Pertamina EP 400 60 2Q 2016
4 Pondok Makmur Pertamina EP 4,000 42 2Q 2016
ConocoPhillip
5 Dayung Compression 2 - 160 3Q 2016
(Grissik) Ltd.
Chevron Indonesia
6 IDD Bangka 4,000 115 3Q 2016
Co. (Rapak)
Ophir Energy
7 Kerendan Gas Plant 300 25 3Q 2016
(Bangkanai) Ltd.
Star Energy (Kakap) 4Q 2016
8 KRA South 2 - 9
Ltd.
B.
EFFORT TO INCREASE
OIL AND GAS
PRODUCTION AND
RESERVES
Efforts to increase production and reserves continue to be carried out by SKK Migas and Production Sharing Contract
("PSC") Contractors. Since early 2016, exploration and exploitation activities had been carried out in order to meet the target
of production and new reserve discovery.
Details of our activities can be conveyed as follows:
EXPLORATION ACTIVITIES
In relation to the extensification efforts, SKK Migas continues to encourage PSC Contractors to increase oil and gas
production and reserves through exploration activities, both in exploration and exploitation contract areas ("CA"). The scope
of activities carried out at this exploration stage cover geophysiccal survey (two dimension ("2D") and three dimension ("3D")
seismic survey) and exploration drilling. Particularly in coal bed methane ("CBM") CAs, the exploration activities were added
with CBM drilling activities (exploration and corehole) and production test.
A. CONVENTIONAL OIL AND GAS

SURVEY
In 2016, PSC Contractors carried out 6 2D seismic surveys covering 3,295 km, 7 3D seismic surveys covering
6,905 km2, and also 13 non-seismic activities.
SEISMIC SURVEY ACTIVITIES IN

IN 2016
3
ACTIVITIES
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Onshore 0 0 2 0 0 0 0 0 1 0 1 4
Offshore 0 0 0 0 0 0 0 3 0 0 1 1
NON-SEISMIC SURVEY ACTIVITIES

IN 2016
3
ACTIVITIES
0
Onshore 0 0 1 0 2 1 0 3 0 0 0 2
Offshore 2 0 1 0 0 0 0 0 0 1 0 0
EXPLORATION WELL DRILLING
There were 43 exploration wells drilled in 2016. This comprised of 40 new wells and 3 reentry wells. Based on location, it is
comprised of 32 onshore and 11 offshore wells.
CONVENTIONAL EXPLORATION DRILLING

OIL AND GAS IN 2016
4
ACTIVITIES
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Onshore Conventional 1 1 2 0 1 0 1 3 0 0 1 1 11
Offshore Conventional 3 0 2 1 0 2 3 1 0 4 5 2 23
Onshore Unconventional 0 1 2 3 2 0 0 0 0 0 0 1 9
Total 4 2 6 4 3 2 4 4 0 4 6 4 43
CONSTRAINTS ON THE REALIZATION OF CONVENTIONAL OIL AND GAS

EXPLORATION DRILLING ACTIVITIES
8
15
Land Acquisition
Procurement Process
Internal PSC Contractors
B. UNCONVENTIONAL OIL AND GAS
In 2016, PSC Contractors drilled 9 new CBM wells, without any existing reentry wells activities.
UNCONVENTIONAL EXPLORATION DRILLING

IN 2016
3
ACTIVITIES
0
Onshore Unconventional 0 1 2 3 2 0 0 0 0 0 0 1 9
CONSTRAINTS ON THE REALIZATION OF UNCONVENTIONAL OIL AND GAS

EXPLORATION DRILLING
1
7
Land Acquisition
Procurement Process
EXPLOITATION ACTIVITIES
A. PRODUCTION WELL DRILLING/EXPLOITATION
As an effort to reduce the decline rate of production, SKK Migas encourages PSC Contractors to drill development wells (infill
wells) as well as to perform well maintenance (work over/well service).
In 2016, 227 exploitation wells were drilled out of 245 wells planned. An amount of 29 wells could not be drilled due to
issues related to: permits for 5 wells; procurement of rigs and services for 5 wells; and internal PSC contractors for 19 wells.
However, there were additional 11 wells due to the acceleration of the 2017 program. As for the production contribution
obtained from the development drilling in 2016 of 59,705 bopd and 182 MMscfd.
REALIZATION OF DEVELOPMENT DRILLING

IN 2016
50
40
30
WELLS
20
10
0
Conventional Onshore 31 23 21 18 17 8 6 11 9 14 8 10 51
Conventional Offshore 4 6 4 6 3 4 3 4 2 7 2 6 176
Total 35 29 25 24 20 12 9 15 11 21 10 16 227
DEVELOPMENT DRILLING CONSTRAINTS
IN 2016
5
5
Land Acquisition
Procurement of Rig/Services
19
B. WORK OVER AND WELL SERVICE
The work over plans according to 2016 Revised work program and budget ("WP&B") were 1,131 activities, which until the
end of the year were realized 1,012 activities with oil production contribution of 27,929 bopd and gas production contribution
of 78 MMscfd. The plan of well maintenance activities were 39,960 activities, which by the end of the year were realized
38,827 activities with oil production contribution of 56,147 bopd and gas production contribution of 422 MMscfd. In addition,
there were well closing activities planned for the 2016 Revised WP&B of 254 activities with year-end realization of
167 activities.
Causes of unachieved activities are due to queue scheduled of rig or equipment caused by operational constraints and
efficiency on use of rigs due to lower oil prices and also good wells performance thus no need for well maintenance activities.
WORKOVER REALIZATION ACTIVITY
120
100
80
ACTIVITIES
60
40
20
Onshore 64 77 74 74 72 74 76 72 60 71 64 79
Offshore 37 32 33 16 25 23 18 22 10 27 39 40
Total 101 109 107 90 97 97 94 94 70 98 103 119
WELL SERVICE REALIZATION ACTIVITY
5,000
4,000
3,000
ACTIVITIES
2,000
1,000
0
Onshore 2,161 1,836 2,099 3,890 2,522 1,585 1,523 4,584 2,022 2,853 2,139 1,960
Offshore 580 728 679 731 667 772 579 609 786 1,002 1,405 1,115
Total 2,741 2,564 2,778 4,621 3,189 2,357 2,102 5,193 2,808 3,855 3,544 3,075
C.
EXPLORATION
INVENTION
CONVENTIONAL OIL AND GAS
By the end of 2016 there are 14 exploration discoveries coming from 4 wells drilled in 2015 and tested in 2016, and 10 wells
drilled in 2016.
Cumulatively, the discovery of resources in December 2016 was 625 Million barrels of oil equivalent ("MMboe"). This resources
were included in the contingent resources category indicating the amount of the initial hydrocarbon volume, so that the need
for additional well and seismic data, and other data for the advanced stage study before it can be developed through the
determination of final exploration status ("PSE"), for subsequently submitted for plan of development ("POD").
CONTINGENT RESOURCES DISCOVERY IN 2016

POST DRILLED RESOURCES
Gas 341.86
MMBO
Oil
283.16
MMBOE
Since 2002, exploration drilling done comprised of wild cat and delineation in a total of 1.007 wells resulted in the discovery
of 602 wells, with the success ratio of exploration drilling ranging from 39%-82%. Success ratio in 2016 of 65% was
calculated from the wells drilled and completed in 2016 were 23 wells, of the total drilled in 2016 were 34 wells.
EXPLORATION DRILLING
2002 2016
100 100%
90%
82%
80 80%
69% 73%
71%
68% 68%
65% 70%
59%
57%
60 55% 55%
60%
52%
51%
50%
MILLION
50%
39%
40 40%
30%
20 20%
10%
0 0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Discovery 38 28 35 21 40 40 40 51 47 55 65 53 47 27 15
Dry 37 26 29 33 40 33 30 23 33 26 31 22 17 6 8
Total Wells 75 54 64 54 80 73 70 74 80 81 96 75 64 33 23
Success Ratio
RESOURCE DISCOVERY
2002 2016
3,000.00
2,202.53
2,048
2,000.00
1,452.67 1,208 1,210
MMBOE
1,048.82
780.53 956 625
1,000.00
468.48 431 428 407 572
239.30
0.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
From the above discoveries, it was recorded since 2010 that there were 86 PSEs with a total of 6,022 MMboe of resources.
EXPLORATION STATUS
DETERMINATION
2000 20
1500 15
MMBOE
1000 10
STRUCTURE
500 5
0 0
2010 2011 2012 2013 2014 2015 2016
Resources 1,758 31 248.34 577.65 1,549.44 1,240.99 616.91
PSE 13 10 14 17 10 11 11
UNCONVENTIONAL OIL AND GAS
As a manifestation of CBM or unconventional oil and gas ("UOG") CA PSCs, since the first exploration CBM well in 2009 until
the end of 2016 had been drilled a number of 130 CBM exploration wells. Drilling was distributed in 4 production basins in
Indonesia, namely South Sumatra, Central Sumatra, Kutai, and Barito Basin with core hole, exploratory, and production test-
dewatering activities.
The CBM exploration drilling activities had provided an overview of CBM's potential of coal exploration targets in each basin
as shown below:
TARGET RANGE GAS

THICKNESS DEPTH
NO BASIN EXPLORATION CONTENT
(M) (M)
FORMATION (SCF/TON)
1 South Sumatra Muara Enim 0.3 - 23 350 - 700 29 - 150
2 Kutai Balikpapan 0.3 - 8.3 300 - 1,300 150 - 350
3 Barito Tanjung 0.5 - 15 400 - 650 150 - 300
Warukin 3.2 - 24 450 - 700 60 - 150
+
4 Central Sumatra Sawah Lunto 2 - 6.45 750 - 820 - 220
Furthermore, as a proofing effort, since 2010 the pilot well activities (production test and dewatering) to prove the flow rate of
CBM in some CBM CA PSCs, had provided an overview as a reference to field development planning.
Not only CBM, 2016 is marked by the drilling of the first exploration well of CBM tight reservoir (shale hydrocarbon),
namely the Meulucut-1 well in CBM Sumbagut CA which is currently being done by Pertamina Hulu Energi CBM Sumbagut.
The target of this drilling was to get an idea of the initial potential of the shale tight reservoir in the Baong Formation of
North Sumatra Basin.
ILLUSTRATION
CBM AND UOG ACTIVITY
SULU SEA
SOUTH CHINA SEA
ACEH
MEULUCUT-1
SHALE
MEDAN
CELEBES SEA
BERASTAGI
MALAYSIA KUTAI
CENTRAL SUMATRA
PEKAN BARU
PONTIANAK MAKASSAR STRAIT

SU
BUKITTINGGI
KALIMANTAN
M
AT
MINANGKABAU
AR
PADANG JAMBI
PALANGKARAYA
BARITO
SUMATRA SELATAN BANJARMASIN
BENGKULU
PALEMBANG
INDIAN OCEAN JAVA SEA
BANDAR LAMPUNG
SUNDA STRAIT
UOG RESOURCES DATA
BASED ON JOINT STUDY AND CBM DRILLING
DEC 2016
NO CONTRACTOR CBM CONTRACT AREA
GIP (MOD) (TCF)
1 PT. PERTAMINA HULU ENERGI METANA SUMATERA 3 CBM Air Benakat I 0.2377
2 PT. PERTAMINA HULU ENERGI METANA SUMATERA 6 CBM Air Benakat II 0.2951
3 PT. PERTAMINA HULU ENERGI METANA SUMATERA 7 CBM Air Benakat III 0.5128
4 PT. ANUGRAH PERSADA ENERGI CBM Air Komering 1.18
5 PT. BANGKANAI CBM PERSADA CBM Bangkanai I 2.53
6 PT. BORNEO METANA ENERGI CBM Bangkanai II 3.02
7 PT. BANGKANAI ENERGI RESOURCES CBM Bangkanai III 0.73
8 PT. BANGKANAI JAYA PERKASA CBM Bangkanai IV 1.4
9 PT. Transasia Energy Resources (BARITO CBM) LTD CBM Barito 1.1
10 PT. BELAWA ENERGI UTAMA CBM Belawa 2.34
11 PT. ANDALAS METANA ENERGI CBM Belida 1.8
12 DART ENERGY (BONTANG BENGALON) PTE. LTD CBM Bontang Bengalon 1.9
13 PT. TRANSASIA CBM CBM Kapuas I 1.48
14 PT. KAPUAS CBM INONESIA CBM Kapuas II 0.73
15 PT. GAS METHAN UTAMA CBM Kapuas III 0.7
16 PT. SATUI BASIN GAS CBM Kotabu 0.628
17 PT. Bina Mandiri Energi CBM Kuala Kapuas I 2.7
18 PT. BINA MANDIRI ENERGI CBM Kuala Kapuas II 0.9
19 NEWTON ENERGY CAPITAL LTD CBM Kutai 2.69
20 PT. GAS METHAN ABADI CBM Kutai Barat 1.13
21 EPHINDO KUTAI NORTH INC CBM Kutai II 3.28
22 SENYIUR CBM INC CBM Kutai Timur 0.21
23 PT. MEDCO CBM LEMATANG CBM Lematang 1.67
24 EPHINDO MEGA METHANA INC CBM Melak Mendung I 2.78
25 PT. TRISULA CBM ENERGI 0.0975

CBM Muara Enim
26 PT. PHE METANA SUMATERA 1 CBM Muara Enim I 3.95
27 .INDO CBM SUMBAGSEL 2 PTE. LTD CBM Muara Enim II 1.4
28 PT. PHE METANA SUMATERA 4 CBM Muara Enim III 5.2
29 DART ENERGY (MURALIM) PTE. LTD CBM Muralim 1.98
30 PT. OGAN INTERIOR GAS CBM Ogan Komering 0.554
31 PT. EAST OGAN METHAN CBM Ogan Komering III 0.046
32 INDON CBM LTD CBM Rengat 1.8
33 VIRGINIA INDONESIA CO. CBM LTD.PT. BELAWA ENERGI UTAMA CBM Sanga-Sanga 7.164
34 SANGATTA WEST CBM INC. CBM Sangatta I 2.4
35 PT. VISI MULTI ARTHA CBM Sangatta II 12.1
36 EPHINDO SEKAYU 2 INC CBM Sekayu II 2.2
37 PT. INTI GAS ENERGI CBM Sijunjung 1.45
38 PT. PERTAMINA HULU ENERGI METANA SUBAN I CBM Suban I 0.162
39 PT. PERTAMINA HULU ENERGI METANA SUBAN II CBM Suban II 0.1851
40 PT. ASAM-ASAM METHAN GAS CBM Tanah Laut 3.8
41 DART ENERGY (TANJUNG ENIM) PTE. LTD CBM Tanjung Enim 1.96
42 PT. PHE METHAN TANJUNG II CBM Tanjung II 0.4
43 PT. SANGA-SANGA ENERGI PRIMA CBM West Sanga Sanga I 1.5
Total CBM RESOURCES 84.2922
UOG WET DRY

OIL
NO CONTRACTOR CONTRACT GAS GAS GIP (TCF)
(MMBO)
AREA (TCF) (TCF)
1 PACIFIC OIL & GAS (UOG KISARAN) Ltd UOG Kisaran 289.33 15.46 0.46 15.92
2 BUKIT ENERGY RESOURCES PALMERAH DEEP Pte. Ltd UOG Palmerah 1,360 14.4 14.4
3 BUKIT ENERGY RESOURCES SAKAKEMANG DEEP Pte. Ltd UOG Sakakemang 2,400 28 28
4 PETROSELAT NC Ltd UOG Selat panjang 0 8 8
5 PT. PHE MNK SUMBAGUT UOG Sumbagut 289.41 3.55 1.86 5.41
6 PT. ADACO ENERGy UOG Central Bangkanai 0 4.94 16.69 21.63
TOTAL UOG RESOURCES 93.36
D.
SHARING
KNOWLEDGE
FORUMS
The acceleration of upstream oil and gas business development is not merely about technology. The preparation of qualified
human resources is also a major concern of SKK Migas management. The commitment to give knowledge of the latest
technology in the upstream oil and gas sector become the biggest challenge. One of this workshop objectives was to
improve the understanding and knowledge of upstream oil and gas technology of oil and gas for SKK Migas workers.
OIL AND GAS TECHNOLOGY

UPDATE WORKSHOP
Periodically, SKK Migas organized this program six times in 2016 with different speaker to present the company's latest
technology related to upstream oil and gas industry. By understanding the technology, the workers would be able to conduct
an accurate evaluation when the PSC Contractor submitted WP&B and would strengthen the role of SKK Migas in improving
the performance of upstream oil and gas industry. Not only with the technology providers, science updates also came
from various cooperation with upstream oil and gas industries of other countries. In early March, SKK Migas held its first
technology workshop by inviting General Electric to present the company's latest technology.

Oil and Gas Technology Update Workshop II, held on
June 28, 2016, presented Schlumberger to elaborate and
share on the latest oil and gas technology. This workshop
discussed several themes, including how to optimize
production and assets; As well as production services and
the utilization of analytic data. The success of the oil and
gas company lies in its efforts in the data management
usage consisting of data processing, human resource, and
technology.
Oil and Gas Technology Workshop III episode was held

together with Halliburton on 26 July 2016, with sharing of old
well, deep water, and onshore drilling technology. The drilling
technology of old well described on "Reservoir Surveillance
Whelibore Integrity Evaluation to Drive Increased Production"
by introducing several technologies as follows: First, CAST
tm Tool - Ultrasonic Evaluation; Second, Multifinger Califer
("MFC") - High Resolution; Third, Magnetic Thickness Tool;
Fourth, Xaminer tm Electro Magnetic Corrosion Tool.
Halliburton also introduced pulse neutron oxygen activation

technology and functioning as a monitoring reservoir and
also multigated decay thermal technology and acoustic
conformance examiner technology.
At the fourth Oil and Gas Technology Update

Workshop, Weatherford shared technology and experience
sharing in offshore deepwater reservoir activities. At the
workshop held 24 August 2016, Weatherford proposed a
well integrated solution in accordance with American Petroleum Institute ("API") Spec Q2, the SOP for quality management
system. Well Integrated was how to implement drilling activities in rigs especially right deepwater since well planning, drilling
model, construction, until production stage.
With risks to be faced in the field, Weatherford delivered managed pressure drilling as the new drilling convention. They also
introduced a system technology of well-analysis, intelligent daily operations and a life-of-well information software that allows
clients to monitor activities in wells and pipelines and monitor the wells status online and realtime.
Oil and Gas Technology Update Workshop V was facilitated by Technip Indonesia on 27 September 2016. Technip had
two segments of product and service namely subsea and offshore-onshore. One of the favorites was the flexible pipe where
the pipes were flexible because they were composed of several layers of pipe connections and provided several advantages
including a more concise installation process, low risk because it could be connected first on land. This pipe flexibility also
made the pipeline route shorter, thus reducing capital expenditure ("Capex") and operating expenditure ("Opex") as well as
minimizing risk and saving time because it did not require much pipeline material.
In addition to pipes, Technip described its experience in EOR, Petroleum Remediation Products ("PRP"), as well as upstream
offshore reservoir activities with high carbon dioxide ("CO2") content. In CO2 removal system owned by Technip, there is a
technology called flare system design with pressurized flare that serves to prevent CO2 freezing after removal or blowdown
and Technip has been used in Libra Field, Brazil.
In the sixth episode, the Oil and Gas Technology Update Workshop was held with the theme "LNG Day" on 26
October 2016. Several participants were invited to attend the event including representatives from universities,
PSC Contractors, Director General of Oil and Gas, as well as all management and SKK Migas workers to discuss
technological updates in the Liquefied Natural Gas ("LNG") business. Several companies were invited as speakers,
including BP Tangguh, Chiyoda, Technip, GTT, United Tractor Pandu Engineering, GE Turbomachinery, BASF, Air Products
Chemical Inc., and Petrotekno.
One of the speakers, BP Tangguh, presented various technologies in Tangguh LNG such as inherently safe design gas
production facility, dual flash energy efficient gas treating, APCI propane precool MR refrigerator, and refrigerant compressor
system technologies. Tangguh LNG was said to be very unique due to the integrated LNG facilities between upstream
production facilities with processing facilities so as to be able to streamline production costs.
At a time when oil prices are still low, preparatory measures must begin. Study more deeply, seek innovation, and strengthen
themselves so that can be more competitive when competing again. When oil and gas prices increase and reach economic
prices it will be better prepared because SKK Migas, government, and PSC Contractors have prepared themselves already.
SEMINAR THE BUILDING OF FLOATING
PRODUCTION STORAGE AND OFFLOADING/FPSO
10 MAY 2016
SKK Migas passionately supports the development of the marine sector. Because, at this moment SKK Migas manages
620 operational vessels. The amount is more than vessels operated by the Navy and other ministries. This was revealed
by Chairman of SKK Migas, Amien Sunaryadi when opening the seminar "The Building of Floating Production Storage and
Offloading/FPSO" organized by Bremar Scifftechnik and supported by SKK Migas on Plaza City 9th floor, Jakarta,
10 May 2016.
SKK Migas now operates 80 fleet vessels, 24 vessel facilities, and vessel units owned by the state with an annual operating
fund of US$820 million. It is not fair if SKK Migas does not participate in promoting the shipyard sector of Indonesian
archipelago. Currently in Indonesia has established a number of world-class shipyards. Russia and Norway are also ordering
ships from Indonesia, so PSC Contractors do not need to order ships from abroad and from now on have to make ships in
the domestic.
Director Bremar Schifftechnik, Henny Poerwanti hoped that the seminar would be a way to share knowledge about FPSO. All
this time there is still a strong assumption regarding ship orientation which is always imported. The event was expected to be
a trigger and mover of the nation independence and confidence to create their own quality vessels.
FPSO is a portable offshore drilling and oil storage building (mobile). For the process of oil and gas products, FPSO can
be a ship of crude oil, water, and gas separator facilities. FPSO can be converted from oil tankers or can be ships built
specifically for such applications. According to him, the making of FPSO was heavily influenced by budget, Capex, Opex,
cost estimation and payback period, work schedule, development deadline, and settlement to location of workmanship.
2016 AUDIT COORDINATION MEETING
14 APRIL 2016
SKK Migas always ensures governance transparency of upstream oil and gas business activities. This is expected to provide
confidence for all stakeholders that upstream oil and gas management meets the principles of good governance and optimal
operating cost control. In order to realize both of the above, SKK Migas conducted a 2016 Coordination Meeting with related
state institutions, namely Supreme Audit Board ("BPK"), Financial and Development Supervisory Agency ("BPKP"), Oil and
Gas Tax Office ("KPP Migas") Directorate General of Taxes ("DJP") of the Ministry of Finance, and representatives Contractor
of Production Sharing Contract ("PSC") Contractors. Audit Rakor 2016 which took the theme "Maintaining Accountability for
Production Sharing Contract Implementation" was held on 14 April 2016.
The examination was not merely an evaluation of past records, but was an input to future improvements. Therefore, this
coordination was expected to result in recommendations of audit results that were not only useful in the short term, but
also long term. The goal was to determine a better direction, namely the increase of exploration and exploitation activities.
Such coordination was also intended as an effort to maintain accountability. According to him, this accountability was very
important for upstream oil and gas industries in order to safeguard the rights and obligations, as well as state assets.
The Taxpayer ("TP") Criteria of the PSC Contractor audited by the audit functional DJP were as follows:
NO TAXPAYER NAME / WP STATUS
1 PSC Contractor Taxpayer (operator/partner) Annual Tax Return (SPT) is overpaid
2 PSC Contractor Taxpayer (operator/partner) Receive a Participating Interest (PI) transfer
3 PSC Contractor Taxpayer (operator/partner) Apply treaty rate on branch profit tax ("BPT")
4 PSC Contractor Taxpayer (operator/partner) The contract term will be completed
5 PSC Contractor Taxpayer (operator/partner) Set in the audit schedule at the National Annual Meeting of
SKK Migas, DJP
Currently BPKP is auditing 13 PSC Contractors and at least takes more than three years. Some reasons that audit findings have
not yet been followed up that not finished yet and some of them are still being followed up or due to already follow-up but have
not been updated between BPKP and PSC Contractors.
APPRECIATION FOR 14 CONTRACTORS OF PSC EXPLORATION

19 MAY 2016
SKK Migas recur present awards to PSC Contractors again. This time, the awards were given to 14 PSC Contractors who
were rated as high performers for the last 3 years. The award was given by Vice Chairman of SKK Migas, M.I Zikrullah,
accompanied by the Head of Plan of Development Commitment Realization Monitoring Division, Nizar Mujahidin at
SKK Migas Office, 9th floor City Plaza Building, on 19 May 2016.
From the observation of SKK Migas' team, there were 14 PSC Contractors who choose to continue their exploration
commitments and maintain financial commitments to conduct exploration. Assessment methods were judged on the basis
of their exact commitments. Then when it met all the competencies, carried out advance category assessment. To see if
the PSC Contractor after their commitments succeeded to find exploration drilling reserves, technical reserves or already
commercial discovery.
Awarding to 14 PSC Contractors, consisting of three categories, Green Category, exploration effort to POD 2013-2016
that was fast, effective and active sustainability 2013-2016, and minimum sleeping area; The Blue Category, indicated
that the contractor had fulfilled firm commitments, financial commitments and other commitments; Category Exploration
Efforts Toward Commercialization of the Contract Area, consisting of two groups "A" and "B". Group A was an
exploration effort to POD 2013-2016 that is fast and effective, while Group B, active sustainability of exploration 2013-2016
and minimum sleeping area.
LIST OF 14 PSC CONTRACTORS THAT RECEIVED AWARDS
NO CATEGORY CONTRACTOR NAME
1 Green (Technical Discovery) PHE Randugunting

PT Pandawa Proma Lestari
Ranhill Jambi Inc. Pte. Ltd.
2 Blue M3nergy Gamma Sdn. Bhd.

Cue Kalimantan Pte. Ltd.
PT Mentari Pambuan Internasional
Bukit Energy Bohorok Pte. Ltd.
CN East Seoinggan Limited
Krisenergy (Udan Emas)
Krisenergy (Tanjung Aru)
3 Exploration Efforts towards Regional
Grup A: Exploration efforts towards POD PT Hexindo Gemilang Jaya

2013-2016 were fast and effective Tropik Energi Pandan
Grup B: Active exploration sustainability Santos (Madura Offshore) Pte. Ltd.

2013-2016 and minimum sleeping area Saka Energy
SKK MIGAS HELD MEDIA GATHERING

18-19 JULY 2016
News in the media sometimes does not match the reality that was in the field. Therefore, SKK Migas provided an opportunity
for mass media to visit the location of contract areas directly through Media Gathering event which took place on
18-19 July 2016. The event was attended by no less than 70 crew of national and regional mass media.
One of the series of Media Gathering event was a visit to Pertamina EP field in Subang, West Java and saw directly oil and
gas industry in the field. Through such activities it was expected that the media crew can be more empathetic with the
business processes of an industry as well as know the actual conditions in the field. In addition to visiting Pertamina EP field
in Subang, participants were invited to visit Rumah Inspirasi which was initiated as one of Pertamina EP's Corporate Social
Responsibility ("CSR") activities.
AWARD TO EXPLOITATION PSC CONTRACTORS FOR SUPPLY CHAIN MANAGEMENT PERFORMANCE IN 2015
3 AUGUST 2016
SKK Migas appreciated several Exploitation PSC Contractors through "Award to Exploitation PSC Contractors of Supply
Chain Management Performance 2015" on 3 August 2016 at Serbaguna Room of SKK Migas, City Plaza Building, 9th Floor,
Jakarta.
PHE ONWJ was selected as the recipient of the Group 1 award for Best Supply Chain Management 2015. This award is the
fifth award achieved by PHE ONWJ in succession since the first award of KPI achievement in 2011. Vice Chairman of
SKK Migas, M.I. Zikrullah presented the award and also awarded the certificates of appreciation to the three PSC Contractors
who had been crowned as the Best Performance Supply Chain Management.
Award Assessment to PSC Contractors was based on several elements of assessment, not only on the procurement aspect
but also on the capacity and asset management and Customs. Award categories still adopt similar awards last year, namely
Small Procurement Category; Medium Procurement; and Large Procurement. Another thing was about the Centralized
Integrated Vendor Database ("CIVD") or an integrated vendor procurement system in the upstream oil and gas industry
that would be enforced in early January 2017. CIVD will accommodate database vendors to facilitate the PSC in selecting
vendors in accordance with its operations region to bring fair competition between vendors.
A lot of diversity energy, such as oil, gas, coal to biomass, which was the basic material for petrochemicals. Several
constraints such as fiscal climate and regulation that were less conducive to investment causing market of domestic
petrochemical products still not guaranteed. In addition to other factors was the maturity level of Indonesia's oil and gas
reserves that had mature so that the value of petrochemical products produced was not in the top level.
In fact, in 2015 Indonesia imported petrochemical products to meet 40%-60% of the demand with a total value of
US$1.2 billion. In addition, Indonesia also imported 55%-65% of the demand for downstream materials worth
US$2.5 billion. This was a pity considering Indonesia was actually able to produce these products themselves.
The drop of world oil prices became a big opportunity for the petrochemical market because of the low cost due
to recycled material from other materials, when demand was on the rise.
THE 8TH INDONESIA HR SUMMIT 2016
5-6 OCTOBER 2016
The annual event entitled INDONESIA HR SUMMIT, was held in Bandung on 5-6 October 2016. This event was the official
annual forum for leaders and human resource practitioners as a contribution from the Indonesian human resources ("HR")
community of upstream oil and gas to Indonesian HR managers. The event was attended by over 400 participants from
78 companies of various industries in Indonesia
Today the whole industry is in the midst of a challenging situation. This condition puts the national HR management in a
"New Normal" situation, that is, a state of business standard that is different or changed, replacing the applicable standards
as the previous reference. Therefore, it takes creative and innovative steps related to HR management so that every industry
practitioner can adapt to the change.
As host of the organizer, SKK Migas and PT Pertamina EP, Saka Energy Pangkah Ltd, Human Resource Management
Association ("PMSM") and Multi Taruna Sejati ("MTS"), raised the same theme with Working Meeting theme of the Indonesian
HR community of upstream oil and gas SKK Migas-PSC Contractors 2016, namely Creative HR Interventions in "New
Normal" Business Situation. This event invited speakers from several agencies and companies that brought best practice
sharing and lesson learned related to organizational transformation and leadership from various industry sectors in Indonesia.
As part of a series INDONESIA HR SUMMIT 2016 events, previously held Working Meeting of the Indonesian HR
community of upstream oil and gas SKK Migas-PSC Contractors 2016, on 4 October 2016. Working meeting attended by
representatives of institutions and HR practitioners from 47 PSC Contractors of Exploration and Production was conducted
to discuss the development of human resource management in upstream oil and gas and its development strategy in the
future. Working meeting also to formulate a number of work programs and action plans in the context of Indonesian HR
development.
MAHAKAM CA LICENSING / CERTIFICATION WORKSHOP
13-14 OCTOBER 2016
Total E&P Indonesie ("TEPI") contract in the management of the Mahakam block in East Kalimantan is about to expire.
After the PSC signing between SKK Migas and Pertamina Hulu Mahakam ("PHM") on 29 December 2015, then officially
PHM will be the operator of Mahakam CA, replacing TEPI. In that framework, SKK Migas held a Workshop on Licensing /
Certification in management transfer preparation of the Mahakam Contract Area, Bandung, on 13-14 October 2016. This
activity was attended by several ministries and institutions related to the licensing transfer of CA, among them were the
Ministry of EMR, Ministry of Environment and Forestry ("MoEF"), Ministry of Trade, Ministry of Communication and Information
Technology ("MCIT"), Ministry of Land and Spatial Planning, Ministry of Transportation, Ministry of Finance, Ministry of Public
Works, Ministry of Manpower, Investment Coordinating Board ("BKPM"), Indonesian National Police ("Polri"), and the Nuclear
Power Supervisory Agency.
As one of the largest gas field in Indonesia, gas production from Mahakam CA reached 1,598.2 MMscfd while oil production
was 53,533 bopd. In order for Mahakam's production contribution to be undisturbed, the government expected non-
technical constraints in management transfers could be overcome, including licensing constraints. Mahakam CA had 71
types of licenses or more than 5,900 documents issued by 13 relevant ministries and agencies. Therefore, an umbrella
policy was needed to ensure certainty in the transitioning process of all existing licenses and certificates. As a speaker in this
workshop, Head of Formalities Working Group of SKK Migas, Didik S Setyadi delivered the material which took the theme
"Analysis On Licensing of Upstream Oil and Gas Business Activities Related to Transfer Management".
BKPM as one of the government's media with investors, has started one-stop integrated permitting system ("PTSP") since
it was inaugurated by President Joko Widodo last January 2015. This system facilitates investors in the permit arrangement
involving several institutions. Based on the strategy, BKPM was proposed to supervise several Licensing Unit which divided
all licenses into three clusters, namely Spatial Planning; Environment, Safety and Security; And the Use of Resources and
Other Infrastructure. The three groups will later take care of direct licensing to related institutions at the central and regional
levels.
In accordance with the substance, the permissions were combined in accordance with each clusters. One cluster was just
one permit and coordinated through PTSP. Furthermore, the timing and cost of licensing process will also be determined
by BKPM, as the manager of PTSP. In managing the licensing later, Mahakam PSC Contractor, namely PHM, only need to
communicate with SKK Migas that will coordinate with BKPM until the issuance of license.
SECURITY SUMMIT 2016
16-18 NOVEMBER 2016
Efforts to achieve the production target is not easy because in fact, there are still various kinds of non-technical problems that
become obstacles, one of them is the security sector. Security becomes one of the factors that influence the achievement of
upstream oil and gas production. Synergy between local governments, the Indonesian National Police ("Polri"), the Indonesian
Armed Forces ("TNI"), the media and the public are required to create security in the implementation of upstream oil and gas
activities.
SKK Migas continues to commit to seek coordination with all security stakeholders. For that purpose, Security Summit 2016
was held which took the theme "Optimizing Role and Synergy of Stakeholders in Security National Vital Object to Realize
Sustainability of Upstream Oil and Gas Operation and Other Industries".
Security Summit 2016 was divided into several sessions, including plenary session, breakout session, workshop, and
exhibition. This activity also presented several speakers from various institutions such as Directorate General of Oil and Gas,
Directorate General of Sea Transportation, TNI, PSC Contractors, and the media.
Based on data from SKK Migas, up to October 2016 recorded 893 cases of security disturbances that include equipment
theft, oil theft, road closures, cessation of operations, demonstrations, material destruction, and others. This number dropped
significantly compared to the 2015 period of 1,720 cases. Despite the decline, the number of structured and conventional
security disturbances at the local and national levels had resulted in delays in some core activities in upstream oil and gas.
For example, surveys, drilling, new field development, or even pipe production were stolen by irresponsible people.
Several efforts by SKK Migas and PSC Contractors to anticipate the security disturbances that still occured were among
others the implementation of security management system, cooperation with the Polri and TNI, cooperation with the media,
security technology applications and cooperation with surrounding communities. All these efforts, will be maximized by the
communication and coordination between all related parties. With the improvement of national security, especially in oil and
gas operation areas, it was expected that the investment climate in the country will increase.
AWARDS
Sustainability Reporting Awards
SKK Migas was awarded the Sustainability Reporting Awards

("SRA") after receiving the same award in 2014. SKK Migas
prepared its sustainability report based on the latest standard of
Global Reporting Initiative ("GRI") version 4.
PNBP AWARDS 2016
SKK Migas received Non-Tax State Revenue ("PNBP") Awards 2016

for the PNBP Management Institution Partner and the Obligatory to
pay of PNBP category on 6 December 2016. The award was given
by Vice Minister of Finance Mardiasmo to Head of SKK Migas as a
form of appreciation for the contribution of Ministries and Institutions
in optimizing State revenue. The award fo the Best Ministry/
Institutions in managing PNBP was based on several criteria, namely
the completeness of basic legal collection, the BPK opinion on the
K/L Financial Statements over the last 3 years, the presence or
absence of BPK findings in the management of PNBP, the level of
compliance of report submission and delivery PNBP plan data and
deviation between target and realized PNBP.
THE 8TH INDONESIA PRINT MEDIA AWARDS ("IPMA")
Newspaper Publishers Association ("SPS") once again held

the awards ceremony of The 8th Indonesia Print Media Awards
("IPMA") 2017 in Jakarta on 3 February 2017 as a series of National
Press Day 2017. A total of 792 cover of newspaper, magazines
including inhouse magazine ("InMA"), tabloids, and rubric of young
people from all over Indonesia participated in this event. For InMA
category, the cover of BUMI magazine (Bulletin Migas), 44th edition
of December 2016 issued by SKK Migas won Silver Winner award.
The award was given by the press leader as well as Chairman of
Fajar Media Group HM Alwi Hamu, and received by Head of Public
Relations of SKK Migas, Taslim Z. Yunus.
REPRESENTATIVE ACTIVITIES
Focus Group Discussion

AT Bank Indonesia
Head of SKK Migas Representative Office of Kalimantan and

Sulawesi, Nasvar Nazar gave an explanation on Upstream
Oil and Gas Activities and Current Oil and Gas Condition in
Focus Group Discussion ("FGD") Bank Indonesia activity at
Hotel Jatra Balikpapan, 28 January 2016. Activities aimed at
making a study of economic condition in Kalimantan where
Bank Indonesia needed information on oil and gas conditions
in Kalimantan.
SOCIALIZATION OF UPSTREAM OIL AND GAS
Representative SKK Migas of North Sumatera held the

socialization of the role and function of upstream oil and gas,
Public Relations Staff, Syuib Hamid was giving explanation
to the Student Executive Board ("BEM") of University of Riau
("UNRI") at BEM UNRI office,
17 February 2016.
VISIT TO THE VICE GOVERNOR OF EAST JAVA
Head of Representative of SKK Migas Java, Bali and Nusa

Tenggara, Ali Masyhar together with his staff conducted
work visits and hospitality to the Vice Governor of East Java,
Saifulah Yusuf ("Gus Ipul") at East Java Governor Office,
11 March 2016.
GOOD GOVERNANCE SOCIALIZATION IN THE
UPSTREAM OIL AND GAS INDUSTRY
The Corruption Eradication Commission ("KPK") and

SKK Migas conducted anti-corruption socialization with the
theme "Realizing Good Governance Principles in Upstream
Oil and Gas Industry" in Palembang, South Sumatera on
15 March 2016 attended by Vice Chairman of KPK Saut
Situmorang, Vice Chairman of SKK Migas M.I. Zikrullah,
Governor of South Sumatera, Alex Noerdin, Vice Governor of
Jambi, Fachori Umar, regents / mayors in the South Sumatra
and Jambi region.
DIES NATALIS OF FAKFAK POLYTECHNIC
SKK Migas Papua and Maluku attended Dies Natalis

Celebration of Fakfak Polytechnic Campus,
on 18 October 2016.
PREVENTION OF ILLEGAL DRILLING ACTIVITIES
SKK Migas of South Sumatra attended the invitation of

Mining Agency of Musi Rawas Regency to socialize the
prevention of illegal drilling activities and the submission
mechanism of old wells in Mining Agency of Musi Rawas
Regency on 25 October 2016.
E.
COOPERATION
WITH OTHER
INSTITUTIONS
COOPERATION AGREEMENT
WITH PROVINCIAL POLICE OF SULAWESI
Efforts to create security in the upstream oil and gas operation Contract Areas, SKK Migas signed a Cooperation Agreement
with Central Sulawesi Police ("Polda") in Palu, 12 January 2016. The signing of the agreement was undertaken by Secretary
of SKK Migas, Budi Agustyono and Chief of Central Sulawesi Police, Brigadier General of Police Idham Azis. The agreement
covered the provision of security and law enforcement on upstream oil and gas business activities in Joint Operating Body
("JOB") Pertamina-Medco E&P Tomori Sulawesi. National vital objects are required to have full safeguards to ensure that
security disturbances do not negatively affect oil and gas production which can result in disruption of state income.
SKK Migas invited stakeholders to work together to contribute in accordance with their respective roles and functions in the
context of achieving national oil and gas production. The hope of cooperation was not only for the benefit of the government,
but the surrounding community also got the benefits.
MEMORANDUM OF UNDERSTANDING
SKK MIGAS WITH ITS
SKK Migas and Sepuluh Nopember Institute of Technology ("ITS") Surabaya were cooperating to provide electricity
distribution in Papua by 2020. Memorandum of Understanding ("MoU") Signing, conducted by Chairman of SKK Migas,
Amien Sunaryadi and ITS Rector Joni Hermana at ITS Campus, Surabaya, East Java, 4 February 2016.
The process of equal distribution of electricity to Papua was still constrained by the problem of LNG distribution. LNG was a
source of electricity that will illuminate the territory of Cendrawasih Island. SKK Migas needed to solve the problem of LNG
distribution. Cooperation between SKK Migas and ITS to review the most effective methods for LNG shipments. The concept
of distribution that should be considered by ITS included infrastructure and transportation facilities.
Collaboration between SKK Migas and ITS had been established since 2003, but the signing of the MoU was considered
to be a very strategic step. ITS was expected to provide assistance to universities located in eastern Indonesia that were
growing and needed assistance. The field of study involved in drafting concept involved various faculties in ITS. Among them
were Industrial Engineering for logistics delivery problems, Chemical Engineering, Physical Engineering, and science under
the Faculty of Marine Technology.
With the establishment of cooperation between SKK Migas and ITS, it was hoped that all the development in Fakfak and
other areas in Papua can run smoothly. Moreover, Papua has the abundant natural and tourism potential, so that the electric
power distribution in Papua must be done immediately.
OF COOPERATION STUDY
In order to support cooperation between two universities with expertise in upstream governance, SKK Migas supported
the signing of an MoU on a joint study between the University of Aberdeen, England, represented by Emre Usenmez who
served as Dean for Internalization and Vice Rector for Cooperation and Alumni, University of Gajah Mada ("UGM"), Paripurna
Sugarda. The signing of MoU witnessed by Vice Chairman of SKK Migas, M.I Zikrullah, was done in SKK Migas Office,
Jakarta on 22 November 2016.
This collaboration was created to review and prepare new strategies on policies and legislation governing oil and gas
governance that were expected to become a new reference for the Indonesian government to push the upstream oil and gas
industry. Abderdeen University is the right partner because it proved to have experienced review of oil and gas governance,
to become one of the UK governments reference in oil and gas policy making.
ON THE TRANSACTION EXCHANGE SERVICES
IN PSC CONTRACTOR AGREEMENT
Since the end of 2008, SKK Migas has mandated all goods and services procurement transactions in upstream oil and gas
industry through national banking. The annual commitment value of payment transactions through State/Regional Owned
Enterprises ("BUMN/BUMD") Bank continues to increase. Since then, SKK Migas continues to build synergy with national
banks. This step has been realized in the framework of participating in encouraging the national economy through banking
channels as well as strengthening national capacity. This time the joint commitment of the national banking industry was re-
established. Especially in conducting cost efficiency of upstream oil and gas operations, through protection from increased
upstream oil and gas operating costs due to exchange rate.
The difference in the exchange rate that affects the operating costs of upstream oil and gas sector, due to fluctuations in the
value of the dollar, SKK Migas signed a memorandum of understanding with three BUMN banks which are, Bank negara
Indonesia ("BNI"), Bank Rakyat Indonesia ("BRI"), and Bank Mandiri to provide exchange rate transaction services to payment
contracts between oil and gas companies and vendors.
MoU signed by Chairman of SKK Migas, Amien Sunaryadi; President Director ("Presdir") of Bank BNI, Ahmad Baequni;
President Director of Bank BRI, Asmawi Syam; and Vice President Director of Bank Mandiri Sulaiman A. Arianto at the office
of SKK Migas, Jakarta on 24 March 2016. The purpose of this signing of understanding was to minimize the impact of
increased operating costs of upstream oil and gas business, which was mainly due to conversion costs from US Dollars
to Rupiah and vice versa. In 2015, Bank Indonesia had issued Regulation No.17/3/PBI/2015 on Rupiah Use Liability in the
Territory of the Unitary State of the Republic of Indonesia. Through a letter issued on 23 February 2016, Bank Indonesia ("BI")
had approved the exception of goods and services transactions in upstream oil and gas activities. For contracts between oil
and gas companies and domestic vendors are allowed to use foreign currency, but the payment must use rupiah currency.
SKK Migas cooperates with BUMN Bank to play an active role and cooperative in helping to reduce potential foreign
exchange conversion costs from US dollar to rupiah and vice versa for such transactions. The provision of a hedge is also
in line with BI Regulation number 16 of 2014, and can contribute positively to the Indonesian economy.
84 MAJOR PROJECTS | SKK MIGAS ANNUAL REPORT 2016
BAB III
MAJOR
PROJECTS
SKK MIGAS ANNUAL REPORT 2016 | MAJOR PROJECTS 85

MAJOR PROJECTS OF UPSTREAM OIL AND GAS
UP TO 2027
DONGGI SENORO
SENORO:
Onstream 2Q-2015
Production: 310 MMscfd ; 6,000 bopd
JAMBU AYE UTARA DONGGI:
JANGKRIK
FEED Tender Onstream April 2016
Preparation Stage Construction Stage Production: 60 MMscfd, 400 bopd
Production (2Q-2020): Production (3Q-2017):
MATINDOK:
110 MMscfd 450 MMscfd, 200 bopd
Construction Stage
Production:
65 MMscfd (Q2-2017),
800 bopd
IDD
BANGKA:
Onstream
Production: 115 MMscfd, 4,000 bopd
(Aug-2016)
ANDE ANDE LUMUT GENDALO-GEHEM:
EPC Tender Stage Revised POD-1 Stage
Production (1Q-2021): Production Gendalo Hub: 700 MMscfd,
25,000 bopd 20,000 bopd (4Q-2022)* TANGGUH TRAIN-3
Production Gehem Hub:
420 MMscfd, Construction Stage
27,000 bopd (EPC Preparation)
(2Q-2023)* Production (2Q-2020):
3.8 MTPA
(700 MMscfd),
3,200 bopd
PONDOK
MAKMUR
Onstream
May 2016
Production (2Q-2016):
4,000 bopd;
42 MMscfd
ABADI
JIMBARAN
TIUNG BIRU Revised POD-1 Stage
BANYU URIP Production (3Q-2027)*
Onstream (Train-A
EPC Tender Stage BUKIT TUA & Capacity (TBD)*
Gas Price Onstream
onstream Dec 2015,
Discussion (First Oil May 2015,
Train-B/full onstream
Production (4Q-2019): First Gas Mar 2016)
Jan 2016, Gas Injection
330 MMscfd Production:
System: May 2016)
Production: 20,000 bopd;
185,000 bopd 70 MMscfd
WASAMBO
Construction Stage
Production (4Q-2017):
MADURA BD MDA and MBH 80 MMscfd
Construction Stage Construction Stage
Production (1Q-2017): Production (1Q-2019):
110 MMscfd, 175 MMscfd
6,600 bopd

Throughout 2016 a total of 70 development projects of upstream oil and gas production facilities in both oil and gas plan
development have been carried out.
Of the various stages of the projects in 2016, 8 projetcs are scheduled onstream in 2016, 22 projects will onstream in 2017,
11 projects will onstream in 2018, 18 projects will onstream in 2019, 5 projects will onstream in 2020, 3 projects will
onstream in 2021, 1 project will onstream in 2022, 1 project will onstream in 2023, and 1 project will onstream in 2027.
ADDITIONAL CAPACITY OF OIL AND GAS PRODUCTION

FROM PRODUCTION FACILITIES PROJECT 2016-2027
350
310
300
246
250
214
194
200
154
MBOEPD
150
125
86 86
100
75
53 42
50 36
24 26
18
4 - - 0
-
2016 2017 2018 2019 2020 2021 2022 2023 2027
2016 2017 2018 2019 2020 2021 2022 2023 2027
Ande-Ande
Banyu Urip Ario Damar PHE 48, PHE 7 Kinanti KLD IDD Gendalo IDD Gehem Abadi
Lumut

Pondok Asap, Merah,
PHE 12, CPP2 MDA-MBH PHE 29 JAU
Makmur Kido
IDD Bangka Tangguh

Madura BD MDK OO-OC-OX
Train 3
Kerendan Ario Damar

Wasambo MAC L Parigi
Phase 2
Bukit Tua Jambaran

Paku Gajah SP
(ORF) Tiung Biru
Bison, Iguana,
Donggi Matindok Gajah Puteri
KRAS 2 Jangkrik TSB 2

Along with the formation of Upstream Oil and Gas scale projects are Banyu Urip Project in Bojonegoro, East
Management Agency of Aceh ("BPMA") so there is one Jawa by ExxonMobil Cepu Limited ("EMCL"); Indonesia Deep
project located in Nanggro Aceh Darussalam Province that Water ("IDD") Project in the Makassar Strait, East Kalimantan
has been delegated its oversight and control by SKK Migas by Chevron Indonesia Company ("Chevron"); Abadi LNG
to BPMA. The project is Gas Development Project of Block A Project in Arafura Sea, Maluku by Inpex Masela Ltd.; Jangkrik
with the operator PT Medco E&P Malaka. Project in Makassar Strait, East Kalimantan by Eni Muara
Bakau B.V.; Tangguh Train-3 Project in Bintuni, Papua Barat
SKK Migas supervises specifically for the projects by BP Berau Ltd ("BP"); and Jambaran Tiung Biru Project in
categorized as large-scale projects that have significant Bojonegoro, East Java by PT Pertamina EP Cepu ("PEPC").
value and production capacity. Project acceleration ("UPP")
is assigned one task force unit of each mega project in order
to support the implementation of those projects. Six mega

A.
JAMBARAN TIUNG-BIRU
PROJECTS
PT PERTAMINA EP CEPU
Jambaran-Tiung Biru ("JTB") Unitization Field Gas Development Project is located in the District of Bojonegoro, East Java
Province. Jambaran Field is in Cepu Block contract area ("CA")-ExxonMobil Cepu Limited, meanwhile Tiung Biru Field is in
Indonesia CA-PT Pertamina EP ("PEP"), Jambaran and Tiung Biru Field are a unitization field between EMCL and PEPC
as the operator since 28 February 2013.
LOCATION OF JTB PROJECT
BLORA
REGENCY
TUBAN
CENTRAL JAVA REGENCY
BLORA
GIANTI KANDANGAN
KALISARI CEPU
GANDONG SUKOWATI
KEDUNG
BANYU URIP KERIS
PILANG CENDANA
NAMPAK
KEDUNG
LUSI KEDUNG
DISCOVERIES RANDU TUBAN
BLATUNG JAMBARAN
Oil & Gas ALAS TUA
TIUNG BIRU EAST
ALAS TUA
Oil WEST
BOJONEGORO
Gas REGENCY
Lead
Prospect
According to front end engineering design ("FEED") study results and size optimization of pipeline diameter for the
development of JTB Field, it is estimated to produce an average of 315 million standard cubic feet per day ("MMscfd") for
14.8 years without compressor. And to maintain a peak production for 16 years, it required compressor after 14 years of
operations.

PRODUCTION AND SALES GAS PROFILE OF
JTB PROJECTS
350
300
PSC Lease
Expiration
250
JAMBARAN - TIUNG BIRU
MMSCFD (ANNUAL AVE)
200
150 SALES GAS
100
CO2 VENT
50
-
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
Scope of JTB Project are: Implementation of the above Project scope is divided into
1. Preparation of 2 wellpads (Central JTB and East JTB) and two packages, namely:
the access road including other supporting facilities for 1. Procurement-construction ("PC") contract for early civil
drilling puposes; work ("ECW") with the scope of work of developing
2. Installation of the production pipeline from Central wellpad, access road, and drilling activity supporting
Jambaran (18) and East Jambaran (20) wells to the facilities which started in January 2016 and is expected to
gas processing facility ("GPF"). Installation of sales gas finish in May 2017.
pipeline (20) from GPF to PT Pertamina Gas ("Pertagas") However in December 2016, the actual phase completed
pipe (open sales source P/L) and supporting production 28.49% or behind schedule. The main problems of delay
facilities; are issues of land acquisition, incompability of soil material
3. Preparation of GPF with a capacity of 330 MMscfd, specification, and indirect workforce shortages and low
including its supporting facilities. productivity.
2. Engineering, procurement, construction, and installation
The development of JTB Unitization Gas Field experienced ("EPCI") contract covers a GPF with the scope of work
a delay where it originally predicted onstream on 4Q 2019 of the pipeline installation and GPF development with a
delayed to 4Q 2020 because of: capacity of 330 MMscfd including supporting facilities.
1. High investment costs which impact on gas prices; In December 2016, the GPF contract procurement
2. There has been no final agreement with the buyers related process has been completed and is awaiting contract
to gas prices; award recommendation from SKK Migas.
3. Final investment decision ("FID") that still needs to wait for
Gas Sales Agreement ("GSA") to be completed.

B.
INDONESIA DEEPWATER
DEVELOPMENT PROJECT
CHEVRON INDONESIA CO.
The Indonesia Deepwater Development ("IDD") Project is a development project consist of four CAs located in Makassar
Strait, which are Ganal CA, Rapak CA, Makassar Strait CA, and Muara Bakau CA (unitization). In those four CAs, there are
five fields which will be developed, namely Bangka, Gehem, Gendalo, Maha and Gandang Field. The production from the
wells drilled in those five fields is planned to be flow integrated through two hub of floating production unit ("FPU") i.e. Gehem
Hub and Gendalo Hub, and one Bangka Subsea Tie-back in West Seno. Gas from the FPU will be flowed through a pipeline
for industrial needs in East Kalimantan and to LNG Bontang Plant for further process to become LNG. Production from
Bangka Field is approximately 110 MMscfd of gas and 4.000 barrels per day ("bpd") of condensate, Gehem Hub amounted
420 MMscfd of gas and 27 thousand bpd of condensate, Gendalo Hub amounted 700 MMscfd of gas and 20 million bpd of
condensate.
After FEED execution in 2014 and referring to EPCI bidding there was an increase in investment costs, the government
decided to develop Bangka Field only, while the development of the four other fields will be done after IDD's revised first plan
of development ("POD-1").
Bangka Field is developed by drillings of two production wells (Bangka-6 & Bangka-7), well modification of the existing West
Seno facility, subsea completion, and tie-in to West Seno facility. Bangka-6 & Bangka-7 well completed at the end of July
2016, and modification of existing West Seno facility completed in mid August 2016.

IDD PROJECTS LOCATION AT MAKASSAR STRAIT
Bangka Field started operating on

16 August 2017 and was commercially
accepted in Terminal Santan on
17 August 2017 with the initial
production rate of 20 MMscfd gas
and 60 bpd condensate. The average
production of Bangka Field throughout
2016 amounted to 90.25 MMscfd
gas and 4,266 bpd of condensate.
Meanwhile Bangka Field production
throughout December 2016 amounted
to 104 MMscfd of gas and 4,846 bpd
of condensate as planned.

Chevron proposed IDD's revised POD-1 on 18 April 2016 which includes issues as follows:
a. Additional potential reserves in the form of secondary reservoir from Maha and Gandang Field (excluding POD-1 of IDD
that has been previously approved);
b. Updating of estimated cost and schedule for POD implementation adapted to market conditions;
c. The increase of development cost, referring to previous EPCI contract bidding and has been adapted to market conditions;
d. Chevron submit investment credit with very significant value.
SKK Migas returned the proposed Revised POD-1 IDD in April 2016, with the justification that investment credit with
significant value is not in the Production Sharing Contract ("PSC"). Moreover, Chevron was asked to conduct a study related
to other incentives request in the revised POD-1 of IDD for project execution and to give optimum benefit (win-win solution)
for the government and the PSC Contractor.
In October 2016, Chevron expressed that they are still committed to the implementation of IDD Project development and
has tried to find ways to reduce investment costs in order to strengthen the competitiveness of the project, including the
possibility of synergy with projects operated by other operator at adjacent location to the IDD project. They also expressed
the need of PSC extension (Rapak CA, Ganal CA, and Makassar Strait CA) and incentives or fiscal provisions improvements.
DETERMINISTIC TARGET SCHEDULE
2016
Q1 Q2 Q3 Q4
GENDALO-GEHEM PROJECT
Phase 1
IDD Conditions Precedent Approvals
Confidentiality Agreement
Key Principle Agreement
Joint Engineering Study Agreement (JESA)
Pre FEED Contract
Pre FEED Tender
Pre FEED Execution
POD Document Preparation
Pre-POD Discussion
POD Submission
ACTUAL

Bangka Field has been able to produce in August 2016, thereby SKK Migas expressed appreciation in November 2016 for
Chevron's gas production from Bangka Field in as scheduled, and also suggesting Chevron to submit altenatives of IDD
Project development with more efficient in cost as the basis for the proposed revised POD-1 of IDD.
Furthermore SKK Migas approved Chevrons proposal to implement the IDD Integrated Development Hub concept evaluation
in 2017 which aims :
1. To evaluate the technical and non-technical to support the development of alternative concepts in the Gendalo Hub fields.
Possibility of Gendalo Hub field tie-in to production facilities of Jangkrik FPU and evaluation of possible usage of other
production facilities at nearby location that was developed by other PSC Contractor;
2. Choose the most optimum concept and submit pre-revised POD-1 IDD;
3. Prepare the documents required for the execution of FEED;
4. Field development concept in Gehem Hub remains the same.
The work is expected to begin in January 2017 and the results will be used as the basis for the submission of revised IDD's
POD-1.
2017 2018 2019
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Phase 2A Phase 2B Phase 3
JAN 2017
MID OF 2018
FORECAST

C.
ABADI LNG PROJECT
INPEX MASELA LTD.
Abadi Gas Field is located in Masela Contract Area signed by the Government on 16 November 1998. Liquefied Natural
Gas ("LNG") Abadi project is a project development of Abadi Gas Field by Inpex Masela Ltd ("Inpex"). in Arafura Sea with sea
depth between 600-800 m. Gas production from Abadi Field is carried out to fulfill domestic and export demands.
ABADI GAS FIELD - CA MASELA
FIELD

POD-1 of Abadi Field was approved by the Government of the Republic Indonesia as per 6 December 2010, in which the
government agreed that the scenario of Abadi Field development uses production facilities of floating LNG ("FLNG") with a
capacity of 2.5 million tonnes per annum ("MMtpa") of LNG and 8,400 bpd of condensate during the 30 years production
period with the estimated recoverable gas reserves of 4.6 trillion cubic feet ("Tcf") and condensate reserves of 91.02 million
barrels oil ("MMbo").
On 23 April 2015 Inpex submitted proposal of revised POD-1 with the scenario of FLNG 7.5 Mtpa which was supported by
Government Bodies for Hydrocarbon Certification ("Lemigas") reserve certification which stated additional gas reserves from
Abadi Gas Field which is quite significant of 10.37 Tcf from 90% P1 and can meet the requirements for FLNG scenario of
7.5 Mtpa, with a production of 1,200 MMscfd gas until the year 2048.
SKK Migas further evaluated the selection of the LNG processing technology proposed by Inpex, including establishing LNG
Technology Sudies Team with the task of reviewing LNG processing technology scenarios for the development of Abadi
Field. Furthermore SKK Migas sent a recommendation letter for approval of proposed revised POD-1 of Abadi Field to the
Minister of Energy and Mineral Resources ("EMR") on 10 September 2015.
Inpex was drilling 3 delineation wells at the Abadi Gas Field

2013-2014 to reduce subsurface uncertainties and improve field
development plans.

Considering various inputs and responses that arise in the A discussion of the terms and conditions and the gas usage
process of discussion of proposed POD-1 Abadi Field, for domestic was done comprehensively together with the
further study was conducted on the selected scenario Coordinating Ministry for Economic Affairs, Coordinating
of onshore LNG plant ("OLNG") and FLNG, including the Ministry for Maritim Affairs, National Development Planning
impact and benefit for the community and local industry Agency ("Bappenas"), Ministry of EMR, Ministry of Industry,
(multiplier effects). Study on the best scenario for Abadi Field Regional Government of Maluku, PT Perusahaan Listrik
development by the independent consultant completed Negara ("PLN"), Pertamina, PT Perusahaan Gas Negara
on 23 December 2015 with the conclusion that FLNG (Persero) Tbk ("PGN"), SKK Migas and Inpex.
gives greater benefit than OLNG. SKK Migas submitted
recommendation of independent assessment to Minister Folowing up the results of the discussion above, Head of
of EMR on 23 December 2015 as further consideration for SKK Migas on 29 December 2016 sent a letter to the
approval of proposed revised POD-1. Minister of EMR about following up further development
of Abadi Field of Masela CA, to request the direction and
The selection of onshore or offshore schemes in the decision of the Minister of EMR for the development of Abadi
development of the Abadi field become a quite warm topic Field.
until the discussion was raised in several limited cabinet
meeting. Until finally on 23 March 2016, Indonesian Another efforts to accelerate the project implementation of
President announced to the media that the Abadi Field of Abadi field development is as follows:
Masela CA would be developed with land scheme (onshore). Regular and intensive discussion with Ministry of EMR
This decision was confirmed by the Minister of EMR through his and Inpex regarding the optimization on schedule
letter to SKK Migas on 31 March 2016 and SKK Migass letter of project implementation in detail, starting from
to Inpex on 1 April 2016. implementation of pre-FEED, revised POD, FEED until FID.
Begin discussions with the Ministry of Environment
Responding to the Governments decision, on 20 May 2016 and Forestry and Inpex of AMDAL preparation for the
Inpex sent a letter to Indonesian President that Inpex and development of Abadi Field land scheme.
Shell are ready to cooperate with the government and Coordinate with BPPT and Universities (Institut Teknologi
implement the development of Abadi LNG Project. Sepuluh November ("ITS"), Institut Teknik Bandung
Inpex sent a letter to the Minister of EMR and the Head of ("ITB"), Universitas Indonesia ("UI"), Universitas Gajah
SKK Migas showing that they remain committed to Mada ("UGM"), and Universitas Pattimura ("Unpatti")) to
implementing the Abadi LNG Project but requires a participate in development of Abadi Field land scheme.
discussion regarding the terms and conditions for the project
to be investible for the contractor. SKK Migas together with stakeholders will continue to
coordinate in 2017 in order the project development of Abadi
Field to run well thus it could provide benefits for national
interest that create the multiplier effects.

D.
TANGGUH TRAIN-3 PROJECT
BP BERAU LTD.
The year 2016 is an important year for Tangguh Train-3 Project, because very important milestones were implemented.
FEED work that was carried out since 2015 finished in the beginning of 2016. Based on the FEED results, in February 2016,
the consortium proposed EPC as one of the terms of FID making.
It was also In 2016, the development of Tangguh Train-3 Onshore Plant got certainty funding from lenders with Trustee
Borrowing Scheme ("TBS").
Signing Funding Cooperation by Lenders

I N -3
TRA
Support to BP in ensuring the FID was by the approval of scope of development of LNG Tangguh Train-3 amounted to
Authorization for Expenditure ("AFE") for development work US$12 Billion.
of Tangguh Train-3 Onshore LNG Plant and AFE for the
development work of two offshore platform (WDA and ROA After BP set their FID, is was followed by procurement setting
offshore facility) including the gas pipelines to the ground. in implementing EPC and EPCI. Contractors defined as
the operator of EPC and EPCI were Consortium Chiyoda,
Dated 1 July 2016 was the historic day for Indonesia, where Saipem, Tripatra, and Suluh Adi ("CSTS") for EPC Plant work
BP decided to keep investing in Indonesia by developing of Tangguh Train-3 Onshore LNG Plant, and Saipem for EPCI
Tangguh Train-3 despise the condition of a depressed world of Offshore Facility.
oil price. The plan and value of investment for the entire

Kick off meeting of EPC and EPCI was held on Equipment and materials delivery for early work performed
25 August 2016 for EPCI offshore GPF work and in November 2016 by CSTS consortium. Equipment
26 August 2016 for EPC Tangguh Train-3 Onshore LNG and materials that are needed in first work form of the
Plant. On that occasion, each contractors conveyed their land clearing and facilities development for the contractor
commitment to complete the scope of work in accordance employee's residence.
with time management targeted through operations was safe
and friendly environment and committed to achieve Since December 2016, several preparatory works have
the minimum level of local content ("TKDN"). been conducted for the preparation development of
Tangguh Train-3 Plant, such as training for health, safety, and
environtment ("HSE") workers of consortium, and logging
training in Tangguh area.

E.
JANGKRIK PROJECT
ENI MUARA BAKAU
Muara Bakau CA is located at offshore Makassar Strait, around 70 km North East of Delta Mahakam-Makassar Strait with the
depth of approximately 450500m from the sea surface, and managed by Eni Muara Bakau.
The gas development of Jangkrik Field (JKK) began with the discovery of gas reserves in 2009 and 2010. Meanwhile, the
development of Jangkrik North East (JNE) began with the discovery of gas reserves in 2011. The POD-1 of JKK Field was
approved in November 2011 with cummulative gas reserve of 913 billion standard cubic feet ("Bscf"), plateau for 5 years and
9 months. POD-2 for JNE Field was approved in January 2013, with cummulative gas production of 417.5 Bscf.
The development of these two fields are estimated to produce gas with total of 450 MMscfd, consists of 300 MMscfd from
JKK Field and 150 MMscfd from JNE Field .
The development of JKK and JNE Field is carried out integratedly in a project named Jangkrik Complex Project.
LOCATION OF MUARA BAKAU CA
Location: Kutei Basin,

70 km offshore
East Kalimantan 450 m W.D.

Gas production from Jangkrik Complex will be further processed into LNG at the Bontang LNG Plant through Peciko
Bontang 42 Gas Pipe of East Kalimantan starting from the tie-in location at KM-7. The pipe is utilized through the facility
sharing scheme with other existing PSC Contractors namely Total E&P Indonesie, VICO Indonesia, and Chevron.
Meanwhile, condensate production from Jangkrik Complex will be delivered to Senipah Tank by utilizing 12 Condensate Pipe
of Handil-Senipah under a facility sharing scheme with Total E&P Indonesie.
In the implementation, Jangkrik Complex Project covers three major work for the production facility consisting of:
a. EPCI 1 - FPU with gas capacity of 450 MMscfd;
b. EPCI 2 - Risers and Flowlines Installation (RFI) including onshore pipeline and ORF;
c. EP3 - Subsea Production System (SPS); and
d. Several packages to support drilling and completion of development wells.
Onshore Receiving Facility

JANGKRIK AND EAST KALIMANTAN SYSTEM ("EKS") PT. BADAK
PIPELINE
BONTANG LNG
MARKET
LNG
DOMESTIC
MARKET
BEM
POMA
EKS
offshore onshore
condensates 4"
FPU ORF
24" gas
42"
12"
SAPI
RFI CHEVRON
gas 24" & condensates 4" export
SENIPAH
TOTAL E&P INDONESIE
SPS
Pilocene Wells
JKK JKK NE
FPU : Floating Production Unit

RFI : Riser Flowline Installation
ORF : Onshore Receiving Facilities
POMA : Pipeline Operating and
Maintenance Agreement
EKS : East Kalimantan System

Integrated Topside Module Load-Out
DESIGN OF JANGKRIK
COMPLEX DEVELOPMENT PROJECT
MAIN DESIGN
Design Life: 20 years
Nameplate Capacity:
4,100 bpd (condensate)

1,000 bwpd (water)
Product delivered into the East Kalimantan System
Production Flowlones 7 wells 3 wells

3 dusters/manifolds 2x12" conventional loop
Umbilicals Expected production: 300 MMscfd Expected production: 150 MMscfd
Condensate Export
Gas Export
Gas Rigid Line

The overall progress of Jangkrik Complex Project until December 2016 has reached 91.6%. First gas production from
Jangkrik Complex Field is estimated to take place in the third quarter of 2017. The gas will mostly be utilized to meet
domestic demand either as industrial raw materials or as fuel.
TIME MANAGEMENT FOR

JANGKRIK COMPLEX DEVELOPMENT PROJECT
2016
1Q 2Q
MASTER SCHEDULE
1 2 3 4 5 6
Jangkrik Complex Project Development
Permit and License

FPU Statutory & Flag
Available (Liberian Flag)
Agreements for Facilities Sharing
Commercial
Agrrements with Buyers

Hull /LQ
ready for
Hull Dock Out
Sail-away
Hull/LQ dan Topsides
FPU-EPCI1
Contract
Integration@Shore, commissioning, towing,
mooring, hook up, and commissioning
Flexible PL
ready for load out
Detailed Engineering, Procurement, and
Fabrication
Flexible PL
Installation start
RFI-EPCI2 Offshore Campaign and SURF Hook Up
Contract
PL construction ORF piping
start start
Onshore
X-Tree #6 X-Tree 8
Delivery Delivery
SPS-EP3 Contract
X-Tree 7 X-Tree 9
Delivery Delivery
Drilling Activities
Drilling JKK C1 JKK C3 JNE 7
Ready Ready Ready
Completion Activities

ORF
2017
3Q 4Q 1Q 2Q 3Q
7 8 9 10 11 12 1 2 3 4 5 6 7 8 9
FPU Re-Flaging to
Indonesia Flag
East Kal System

Agreement
LNG SPA
Hull Karimun
Onshore Commissioning Completed
ITM Comm. start
ITM-Hull piping FPU ready for

ITM loadout Integration complete SURF Hook-up
FIRST GAS
Shore comm start FPU Sail
Away
MWA ready for FLET Ready for
load out Load out
Spool ready
for load out
DW rigid PL & MWA Umbilical & Riser Flowline Leaktest Ready for
Installation complete Installation start complete Commisioning
Deepwater rigid PL Manifolds FLET, FL, Umbilical, SURF Hook up

Installation start Installation start Connectors Installation start
Onshore PL complete
Installation complete Hot tap
HIPPS Mechanical
Installation completion
Umbilical & Riser
X-Tree 10 1st batch Umbilical Connectors last

Delivery loadout Delivery
Expl. Drilling finished JKK 11 Drilling completed

JKK 11
JNE Wells JKK 11 Well

Ready JKK 11 Ready

F.
DONGGI MATINDOK PROJECT
PT PERTAMINA EP
The development of Matindok Gas Field is based on gas discovery in Matindok Area at Donggi, Matindok, Maleoraja, and
Minahaki Fields with a total reserves of ~ 0.7 Tcf (GCA certification of EUR) and based on the needs to utilize gas from
Matindok area for LNG and power plant. This project is located at the district of Banggai, Central Sulawesi.
DONGGI AND MATINDOK FIELD LOCATION

IN CENTRAL SULAWESI
PERTAMINA EP
JOB PMTS
PERTAMINA EP
PPGM
POD for Matindok Area (Donggi, Matindok, Maleoraja, and Minahaki Gas Fields for gas supply to LNG Plant was approved by
SKK Migas (before BPMIGAS) on 24 December 2008. The added reserves in Matindok field in total became 852.75 Bcf and
gas production from Matindok Area became 105 MMscfd, which was approved by SKK Migas under revised POD-1 on
30 March 2011.

GAS SUPPLY SCHEME
FROM MATINDOK AND SENORO AREAS
Gas Supply
Electricity, Gas Supply

-
Fertilizer, Gas Supply

GSA
Upstream Downstream
From the scheme above, it can be illustrated that the objective of the development of this field is to monetize gas from Matindok
Area of 105 MMscfd (net) with allocation of gas sale as follows:
a. As a gas supplier of 85 MMscfd jointly with gas from Senoro Area-Joint OPerating Body Pertamina-Medco E&P Tomori
Sulawesi ("JOB PMTS") of 250 MMscfd to the LNG Plant PT. DSLNG (buyer);
b. As a gas supplier of 20 MMscfd jointly with gas from Senoro Area-JOB PMTS of 5 MMscfd to PLN (prospective buyer).
For the purpose above, production facilities are currently constructed in Matindok area with allocation based on the following
areas:
a. Production Facility of Donggi Field ("Donggi CPP") with design capacity of 60 MMscfd to process gas from Donggi and
Minahaki Fields;
b. Production Facility of Matindok Field ("Matindok CPP") with design capacity of 65 MMscfd to process gas from Matindok and
Maleoraja Fields.
Production from Matindok Area may reach the peak of 123 MMscfd for 12 years, and subsequently the production will
continue to decline until it reaches the abandonment pressure after 20 years of production. The condensate production will
begin in conjunction with gas production and will reach the peak of 685 bpd of condensate.

MATINDOK GAS
DEVELOPMENT
PROJECT
Gas production from Matindok area is incorporated with gas from Senoro area at the tie-in point 1 ("TIP-1") and tie-in point 2
("TIP-2"). The condensate produced from both production will be flowed to the production facilities of Senoro Field operated by
JOB PMTS.
MATINDOK GAS
DEVELOPMENT PEOJECTS
THE PROJECT SCOPE OF WORK
1. Construction of Gas Plant with the following design capacity:

Donggi Project : 60 MMscfd
Matindok Project : 65 MMscfd
2. Construction of Pipe Trunkline
Donggi Project to TIP-1 : 35 km x 16"
Matindok Project to TIP-2 : 1 km x 16"
-
335 MMscfd
Senoro &
Cendanapura Wells

Donggi Project was onstream in April 2016. Meanwhile, the construction progress of Matindok Project in December 2016
has already reached 95%. Production facilities of Matindok Project predicted to be onstream in April 2017.
Donggi and Matindok Gas Development Project ("PPGM") is an important project for the oil and gas industry in Indonesia and
will play an important role in maintaining and strengthening the position of Indonesia as the largest LNG exporting country
in the world. PPGM development is believed to increase the contribution of the oil and gas sector in contributing foreign
exchange for the country and the possibility of domestic fuel substitution.
DONGGI GAS
DEVELOPMENT PROJECT

G.
MADURA BD AND
MDA-MBH PROJECT
HUSKY CNOOC MADURA LTD.
MADURA BD PROJECT
Madura BD Field is a part of Madura Strait CA located in Madura Strait, about 50 km from the District of Pasuruan with a sea
depth of about 55 meters.
Referring to the revised POD-1 of Madura BD Field signed in July 2008, Madura BD Field development is expected
to increase the gas supply to East Java about 442 Bcf and 18.7 million barrels ("MMbbls") of condensate at a flow rate of
100 MMscfd plateau. Gas from this field will be utilized by PGN, Inti Alasindo, and Parna Raya.
LOCATION OF MADURA BD FIELD DEVELOPMENT
SAMPANG
FPSO
Progress: 97.04%
Sail away: 20 Dec 2016
Arrive at site: 27 Dec 2016
Performance Test Estimated to
Finish: 14 Feb 2017
SURABAYA
JAVA SEA Jacket & Topside
Completed installed 31 Oct 2015
Drilling Completed
14 Nov 2016
P/L Progress: 96.91%

P/L Complete: 16 Dec 2016
Pre-comm work completed
GMS Progress: 89.23%

GMS to complete 18 Jan 2016
PASURUAN

Planned production scenarios as follows, hydrocarbons from well head platform ("WHP") BD will be distributed through a
flowline to floating production storage and offloading ("FPSO") for the separation process. The processed gas will be flowed
using export pipeline to gas metering station ("GMS") in Pasuruan, to then distributed to gas buyers. Condensate and sulfur
from the separation process will be distributed from the FPSO to shuttle tanker and sulphur barge.
PROCESS FLOW SCHEME OF MADURA BD FIELD DEVELOPMENT
WELL HEAD FPSO GMS
Thermal LP/Acid
Oxidizer HP Gas
Incinerator Flare Flare
WELLHEAD
PLATFORM
GAS Flexible
DEHYDRATION DEW POINT
Infield SWEETENING Riser
UNIT CONTROL UNIT
Flowline UNIT
HP Separator
D-1501
MP Separator ACID GAS SULFUR SULFUR

D-1502 RECOVERY FORMING
ENRICHMENT
UNIT UNIT
LP Separator
D-1503
Export
Pipeline
Sour Water
Stripper Hot Oil System Fuel Gas
CONDENSATE
STABILIZATION
UNIT Utility Air Turbine Genset Other Utilities
GAS
METERING
STATION
SULFUR
CONDENSATE OTHER TANKS STORAGE
TANKS IN HULL IN HULL ON HULL
BUYERS
SHUTTLE SULFUR
TANKER BARGE
WHP & FPSO

Madura BD Project consist of EPCI Project and FPSO Project which are described as below:.
The EPCI Madura BD Project scope of work includes WHP, export pipeline, and GMS. The EPCI project construction progress
in December 2016 has reached 98%. GMS' entire equipment has been installed. The pre-commissioning work is still in
process. WHP has been installed at the offshore of Madura Strait. Export pipeline from WHP to GMS in Pasuruan has also been
installed.
The FPSO Project scope of work includes conversion work of hull tanker into a FPSO, including topside installation of
production facilities, mooring work, and hook up in Madura Strait. FPSO Project construction progress in Desember 2016 has
reached 98%. FPSO Karapan Armada Sterling III has been in Madura Strait and is continued to work the mooring and hook up
riser.
The entire production facilities is predicted to be completed in February 2017. While the onstream plan is still waiting for the
readiness of pipeline installation from GMS to the buyer facilities, which will be built by the gas buyer.
GMS

MDA-MBH PROJECT
MDA-MBH Field ia a part of Madura Strait CA located at the offshore of Madura Strait, about 200 km from East of Surabaya,
and about 75 km South East of Madura Island, with sea depth between about 100 meter. Referring to POD of MDA-MBH Field
signed in January 2013, MDA-MBH Field development was expected to increase the gas supply to East Java about 380 Bcf,
with a peak flow rate of 120 MMscfd, and gas buyers such as PT. Petrokimia Gresik, PLN and Pertagas.
LOCATION OF MDA AND MBH FIELD DEVELOPMENT
FPU
Floating Production Unit
175 MMSCFD capacity MBH
3-leg wellhead platform
g EJGP 80m water depth
28" existin
3
,6 k
m-
14"
pip
elin
e
2
8k MDA
m- 4-leg wellhead platform
20"
pip 100m water depth
elin
e
MADURA STRAIT
Planned production scenario of gas distributed from WHP MDA-MBH which is about 28 km to FPU through flexible riser
between MBH WHP and FPU. Gas that has been processed in the FPU is then flowed through subsea pipeline which is
connected via subsea hot tap process to subsea pipeline 28 East Java Gas Pipelines ("EJGP") of Pertamina to then be
distributed to gas buyers in East Java.
MDA-MBH Project consist of EPCI Project and FPU

Project. The MDA-MBH EPCI Project scope of work include
fabrication and installation of MDA WHP, MBH WHP, subsea
pipeline, and subsea hot tap to subsea pipeline EJGP.
EPCI Project construction progress in December 2016
has reached 35%.
Approval of the FPU tender winner was approved by

SKK Migas in December 2016. The FPU Project scope
of work includes new hull manufacture and installation of
production facilities at the topside, mooring work, and hook
up in Madura Strait. First fabrication cutting of MDA-MBH Project
Production facilities of MDA-MBH Project is estimated to

onstream at the end of 2018.

116 EMPOWERING NATIONAL CAPACITY | SKK MIGAS ANNUAL REPORT 2016
CHAPTER IV
EMPOWERING
NATIONAL
CAPACITY
SKK MIGAS ANNUAL REPORT 2016 | EMPOWERING NATIONAL CAPACITY 117
A.
OPTIMIZATION OF CRUDE
OIL PRODUCTION FOR
DOMESTIC REFINERIES
In 2016, SKK Migas carried out the following commercialization activities:
RELATED TO THE ELECTION IN KIND COMMERCIALIZATION SCHEME, HAS ISSUED ELECTION IN KIND
NOTIFICATION LETTER FOR 2016, AS FOLLOWS:
LIST OF CRUDE OIL/CONDENSATE COMMERCIALIZATION WITH ELECTION IN KIND
NO PSC CONTRACTORS CRUDE OIL / CONDENSATE
1 PetroChina International Jabung Ltd. Geragai Crude Oil, Makmur Crude Oil, Geragai
and Makmur Condensate
2 VICO Badak Crude Oil and Bontang Return Condensate

("BRC")
3 Chevron Makassar Limited West Seno Crude Oil and BRC
4 Total E&P Indonesie Bekapai Crude Oil, Badak Crude Oil, Handil Mix,
Senipah and BRC
5 Chevron Indonesia Co. Attaka Crude Oil, Sepinggan Yakin Mix, BRC, and
Sapi Condensate
6 Triangle Pase Arun Condensate
7 Inpex Corporation Bekapai Crude Oil, Handil Mix, Badak Crude Oil,
Senipah and BRC
8 PHE NSB Arun Condensate
9 PHE NSO Arun Condensate
10 JOB Talisman Jambi Merang Jambi Merang Condensate and Grissik Mix
11 BP Tangguh - Berau Tangguh Condensate
12 BP Tangguh - Muturi Tangguh Condensate
13 BP Tangguh - Wiriagar Tangguh Condensate
14 ConocoPhillips (Grissik) Limited Grissik Mix

NO KONTRAKTOR KKS MINYAK MENTAH / KONDENSAT
15 Inpex Corporation Attaka Crude Oil
16 JOB P - Medco Tomori Senoro Condensate
17 Mubadala Petroleum Senipah Condensate
18 Chevron Pacific Indonesia SLC Crude Oil
19 Premier Oil Natuna Sea B.V. Anoa Crude Oil
20 PT SPR Langgak SLC Crude Oil
21 ConocoPhillips Indonesia Inc. Ltd. Belida and Belanak Crude Oil
22 EMP Malacca Strait SA Lalang Crude Oil
23 PetroChina International Bangko Ltd. Bangko Crude Oil
24 PT Medco E&P Indonesia Kaji, Tabuhan, and Tanjung Laban Crude Oil
25 PT Medco E&P Indonesia Matra and Pendopo Crude Oil
26 Saka Indonesia Pangkah Ltd. Pangkah Crude Oil
27 PC Ketapang II Ltd. Ketapang Crude Oil
28 Santos (Sampang) Pty. Ltd. Oyong Crude Oil
29 ExxonMobil Cepu Ltd. (EMCL) Banyu Urip Crude Oil
30 BOB PT Bumi Siak Pusako - SLC Crude Oil

Pertamina Hulu
31 Star Energy (Kakap) Ltd. Star Energy (Kakap) Ltd.
32 CNOOC SES Ltd. Cinta and Widuri Crude Oil
33 JOB Pertamina PetroChina East Java Mudi and Sukowati Crude Oil
34 PT Pertamina Hulu Energi ONWJ Ltd. Cinta (NWC) Crude Oil, Arjuna Crude Oil, and
Kresna Condensate
35 PT PHE West Madura Offshore Madura Crude Oil
36 Petrogas (Basin) Limited Walio and Wakamuk Crude Oil
37 JOB Pertamina PetroChina Salawati Matoa and Meslu Crude Oil
38 PT Pertamina Hulu Energi Siak SLC Crude Oil

FOR THE ELECTION NOT TO TAKE IN KIND COMMERCIALIZATION SCHEME, HAS UPDATED CONCEPT FOR
ELECTION NOT TO TAKE IN KIND PROCEDURE GOVERNING SOME OF THE FOLLOWING:
1. The authority and obligations of the PSC Contractor given by SKK Migas to market the state entitlement of
crude oil and/or condensate;
2. Entitlement settlement mechanism between the PSC Contractor and SKK Migas;
3. The price of state entitlement of crude oil and/or condensate;
4. Billing mechanism, payment mechanism, and the costs incurred;
5. Penalties in the event of late payment.
Formula for Indonesia Crude Oil and Condensate Price changed as follows:
ICP FORMULA FOR JULY 2015 UNTIL JUNE 2016 PERIOD:

ICP Formula = 50% RIM + 50% Platts
(Ref. Minister of EMR Decree No. 3491.K/12/MEM/2015)
ICP FORMULA FOR JULY 2016 UNTIL JUNE 2017 PERIOD:

ICP Formula = Dated Brent + Alpha
(Ref. Minister of EMR Decree No. 6171.K/12/MEM/2016)
For temporary ICP had been determined ten individual ICP formula, both for crude oil/condensate newly
produced or adjustment of individual ICP formula for existing crude oil/condensate, namely:
New Crude Oil/Condensate:

1. Akatara Crude Oil (Ref. Minister of EMR Decree No. 52.K/12/DJM.B/2016);
2. Ridho Crude Oil (Ref. Minister of EMR Decree No. 288.K/12/DJM.B/2016);
3. Madura Condensate (Ref. Minister of EMR Decree No. 399.K/12/DJM.B/2016).
Existing Crude Oil/Condensate:

1. Banyu Urip Crude Oil (Ref. Minister of EMR Decree No. 168.K/12/DJM.B/2016);
2. Grissik Mix Crude Oil (Ref. Minister of EMR Decree No. 161.K/12/DJM.B/2016);
3. West Seno Bangka Mix Condensate (Ref. Minister of EMR Decree No. 290.K/12/DJM.B/2016);
4. Sungai Gerong Condensate (Ref. Minister of EMR Decree No. 52.K/12/DJM.B/2016);
5. Tiung Biru Mix Condensate (Ref. Minister of EMR Decree No. 52.K/12/DJM.B/2016);
6. Sengkang Condensate (Ref. Minister of EMR Decree No. 157.K/12/DJM.B/2016);
7. CPP Donggi Condensate (Ref. Minister of EMR Decree No. 162.K/12/DJM.B/2016).

Furthermore there are ICP of crude oil and condensate that will be evaluated in 2017, namely:
1. Banyu Urip Crude Oil, ExxonMobil Cepu Limited;
2. Tampi Crude Oil, PT Sele Raya Merangin Dua;
3. Pendalian Crude Oil, PT Sumatera Pendalian Energi;
4. Budi Crude Oil, Tately N.V.;
5. Walio Mix Crude Oil, JOB-Petrochina PS, PT Pertamina EP, Petrogas Basin Limited;
6. West Seno Bangka Mix Condensate, Chevron Rapak Limited;
7. Senoro Condensate, PT Pertamina EP and JOB Pertamina Medco Tomori Senoro;
8. Madura Condensate, PT Pertamina Hulu Energi WMO;
9. Bangkanai Condensate, Ophir Indonesia (Bangkanai) Limited;
10. Condensate from BD Field, Husky-CNOOC Madura Limited;
11. Condensate from Bukit Tua Field, Petronas Carigali Ketapang Limited;
12. Condensate from Jangkrik Field, ENI Muara Bakau BV.
There are also ICP of crude oil and condensate that will be evaluated and for temporary proposed to be official, namely:
1. Oseil Crude Oil, Citic Seram Limited;
2. Oyong Crude Oil, Santos Sampang Pty. Limited;
3. Sengkang Condensate, Energy Equity Epic (Sengkang) Pty. Ltd.;
4. Banyu Urip Crude Oil, ExxonMobil Cepu Limited;
5. Kresna Condensate, PT Pertamina Hulu Energi ONWJ.

Realization of crude oil and condensate lifting during the period of January to December 2016 was 303.48 million barrels
("MMbbls") or 829.18 Mbopd. The lifting achievement was above the 2016 revised state budget targeted at 820 Mopd.
Details of the monthly lifting data can be seen in the following chart:
CRUDE OIL AND CONDENSATE LIFTING

JANUARI-DESEMBER 2016 PERIOD
1,000
900
800
700
600
MBOPD
500
400
300
200
100
0
Domestic of the Contractor Share 173.4 234.0 240.2 217.4 165.2 126.5 141.2 152.4 161.7 116.9 107.4 206.7
Domestic of the GOI Share 296.9 190.7 209.2 228.7 298.8 289.1 356.7 308.1 322.4 472.7 438.4 374.7
Export of the Contractor Share 240.9 347.0 473.2 348.2 360.3 461.9 303.0 396.8 335.9 229.6 285.9 329.3
Export of the GOI Share 0.0 0.0 0.8 0.1 0.0 0.0 0.9 0.0 0.0 0.0 1.2 2.7
Utilization of crude oil and condensate from the GOI share was used as much as possible to meet Pertaminas refinery feed
demand. The realization of domestic lifting in 2016 was 59% of the total lifting, consist of 38% the GOI share and 21% the
PSC Contractor share. The domestic lifting of the PSC Contractor share was carried out through pipelines and vessel, mainly
performed by PT Pertamina Hulu Energi and PT Pertamina EP.
The realization of export lifting from the PSC Contractor share was 41% of the total lifting, because no sale and purchase
agreement was made with Pertamina. SKK Migas through a shipping coordination meeting and other coordination meeting
continued to encourage and urge the PSC Contractor to carry out a business to business negotiation with Pertamina in order
to meet Pertaminas refinery feed demand.
Crude oil/condensate of the GOI share that exported was 0.06% of the total lifting, include Oseil crude and Camar crude.
On the crude oil type, SKK Migas doing commercial schemes of elect not to take in kind lifting, considering the GOI share
still amounted to first tranche petroleum ("FTP"). For Oseil crude type, Pertamina could not process the oil due to the high
sulfur content, while for Camar crude, the annual GOI share is below 60 Mbbls and lifting must be done by using tanker,
therefore lifting it is not economically viable to be done by Pertamina. Here is a diagram of the composition percentage of
crude oil and condensate lifting of January until December 2016.

PERCENTAGE COMPOSITION OF CRUDE COUNTRIES FOR EXPORT LIFTING DESTINATION
OIL AND CONDENSATE LIFTING OF CRUDE OIL AND CONDENSATE
JANUARI-DESEMBER 2016 JANUARI-DESEMBER 2016
0% 14%
21% 15%
15%
8%
China
Thailand
Export of the Contractor Share
Japan
Domestic of the GOI Share
Malaysia
Domestic of the Contractor Share
11% Singapore
Export of the GOI Share
Australia
USA
11%
38% 41%
15%
11%
The biggest destination country of crude oil and condensate lifting export in January to December 2016 was China with a
total lifting volume of 19.6 MMbbls, subsequently followed by Thailand of 18.9 MMbbls, Japan of 18.8 MMbbls, Malaysia of
14.0 MMbbls, Singapore of 13.6 MMbbls, Australia of 13.4 MMbbls, United States of 9.9 MMbbls, and other countries of
17.3 MMbbls.
Currently SKK Migas is finalizing the Working Guidelines ("PTK") for sales designation and sales of crude oil and/or
condensate the GOI share and PTK for crude oil lifting and/or condensate in the upstream oil and gas activities. Both PTK
are targeted to be published in January 2017. With the publication of both PTK, SKK Migas can improve good governance
and provide a clear and detailed guideline for commercialization of crude oil and condensate.

B.
INCREASING GAS SUPPLY
TO MEET DOMESTIC
DEMANDS
The average supply of gas for domestic demands increased by 9.5% from 2003 through 2016. Until 31 December 2016, a
total of 3,997 Billion british thermal unit per day ("BBtud") (58.3%) of gas was allocated for domestic demands, exceeding the
volume of exports, which amounted to 2,860 BBtud (41.7%).
In order to accelerate the national economic growth and increasing competitiveness through the use of natural gas as raw
material or fuel for national economic activity as well as to ensure the efficiency and effectiveness of the transfer of natural
gas, the Government issued the Economic Policy Package III through a reduction of gas prices for industries which is
effective as per 1 January 2016. The policy was made with a decrease of gas price in the upstream and downstream side.
The mechanism of price reduction is done through the reduction of non-tax revenue in the sales of natural gas, as well as
regulation in the downstream side as follows:
i. Setting margin for natural gas trader which does not have the facilities;
ii. Reduction of dues and taxes on the transmission and distribution of natural gas;
iii. Setting margin/IRR for natural gas trader which have facilities.
Policies allocation and utilitzation of natural gas referring to the Minister of EMR Regulation Number 06 year 2016 regarding
Provisions and Procedures for Determination of Allocation and Utilization of Natural Gas and Gas Prices, where the
Government is trying to ensure the efficiency and effectiveness of the availibility of natural gas as a fuel, raw materials, or
other purposes for domestic demand which oriented in an optimal utilization of natural gas. Allocation and utilization based on
national energy policy by considering:
i. Public interest;
ii. State interest;
iii. Indonesia Gas Balance;
iv. Reserves and market opportunities of natural gas;
v. The infrastructure available or in planning in accordance with the Master Plan of Transmission and Distribution Network of
National Gas; and/or
vi. The field economic of allocated oil and gas reserves.

INCREASING GAS SUPPLY TO MEET DOMESTIC DEMANDS
5,000
4,397 4,416
4,500 4,336
4,202 3,997
4,008 3,820 4,078 3,882
4,000 3,775 3,681 3,774 3,632
3,631
3,500
3,550
3,000 3,323 3,379 3,267 3,402 3,237 3,090
2,913 2,860
BBTUD
2,500
2,527
2,000 2,341
1,500
1,513
1,480 1,466
1,000
500
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Export Domestic
INDONESIA NATURAL GAS UTILIZATION IN 2016
2.58%
14.61%
6.17%
29.36%
Electricity
Fertilizer
Industry
9.58%
Oil Lifting
City Gas
Gas Fuel for Transportation
Pipeline Gas Export
Export LNG
Domestic LNG
Domestic LPG
23.26%
11.55% 2.79%
0.04%
0.05%

DISTRIBUTION OF PIPELINE GAS FOR DOMESTIC DEMANDS IN 2016
2,000
1,812.8
1,800
1,626.2
1,600
1,400
1,202.9
1,200
1,021.7
BBTUD
1,000
775.8
800
669.7
600
400 321.1
195.2
200 3.51 8.5
3.1 3.6
0
Electiricity
Fertilizer
Industry
Oil Lifting
City Gas
Gas Fuel for

Transportation
Actual Contract Total +
Gas Allocation
The largest part of the domestic gas allocation is used for industrial, electricity, and fertilizer purposes at an average 55% of
the total gas allocation.
DOMESTIC GAS ALLOCATION 2016
24.8
25 23.5
22.8
22.2
21.6
20.5
20.1
20
15.3
14.6
15
13.3
TCF
10.6
9.0
10
6.2
5
2.4
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Industry 0.1 2.7 4.1 4.2 5.2 5.9 6.2 10.1 10.2 10.3 10.5 10.8 10.8 11.5
Electricity 1.2 2.3 3.2 4.4 5.3 5.8 6.3 6.9 7.0 7.6 7.7 7.7 7.9 8.3
Fertilizer 1.1 1.2 1.8 1.9 2.8 2.8 2.9 3.1 3.3 3.6 3.9 4.2 4.7 5.0

LNG LIFTING 2012 2016
In addition to meet the increasing

1,000
need of domestic liquefied natural gas
900 ("LNG"), export of LNG cargo also
800 decreased due to natural decline in
production, export contracts expiration,
700
as well as the availability of new LNG
600
supplies from other sources globally.
Increase of domestic demands could
TBTU
500
be fulfilled from the operation of several

400
LNG regastification terminal in 2014
300
and 2015 namely Lampung floating
200 storage regasification unit ("FSRU")
100
and Arun Regasification, following
Nusantara Regas FSRU which have
0
2012 2013 2014 2015 2016 been operated since 2012. Since
Domestic 41.3 67.5 86.7 114 157.91
2016, small scale regasification plant in
Export 949.4 888.4 834.2 811 751.22
Benoa, Bali has also started to operate.
ACTUAL LNG LIFTING 2012 - 2016
160 157.91 The government continued to increase

the allocation of LNG for domestic
140
demands. On the other hand, the
120 114 buyers absorption of LNG cargo can
not maximize so that the absorption
100
86.7 target of LNG by the domestic market
TBTU
80 last year is still unfulfilled. Of 59.1 LNG

67.5
cargos allocated by the government
60
41.3
for the domestic demands in 2016, as
40 many as 89% absorbed by
20
PT Perusahaan Listrik Negara ("PLN"),
Pertamina, and PT Perusahaan Gas
0
2012 2013 2014 2015 2016
Negara (Persero) Tbk ("PGN"). The
domestic buyers absorption in 2016
increase compared with the absorption
in 2015 that only 61% of LNG
allocation that has been set by the government.
In total, 176.6 Bontang LNG cargoes and 115 Tangguh LNG cargoes have been successfully shipped in 2016. In the
future, LNG supply is expected to increase in order to accommodate domestic demands parallel with the increasing of LNG
terminals in Indonesia which supplies gas to electricity and industrial needs.

C.
UTILIZATION OF LOCAL
GOODS AND SERVICES
To maximize the benefits of the upstream oil and gas operational activities for the nation, the upstream oil and gas industry
always tried to optimize the use of local content for all of their activities.
In 2016, the commitment for local content in the procurement of goods and services for the upstream oil and gas industry
conducted through the approval of SKK Migas and by the PSC Contractors themselves have reached 55.38% (cost basis) of
the total value of the procurement of goods and services amounted to US$10.20 billion.
GROWTH OF LOCAL CONTENT IN THE UPSTREAM OIL AND GAS INDUSTRY
14,000 100%
90%
12,000
80%
10,000 70%
MILLION US$
60%
8,000
50%
6,000
40%
4,000 30%
20%
2,000
10%
0 0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Goods 995 1,846 1,400 3,577 3,811 3,706 5,082 4,616 5,548 2,590 3,699
Services 5,862 4,737 6,568 5,408 6,976 8,109 11,531 9,304 11,807 5,319 6,496
% Local content 43% 54% 43% 49% 63% 61% 60% 57% 54% 68% 55%
A number of entrepeneurs, including state-owned enterprises have taken advantage of the upstream oil and gas business
opportunities, in the procurement of goods and services for the upstream oil and gas industry. In 2016, the value of
procurement of goods and services supplied by state-owned enterprises was US$274.74 million. When calculated
cumulatively since 2009 the procurement value have reached US$5.76 billion.

GOODS/SERVICES PROCUREMENT OF STATE-OWNED ENTERPRISES
2010 TO DESEMBER 2016
TOTAL
NO. STATE OWNED ENTERPRISES VALUE (THOUSAND US$) LOCAL CONTENT (%)
1 PT. Pertamina (Persero) 3,273,065.74 74.05%
2 PT. Elnusa Geosains Tbk. 722,802.17 72.17%
3 PT. Wijaya Karya (Persero) Tbk. 485,912.49 55.85%
4 PT. Rekayasa Industri 390,245.03 47.84%
5 PT. PAL Indonesia (Persero) 275,800.00 51.20%
6 PT. Surveyor Indonesia (Persero) 138,973.42 89.06%
7 PT. SUCOFINDO (Persero) 137,113.58 94.62%
8 PT. Adhi Karya (Persero) 114,385.88 90.07%
9 PT. Hutama Karya (Persero) 95,584.58 83.35%
10 PT. Amarta Karya (Persero) 28,000.00 61.34%
11 PT. Biro Klasifikasi Indonesia (Persero) 27,432.83 66.17%
12 PT. Telekomunikasi Indonesia (Persero) Tbk. 22,959.05 85.22%
13 PT. Dahana (Persero) 21,576.98 83.42%
14 PT. Asuransi Jasa Indonesia (Persero) 11,468.57 93.73%
15 PT. Pembangunan Perumahan Tbk. 6,336.96 76.32%
16 other state-owned enterprises 12,297.59 59.94%
Total 5,763,954.87 70.71%
1,600.00
1,378.84
1,400.00
1,233.73
1,108.93
1,200.00
981.93
1,000.00
MILLION US$
800.00
678.50
600.00
400.00 274.74
107.28
200.00
0.00
2010 2011 2012 2013 2014 2015 2016

In order to increase the ability of local companies to support the upstream oil and gas activities, SKK Migas and PSC
Contractors jointly conduct an assessment to local companies that became the basis for the process of approved
manufacturer list ("AML") set together to be used as a reference of prioritizing local content by PSC Contractors.
In 2016, joint assessment activities have been carried out by SKK Migas together with PSC Contractor to several local
companies which produced two commodities as follows:
a. Cables Commodity
Assessment on cable commodities carried in the first quarter of 2016 to 8 companies provider of low voltage and medium
voltage cables. The initial assessment results that 7 companies meet the criteria of assessment and passed, while
1 company did not meet the minimum requirements, which then was given the opportunity to improve performance for
six months as part of the coaching process by SKK Migas and PSC Contractors. Furthermore, there was a reassesment
resulting they passed for the low voltage cable products.
b. Valve Commodity
Valve Assessment commodity started in the fourth quarter of 2016 to 10 companies provider of valve with gate valve,
ball valve, and globe valve types.

D.
DISPUTE
SETTLEMENT
As part of supervision and guidance, SKK Migas clarify and provide recommendations of the dispute settlement and/
or dispute in tender process that occurs between PSC Contractor and the Goods and Services Provider ("GSP") or the
implementing contract. In addition SKK Migas also provided consultation on the imposition of sanction given by the
PSC Contractor to GSP, this refers to provisions set in the PTK 007 Revision-3 especially regarding the imposition of
black sanction.
Throughout 2016 SKK Migas has handled a total of 110 problems/dispute and 21 consultations of black sanction imposition.
DISPUTE AND SANCTION CONSULTATION
DISPUTE 2016 SANCTION CONSULTATION 2016
CHEVRON (CICO-CPI) 14 COPI 4

TEPI 9
VICO 3
BP INDONESIA 9
HCML 8 TEPI 2
MONTD'OR 7 PEP 2
EMCL 7
5 CNOOC 2
COPI
PHE ONWJ 4 CHEVRON 2
PETROSELAT 4
PETRONAS 1
PETROCHINA JABUNG 4
MEDCO 4 PETROCHINA JABUNG 1
HEXINDO 4
MEDCO 1
ENI INDONESIA 3
ENERGY EQUITY 3 HCML 1
CNOOC 3 EMCL 1
PONSBV 2
BOBO BSP 1
PEPC 2
PEP 2
PEARLOIL 2
OPHIR BANGKANAI 2
EMP 2
PETRONAS 1
JOB JAMBI MERANG 1
GENTING OIL 1
SPR LANGGAK 1
SAKA 1
PHE WMO 1
PETROGAS 1
KSO PEP 1
JOB PPEJ 1
CITIC 1

E.
INVOLVEMENT OF STATE/
REGIONAL-OWNED BANKS
IN THE OIL AND GAS
BUSINESS ACTIVITIES
National banking has obtained capital strengthening from the transaction payment policy on goods and services of upstream
oil and gas activities that must be made through national banks. The policy started to apply in 2009 where up to 2016 has
recorded the payment amounted to US$60.59 billion.
PSC CONTRACTORS GOODS AND SERVICES PROCUREMENT

Along with the increase in world oil prices and the development of the investment climate, the annual commitment value
of payment transactions through the state/regional-owned banks increase until 2014. However, this trend then decreased
in response to the drop of world oil prices significantly which forced investors to make economic analysis which impacted
on the construction delay of several mega projects. This trend is expected to reoccur as the oil prices starting to increase
although it still not able to boost extensive upstream oil and gas investment.
ANNUAL TRANSACTION COMMITMENT

TRANSACTION VALUE
14,000
12,432.0
12,000
10,000 9,337.9
9,011.56
MILLION US$
8,195.4
8,000
6,666.30
6,348.6
APRIL 2009 TO
6,000 DECEMBER 2016
3,969.6
4,626.2
US$60.59 Billion
4,000
2,000
0
2009 2010 2011 2012 2013 2014 2015 2016
Mandiri 64% Mandiri & BRI 0%

BNI 19% BNI & BRI 0%
BRI 6% Muamalat 0%
Syariah Mandiri 1% State-Owned Banks Commitment 0%
Mandiri & BNI 1% State/Regional-Owned Banks
Commitment 7%
BTN 0%
Commercial Bank 2%

ABANDONMENT AND SITE RESTORATION
State-owned banks also obtained capital strengthening from the deposit of abandonment and site restoration ("ASR") fund
which reached US$901 million since 2010 to December 2016.
ASR FUND
ASR FUND CUMULATIVE
1,000
901
900
800 775
700
635
600
MILLION US$
497
500
400
344
300
232
200 167
100
0
31 Dec
2010 2011 2012 2013 2014 2015 2016
BANK RAKYAT
INDONESIA
BANK NEGARA US$285.13 million
INDONESIA 31.65%
US$322.47 million
35.80%
TOTAL ASR FUND

PER 31 DECEMBER 2016
BANK MANDIRI
US$293.16 million
32.55%

F.
MANAGEMENT AND
DEVELOPMENT
OF PSC CONTRACTORS
HUMAN RESOURCES
The total manpower of PSC Contractors in 2016 reached 30,531 employees, consist of 29,863 nationals and
668 expatriates.
The number of national and expatriate employees in the upstream oil and gas industry is highly depend on the number and
type of activities undertaken during the year. The manpower employment experienced a declining trend in 2016 caused by
the drop of world oil prices so that PSC Contractors tend to reduce their activities .
NATIONAL VS EXPATRIATE EMPLOYEES
40,000 2,100
35,000 1,900
32,292 31,745
29,863
29,330 1,700
30,000
25,243 25,682
1,500
23,668 23,735
25,000 22,914 23,328
21,835
1,300
1,140
20,000 1,078
1,069 1,032 1,022
975 1,100
960 928
901 890
15,000
900
668
10,000 700
5,000 500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
National
Expatriate
Note:
1. Expatriate employees data is calculated based on the approval
letter of expatriate use issued by SKK Migas throughout the year.
Figures on the number of expatriate employees in the graph
above does not describe the number of expatriate employees at a
particular time.
2. National employees data TKI is calculated based on WP&B 2016.

EXPATRIATES DEMOGRAPHIC BASED ON AREAS OF EXPERTISE
18%
14.22% 14.07%
15%
13.62% 13.47%
12.13%
12%
9% 8.08%
7.93%
5.99%
6%
3.14% 2.99%
2.25%
3%
1.05% 0.60%
0.30%
0.15%
0%
Drilling
Projects
G&G
Engineering &
Operation Support
Leadership
Reservoir Engineering
Petroleum Engineering
Operations
Commercial
Finance
Business Compliance
Business Development
Legal
IT
External Relations
The employment of expatriate focus more on disciplines of expertise where nationals are still inadequate (e.g. Projects,
Drilling, G&G, Reservoir, Engineering) or as the investors representative (Top Management). In general, the expatriate are
required to possess a minimum of 10 years experience. In developing of national employees, SKK Migas encouraged PSC
Contractors to conduct internationalization program such as swapping & TDE.
DATA COMPARISON OF THE NATIONAL EMPLOYEES TOWARDS THE APPROVAL

FOR THE MANPOWER EMPLOYMENT PLAN ("RPTK")
40,000 38,028
36,443
34,883 33,987
32,630
35,000
National as of RPTK
30,000 32,292
31,745
29,863
National as of Actual
29,330
25,000
25,682 Note:
20,000 1. National RPTK data is based
15,000 on the PSC Contractors RPTK
approved by SKK Migas.
10,000
2. National employees actual data
5,000
is calculated based on the
0 WP&B 2016.
2012 2013 2014 2015 2016
Job opportunities for national employees based on the approval for the manpower employment plan (RPTK) have been
approved for 33,987 positions in various fields, while filling the position as much as 29,863 people (87,9%). However
considering the condition of the industry struggling with low oil and gas prices, generally the PSC Contractor would delay
filling vacant positions.

NATIONAL EMPLOYEES DEVELOPMENT
SKK Migas does not only serve to supervise and control the human resources management throughout the PSC
Contractors, but is also obliged to ensure national employees receive competence development through the transfer of
knowledge both from expatriate and other national employees, sending abroad as well as a series of other development
programs which occur for national employees to be able to master the competencies needed in upstream oil and gas
activities that are high capital, high risk, and high technology.
Increase in national employees competence initiated through budgetary policy of training and development activitities through
mechanism of WP&B in 2016, which by number has decreased compared to 2015. However, the PSC Contractors asked
to remain committed to undertake national employees development activities with more effective and efficient methods, for
example through massive in house training implementation and facilitators from the internal PSC Contractors without reducing
the quality of output expected.
Some of the initiatives that have been and are being made by SKK Migas in national employees competency development of
upstream oil and gas industry during 2016 among others :
Competency development of supply chain management ("SCM") professional in the upstream oil and gas industry through
the implementation of SCM professional ceritification. Until today, 77 BNSP licensed assessors in SCM field have been
prepared for certifying online and was targeting 1000 SCM professionals certified in the upstream oil and gas industry until
2017.
For the lifting supervisor profession, SKK Migas team cooperated with the PSC Contractor and LSP upstream oil and gas
("LSP Hulu Migas") profession certification institution to prepare certification program for lifting supervisors and was
completed in October 2016.
Preparing the Standard of Human Resources Management Competency have also started at the end of 2016 in
cooperation with the PSC Contractors and LSP Hulu Migas. Following other professions including financial management,
public relation, HSE, security services, and others.
Support the implementation of internships for 20 lecturer of Universitas Pattimura-Ambon in order to prepare competence
of local Ambon human resources to support Abadi LNG Project activities.
In cooperation with Lembaga Minyak dan Gas ("LEMIGAS") in implementing internships for 16 new employees at LEMIGAS.
Encouraging PSC Contractors to send potential national employees to work in business units abroad, through the TDE,
job swapping, job assignment, internationalization, including carrying out post graduate education abroad.

NATIONAL EMPLOYEES COMPETENCE DEVELOPMENT THROUGH TDE, JOB SWAPPING,
OVERSEAS ON THE JOB TRAINING, INTERNATIONALIZATION, AND POST GRADUATE
EDUCATION ABROAD PROGRAM
250
200
NATIONAL TOTAL
150
100
50
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Job Swapping 78 62 62 62 34 60 55 50 45 34 37 9 4 1
TDE 3 5 13 15 32 30 18 10 14 16 14 6 8 5
OJT/Job Assignment 59 70 70 36 34 75 45 39 73 102 92 5 9 12
Internationalization 9 25 47 132 187 240 220 144 100 67 39 27 23 17
SKK Migas consistently evaluates the performance of the whole human resources management conducted by all Production
PSC Contractors through annual career development montoring ("CDM"). Based on the evaluation of the CDM, SKK Migas
can discover the conditions of employment in the Production PSC Contractor so continuous improvement efforts can be
performed together with the PSC Contractor. Inspite of a more effective and efficient management of human resources in the
PSC Contractors.

138 INTERNAL SKK MIGAS | SKK MIGAS ANNUAL REPORT 2016
CHAPTER V
INTERNAL
SKK MIGAS
SKK MIGAS ANNUAL REPORT 2016 | INTERNAL SKK MIGAS 139

A.
AUDIT REPORT
FROM THE SUPREME AUDIT
BOARD REPUBLIC OF
INDONESIA (BPK-RI)
SKK MIgas Financial Statement for the 2015 fiscal year obtained an Adversed opinion based on the audit results conducted
by the Supreme Audit Board Republic of Indonesia ("BPK RI"). The Adversed opinion was given because of the proposed
audit correction by BPK RI to remove the the estimated liabilities for post-employment benefits and to record unpaid
abandonment and site restoration ("ASR") fund billing of PSC Contractors in the Financial Statements as of
31 December 2015. Towards the two proposals, SKK Migas did not agree with BPK RI with the explanation as follows:
1. BPK RI's recommendation of the estimated liabilities for post-employment benefits to be removed from the cover
sheet of SKK Migas Financial Position Report 2015 and reporting adequate disclosure of the estimated liabilities for
post-employment benefits as of 31 December 2015 on notes to SKK Migas Financial Statements for 2015 Fiscal
Year could not be done because:
a. The policy of recognizing, measuring, presenting, and disclosing the estimated liability for post-employment
benefits had been made by SKK Migas in accordance with generall accepted accounting policies and
accounting principles.
b. In auditing SKK Migas Financial Statements for 2014 Fiscal Year, the BPK RI had paid particular attention to the
recognition and presentation on the estimated liabilities for post-employment benefits on the cover sheet of
SKK Migas Financial Statements ("Audit Findings"). With regard to the Audit Finding, there had been discussions
between BPK RI, the Ministry of Finance of the Republic of Indonesia ("MoF") and SKK Migas dated
11 June 2015, and BPK RI concluded that the estimated liabilities for post-employment benefits had been fairly
presented in accordance with the General Accounting Principles ("PABU "), And had been adequately disclosed
in the notes to SKK Migas Financial Statement for 2014 Fiscal Year (Audited).
2. BPK RIs Recommendation to ASR bill funds listed as receivables of ASR funds in the Financial Statement could not
be done because:
a. ASR-fund management including the calculation, collection, use, storage, recording, and reporting is done
separately (extra comptable SKK Migas financial management) for the obligation of ASR and reserve fund is a
contractual implementation of the PSC.
b. In preparing the SKK Migas financial statements as of 31 December 2015, the recognition of ASR was
only funds made only upon the ASR fund deposited in the Joint Account of SKK Migas and restricted PSC
Contractors as of 31 December 2015. In recognition of the ASR funds were presented as assets in ASR fund,
and was also recognized as a non-current liability-ASR debt with the same value.
In order to improve SKK Migas governance, follow-up on both recommendations and other recommendations are still
continously completed.

B.
CONTINUOUS
IMPROVEMENT IN THE
GOVERNANCE ASPECT OF
THE ORGANIZATION
IMPROVEMENT IN THE BUSINESS PROCESS OF SKK MIGAS
Improving SKK Migas governance as a whole, which includes business processes, internal Working Procedures Guidelines
("PTK") and Standard Operating Procedure ("SOP"), as well as the organization of SKK Migas is one of the requirements to
align with the applicable regulations and legislation without compromising the quality of service to stakeholders. Efficiency,
effectiveness, and bureaucratic reform are the main goals in governence improvement of this governance.
Effort taken in 2016, among others include the ratification of five PTK which are of:
LIST OF PTK PASSED IN 2016
NO NAME OF PTK STATUS OF PTK APPLICATION
1 PTK of General Administration Implementation Revision Internal

Book One about Official Correspondence
Management Revision 03
2 PTK of the Internal Management Book Six New Internal

about Operational Representative Office
3 PTK of SKK Migas Internal Accounting New Internal
4 PTK of Oil and Gas Production Management New PSC Contractor
5 PTK of Engineering Geology and Geophysics New PSC Contractor
These PTKs are expected to harmonize the governance of several internal processes of SKK Migas, among others related
to the process simplification of administering public administration in the form of changes in provisions of temporary officials
and circulars; processes and policies concerning internal accounting; as well as related processes of representative office
operations. The approval of PTKs also clarifies the working relationship between SKK Migas and PSC Contractors, among
others, regarding policies related to geological and geophysical engineering and also oil and gas production management.

The alignment of business processes involves improvements in the management process of contract areas under termination
payment management of ground water taxes, surface water taxes, and street lighting taxes that is managed by the
Representatives Office and Divisions that carry out the risk and taxation management; as well as the process of supervision
on of lifting operations in the Representative Offices area.
CLEAN AND FREE FROM CORRUPTION, COLLUSION, AND NEPOTISM
SKK Migas has continuously constructed some reformations and improvements of its governance by implementing the
corruption, fraud, and gratuity prevention programs. This is done in order to realize the upstream oil and gas industry that is
free from corruption, collusion, and nepotism ("CCN"). Some of these activities are:
OBLIGATION TO SUBMIT LHKPN LHKPN REPORT 2016
Since the issuance of the decision letter of the Chairman of 29%

SKK Migas Number KEP-0334/SKK0000/2013/S0 on the
Obligation to Submission of State Official's Wealth Report
("LHKPN"), the entire Management and employees of
SKK Migas are required to submit their LHKPN. According
to the requirements on LHKPN, every two years or every OBLIGATION TO
occurrence of promotion/new position, the Management and SUBMIT LHKPN
NOT YET
employees of SKK Migas are required to renew their LHKPN
ALREADY
by filling out the LHKPN B form. Until now, out of the
887 employees required to report LHKPN, 70.8% or
628 employees have collected LHKPN.
71%
RECEIPT OF GRATUITY REPORT
Through the Decision Letter the Chairman of SKK Migas Number KEP-0161/SKK0000/2011/S0 on Gratuity Controlling
Guideline ("GCG"), all Management and employees of SKK Migas are required to report every receipt of gratification. In
accordance with the gratuity regulations, the Management and employees of SKK Migas are required to report the gift by
filling gratuity reporting form no later than 7 days after receiving it. Along 2016, Internal Audit of SKK Migas received 15
gratuity reports, of which 6 reports were received in the first semester and 9 reports were received in the second semester.

WHISTLE BLOWER SYSTEM
Since August 2013, SKK Migas has opened a channel for reporting violations or a Whistle Blower System ("WBS") under the
name of KAWAL SKK Migas. This channel can be used by both internal and external parties to report any alleged violations
committed by the Management and/or employees of SKK Migas. All reports will be verified by KAWAL SKK Migas to ensure
their validity. The criteria for alleged violations that can be reported are alleged corruptions, alleged violations of the Code of
Ethics, alleged violations of the GCG, alleged frauds, alleged conflicts of interest, alleged abuse, and alleged dissemination or
divulgence of the institutions confidential information. Throughout 2016, the number of reports on violations received from the
WBS KAWAL SKK Migas was 14 reports as follows:
WBS REPORT 2016
2 2 2 2
1 1 1
N
AR
AY
CT
C
JU
NO
SE
FE
AP
JA
JU
DE
AU
M
O
M
All reports that have been filed with KAWAL SKK Migas have been followed up on in accordance with the applicable
regulations.
ENTERPRISE RISK MANAGEMENT
2
The full implementation of enterprise risk management 5
("ERM") has entered the second year and was expected to
1. Risk Assessment
contribute positively in the context of improving governance
2. Mitigation Plan
of SKK Migas to increase assurance on achieving Preparation
organizational targets of all Divisions in SKK Migas. 3. Mitigation
Implementation
4. Mitigation Monitoring
5. Risk Report

The risk management activities in 2016 began with the implementation of a risk assessment that re-identifies whether there
were new risks arising and how changes in impact levels and likelihood of risks that had been identified after risk mitigation.
The 2016 risk assessment was carried out independently by the Risk Control Self-Assessment ("RCSA") method, which
involved risk owners ("RO") and risk champion ("RC") actively conducting self-assessment. It aims to increase awareness,
ownership, also RO and RC accountability of the risks in their function.
The risk assessment implemented in the first quarter of 2016 has a wider coverage than the implementation of 2014 with the
inclusion of 5 Project Acceleration Units and 4 State Budget ("APBN") Support Unit. The implementation of RCSA 2016 had
also produced a new risk map for SKK Migas. Overall, the number of Division-level risks increased from 488 risks in 2014
(117 operational risks and 371 corruption risks) to 526 risks in 2016 (332 operational risks and 194 fraud risks). High risk
in 2016 decreased by 80% from 34% in 2014 to only 6% in 2016. While low risks increased significantly to almost doubled
from 31% in 2014 to 61% in 2016.
2014 2016
34% 6%
33%
31%
High Risk High Risk

Medium Risk Medium Risk
Low Risk Low Risk
35% 61%

8 117 6
Enterprise Risk Enterprise Risk

Division Risk Division Risk
Corruption Risk (include 194 fraud risk)
371 526
RCSA 2016 also resulted changes in the SKK Migas enterprise risk composition from previously 8 top risks in 2014
decreased to 6 top risks which were prepared based on the consolidation of risks at the Division level.
NO ENTERPRISE RISK HIGH MED LOW
1 Risk of Non-Optimal Efforts to 12 68 141 221

Improve Reputation of SKK Migas
2 Risks Unachieved Target of Increasing 6 4 7 17

Oil and Gas Reserves
3 Risks Unachieved Target of 5 25 16 46

Oil and Gas Production
4 Risk of Unachieved Target of 4 6 15 25

State Revenue
5 Uncertainty Risk of 3 42 58 103

Cost Recovery
6 Uncertainty Risk of 2 29 83 114

Organization Sustainability SKK Migas
32 174 320 526
6% 33% 61%

Once the risks of Divisions are done being identified and confirmed, then the next step is the preparation of risk mitigation
plans by each Divisions. The preparation of mitigation plan aims to control the risks in order to reduce the impact and/or
likelihood of risk. The mitigation plans that have been compiled and implemented by each Function, are monitored by the
Internal Audit. Monitoring is conducted every semester to monitor the extent to which mitigation plans developed can be
undertaken and effective in reducing the impact and/or likelihood of risk.
Out of a total of 526 risks, 633 mitigation plans have been compiled by Divisions. The monitoring results in the first semester
of 2016 showed that 398 mitigation plans had been completed, 137 plans were still in process, and 98 plans had not been
implemented. While in the second semester of monitoring in 2016, Divisions compiled several additional mitigation plans,
bringing the total to 700 mitigation plans with the results, 555 mitigation plans had been completed, 111 plans were still in
process, and 34 plans had not been implemented.
RISK MITIGATION SEMESTER I/2016 RISK MITIGATION SEMESTER II/2016
79%
16%
15%
Not Done Not Done

Process Process
Finish Finish
63%
22% 5%
The completion of the mitigation plan developed by Divisions increased from 63% to 79% while the mitigation plan decreased
significantly from 15% to about 5% in the second semester. Completion of the mitigation plan developed by Divisions n is
expected to reduce or control the risks.

C.
COMMUNICATION
AND INFORMATION
TECHNOLOGY SYSTEM
INFORMATION TECHNOLOGY PROJECT MANAGEMENT
As an effort to improve effectiveness, efficiency, and transparency in work implementation, SKK Migas utilizes information
technology to support internal operational activities and to support the main tasks and supervision functions and control of
upstream oil and gas business activities, primarily in the PSC Contractors. Implementation of integrated and online information
management system is utilized as an accurate, complete, and on-time data and provider of information for SKK Migas
Managements, in decision making process.
The Basic principle for the development and enhancement of the application system is an integrated - independent
application system from a particular technology platforms that can be developed, improved, and operated in the most
suitable environment with appropriate, effective, and efficient management.

The current application system implemented is divided into three main groups which can be described as follows:
A. INTEGRATED OPERATING SYSTEM
Integrated Operating System ("SOT") is a strategic data/information exchange system of upstream oil and gas business
activities between PSC Contractors and SKK Migas, as well as with stakeholders of upstream oil and gas business activities.
The data are exchanged directly from the PSC Contractors legacy operating system to SKK Migas and subsequently
exchanged to stakeholders as a form of transparency reporting of upstream oil and gas business activities.
INTEGRATED OPERATING SYSTEM
PSC CONTRACTOR SKK MIGAS

DAILY PRODUCTION SERVER OF PRODUCTION
MONITORING MONITORING APPLICATION
(Policy-Driven) (D)
(E)
ACCOUNTING SYSTEM PROD M
(B)
VP (B)
PROD ML
HISTORIAN DATA,
SCADA.
(A)
(Policy-
Driven)
(Policy-Driven) PROD M
(F) DATABASE (C)

(D)
MONITOR NEAR
REAL TIME

SOT which are related to data/strategic information that had been implemented for the past few years and further developed
in 2016 are as follows:
1. SOT FOR PRODUCTION MONITORING & LIFTING ("SOT PM&L") is a collaborative activity of Production Operation
Division and Information System Management Division ("ISM"), with supports from the relevant PSC Contractors in extracting
production, stock, and lifting data from the production data management system of PSC Contractor to SKK Migas, using
ProdML data exchange standards, in order to improve the monitoring of production, stock, and lifting in PSC Contractors.
With the development of SOT PM&L, production and lifting data reports are available daily for further needs of Divisions in
SKK Migas and stakeholders.
Since the fourth quarter of 2016, data/information on PSC Contractor lifting activities had been made available openly, online
and updated, and accessible to all parties in need without the need for registration or other access permits.
Moreover, until the end of 2016 the development of prototype SOT for Production Monitoring of Wells had been completed in
three PSC contractors production with daily data collection activities and reconciliation of each well in the PSC Contractor for
production reporting requirements include: Morning Production Report from PSC Contractors to SKK Migas, Liquid Balance
Diagrams, Gas Flow Diagrams, and also Daily Delivered Gas Quantities and Composition Report.
This SOT is expected to be used as one of the supporting data sources in determining the level of production in each field,
each PSC Contractor, and also to know the amount of production for the area. SOT PM&L at well level plan to be applied in
5 PSC Contractors in 2017.
2. SOT FOR DRILLING MONITORING ("SOT DM") is a collaborative activity of Survey and Drilling Division and ISM Division,
with supports from the related PSC Contractors in extracting drilling, workover, and well maintenance plan and realization data
in upstream oil and gas business activities with the direct data retrieval principle from the drilling operation system of PSC
Contractors to SKK Migas by using WitsML data exchange standard.
The system is expected to support SKK Migas in improving the effectiveness and efficiency of monitoring activities of each
drilling, workover, and well maintenance activities in PSC Contractors, and at the same time facilitate SKK Migas in data
mapping, data standardization, and data supervision related to survey activities, drilling operations , workover, and well
maintenance at PSC Contractors.
The number of PSC Contractors already covered by SOT DM until the end of 2016 had reached 75% and the rest was
expected to be completed by 2017.

3. SOT FOR FINANCIAL QUARTERLY REPORT ("SOT FQR") is a collaborative activity of Accounting Division and
ISM Division, with supports from the related PSC Contractors in extracting quarterly and transactional financial report from
the financial system of PSC Contractor to SKK Migas using an account combination, Chart of Account-CoA components
(Cost Center, WBS, etc), by using XBRL data exchange standards to maintain the accuracy and validity of data/information
from PSC Contractor to SKK Migas.
With this SOT FQR, the PSC Contractors' quarterly financial statements and data will always be available for SKK Migas
regularly and can be scheduled as needed. In addition, mapping of CoA PSC Contractors to CoA SKK Migas and mapping
of the revenue data source to FQR are always updated, so that any changes in business policies/processes and their
impacts to FQR reporting on PSC Contractors can be anticipated earlier with faster and efficient solutions.
Approximately 75% of the targeted number of PSC Contractors had been implemented SOT FQR by the end of 2016 and
most will be completed by 2017.
4. AFE MANAGER/INTEGRATED is a collaborative activity of Work Program And Budget Management Division,
Operational Cost Audit Division, and ISM Division, as well as PSC Contractors, to develop an integrated system of AFE
evaluation and approval and close out AFE proposed by the PSC Contractor. The AFE Manager System is built in order
to improve the quality and transparency of data related to its submission, revision, and approval, as well as to improve the
effectiveness and efficiency of decision-making process by Management of SKK Migas.
With this system, the evaluation and approval process of AFE/closed out AFE is done automatically by a workflow
mechanism (routing document) and enables SKK Migas and PSC Contractors to monitor AFE and closed out handling
process. This system also improves the completeness, accuracy, and historical data.
As of August 2016, the latest version of AFE Manager/Integrated has been web-based and accommodates both old and
new AFE's budget schedule format (https://newafe.skkmigas.go.id), with advantages including:
Improve the efficiency, effectiveness, and transparency of AFE closed out submission and approval process;
Facilitate the monitoring process-the establishment of shared databases;
Reduce paper usage.
Until the end of 2016, AFE Manager had been introduced to most PSC Contractors and had been used for operations in
PSC Contractors. The advanced training of AFE Manager system for PSC Contractors is done independently in SKK Migas.
5. SOT FOR INTERCONNECTION SYSTEM SKK MIGAS WITH THE MINISTRY OF FINANCE is a collaborative
activity of Ministry of Finance, Ministry of Energy dand Mineral Resources ("EMR"), and SKK migas, to build a data exchange
between SKK Migas with the Ministry of Finance, in this case the Directorate General of Budget ("DJA"), the Directorate
General of State Assets ("DJKN"), the Directorate General of Taxation ("DJP"), the Directorate General of Fiscal Balance
("DJPK")-as well as the data exchange from EMR especially the Directorate General of Oil and Gas ("Ditjen Migas") to
optimize the reporting process from SKK Migas to Ministry of Finance and Ministry of EMR especially the Ditjen Migas,
this is to optimize the reporting process from SKK Migas to Ministry of Finance and Ministry of EMR.

The mission of this activity is to realize an integrated system of data/information of upstream oil and gas business activities
that is complete, valid, fast, accurate and current in supporting the planning and implementation of supervision and control of
upstream oil and gas activities that is transparent, accountable and reliable.
The benefits expected from this SOT can increase:

good corporate governance: completeness, accuracy, update of upstream oil and gas data/information;
synergy, collaborative, team work in monitoring and control activities;
accountability, transparency and reliability of information;
planning and implementation related to upstream oil and gas activities;
decision making and policy of upstream oil and gas activities.
With this SOT, the report and data of production and lifting, PSC Contractor assets, and taxes are always available in
scheduler and can be accessed online by Ministry of Finance. This system has covered all areas of interest that become as
target data exchange with directorate under the Ministry of Finance and EMR. For 2017, this system's scope will focus more
on improving data exchange related to the assets of state property ("BMN"), customs and profit-sharing fund ("DBH"), which
specifically will involve the collaboration between Ditjen Migas-Ministry of EMR as well as the Directorate General of Budget,
Directorate General of Taxes, and Directorate General of Fiscal Balance-Ministry of Finance.
6. SOT FOR ASSET LIFE CYLE MANAGEMENT ("SOT ALCM") builds a prototype of the PSC Contractor's data
reporting assets of BMN system to system from the PSC Contractor to SKK Migas to improve the quality and transparency of
data. The assets of BMN consist of capital assets ("HBM"), inventory property ("HBI"), land, and inventory materials.
Prototype and trial data material inventory exchanges at several PSC Contractors had been completed by the end of 2016,
while other BMN assets faced serious constraints regarding the availability/reliability of BMN asset management systems in
PSC Contractors.
The 2017 plan will revise SOT ALCM's strategy to focus on improving business processes as well as the need for BMN
asset management systems in PSC Contractors simultaneously with the improvement of quality assurance related to data
management business processes and reporting of BMN asset data in PSC Contractors in accordance with the applicable
technical principles .
7. INFORMATION SYSTEM OF COMMERCIALIZATION AND ACCEPTANCE OIL AND GAS is an integrated

information system in the sales process up to oil and gas revenues involving several related functions namely Division of
Accounting, Crude and Condensate Commercialization Division, and Natural Gas Commercialization Division.
This system is built with the database concept with updated and user friendly data/information in order to provide
comprehensive information for all interested parties as well as provide convenience in conducting oil and gas sales and
revenues activities, as well as integrated with the monitoring implementation activities of revenue and debt-receivable
accounting.

Until the end of 2016, features that had been built include document repository related to contracts, ICP, planning, lifting
verification and realization, OTP functions, monitoring of billing data, monitoring of payment documents, and debt/receivable
settlement.
For 2017 will proceed towards finalizing this SOT focusing on DMO and DMO fee development, Report A05, correction/
revision function and integration to other IOS as well as with Handheld Monitoring Lifting system.
8. GIS OF OIL AND GAS RESOURCES MANAGEMENT is a system based on geospatial information system ("GIS") for
monitoring subsurface data of upstream oil and gas activities in order to improve SKK Migass supervision and control to
PSC Contractors on exploration, exploitation, commitment monitoring plan, and the realization of oil and gas field
development, PSC management, and also program and budget management.
GIS of Oil and Gas Resources Management is built with an approach to accommodate most of the data/information in
internal SKK Migas, some data from PSC Contractors, and some data/information from stakeholders by cooperation and
update approach through web services technology to obtain accurate, complete, and current data.
Throughout 2016 had been developed features of work form that allows each division to clarify the completeness and
accuracy of data displayed on this GIS system. Another that had also been developed is SKK Migas INA Fact Pages that
provides all correlated data related to information on upstream oil and gas activities in Indonesia, delivered through smart
technology to support the main task of SKK Migas.
SKK Migas has coordinated with other agencies, such as Data and Information Center, Geological Agency, and Marine
Geology Research and Development Center-Ministry of EMR; Geospatial Information Agency ("BIG"); Dishidros-Navy; and
the Ministry of Transportation, where from all the results of the discussion, the parties give full support to SKK Migas in the
development of GIS applications/portals.
Furthermore, the development of SKK Migas GIS is directed to support the implementation of Presidential Regulation Number
9 of 2016 on Accelerating the Implementation of One Map Policy ("OMP").
In 2017, GIS will be further developed and to cover the management of oil and gas reserves and resources, Geology,
Geophysics and Reservoir ("GGR") studies, administration and legality, and other general data required by SKK Migas
Division. Further steps will be the integration with authority data in ministries/agencies, as well as continued integration
with OMP.

B. INTERNAL INFORMATION SYSTEM
Implementation of information and communication technology utilization is not only for the use of integration and
interconnection with PSC Contractors or stakeholders, but also for internal performance improvement, primarily in relation
to the improvement of effectiveness, efficiency, and transparency of SKK Migas operations.
Several Internal Information System ("IIS") programs that have been implemented are among others:
1. ENTERPRISE RESOURCE PLANNING ("ERP") SYSTEM to manage financial, logistics and personnel management
in internal SKK Migas. Operational internal management activities that have been performed using ERP system modules
include:
Financial / Controlling Module ("FICO"): recording and reporting internal financial data of SKK Migas;
Material Management Module ("MM"): reservation of ATK items;
Human Capital Management Module ("HCM"): independent personnel data management (Employee Self Services), the
management of official travel (Travel Management).
Where all features had been adopted in the 2016 SKK Migas operations. With an integrated process between each module
in the ERP system allows consistent data so that the report is more accurate, complete, and can be presented on time.
The focus of ERP system development in 2017 will include the refinement of the Self Service Manager ("MSS"), the creation
of ERP transaction monitoring dashboards, and the continued assistance of ERP users.
2. ELECTRONIC GENERAL ADMINISTRATION MANAGEMENT ("E-PAU") to manage administration, correspondence,

and filing activities. With this system, there is an increase in effectiveness, efficiency, transparency as well as recorded all
records, and at the same time improving the ease for users in drafting, tracking, and reporting/recap of official script and filing.
E-PAU has been actively and massively used in SKK Migas, where continued development in 2016 was prioritized on back
end processes and will be enhanced to be faster, more mobile, more reliable, and more user friendly in 2017.

3. THE DEVELOPMENT OF ENTERPRISE ARCHITECTURE ("EA") BASED ON SERVICE ORIENTED
ARCHITECTURE ("SOA") is the mapping and alignment of business process between divisions, business process with
application system, in order to enhance communication between organization and business, to improve consistency,
accuracy, accuracy of time, integrity, quality and availability of access, and to accelerate the system integration.
This tool facilitates further analysis and helps decision-making process of SKK Migas Management and stakeholders as it
provides design and modeling as the basic reference for the development of application system (management and data
processing) also simplify the process of synchronization and alignment between business processes and information
systems as well as integration system and information/data in SKK Migas.
EA has produced information flow core model data that characterize core process in SKK Migas related to data and
information flow, which then can be used by SKK Migas in the development of application system needed by Division/
organization with reference to the concept of Enterprise Application Integration.
4. PERFORMANCE MANAGEMENT SYSTEM ("PMS") is an integrated system, which can manage, display, and analysis
datas related to the performance of each Division in SKK Migas in order to support SKK Migas target achievement
This system is expected to support SKK Migas in:

1. Improving the competitiveness of organizational performance comprehensively;
2. Understanding the organization's shared goal;
3. Establishing a more conducive working environment;
4. Directing the capacity/competence and capability of the organization and the worker;
5. Accommodating, managing, displaying, performing data analysis related to the performance of each section in SKK Migas.
PMS has been used for two consecutive years to support the Working Meeting of SKK Migas in executing the finalization of
the Organization is Key Performance Indicator ("KPI") and Deputy's KPI which is used as the data source of KPI assessment
on each Divisions.

5. PERMITS AND FORMALITIES SYSTEM DEVELOPMENT is a web-based data reporting system related to data of
State Property Land (BMN Land) assets from upstream oil and gas business activities of PSC Contractors to SKK Migas to
report complete data on land ownership with allocation for upstream oil and gas activities in PSC Contractors. This system is
expected to improve the quality and transparency of data reporting of land data, as well as to be integrated into IOS ALCM
which will connect to database system in DJKN Ministry of Finance.
6. RPTK-IMTA ONLINE APPLICATIONS ais an online application system that has a database of national and expatriate
employees in PSC Contractors completely who are able to manage the approval of the Workforce Development Plan
("RPTK") and License to Use Expatriate ("IMTA") as well as features of tracking national-expatriate employees movement in
internal and between PSC Contractors.
This system is expected to improve the performance of SKK Migas on evaluation/analysis for decision-making related to
the management of empolyees in PSC Contractors. For employees beyond PSC Contractor it is have been prepared an
application names SKK Migas Employees Portal.
Throughout the year 2016, a pilot project had been implemented in 12 PSC Contractors and will be further developed in
2017.
7. DEVELOPMENT MONITORING SYSTEM OF VALUE ADDED TAX (VAT) AND INCOME TAX is carried out to
improve the performance of SKK Migas Taxation and Levy Department in the business process of monitoring oil and gas
income tax and reimbursement of PSC Contractors VAT, in order to establish an integrated system with stakeholder system in
order to improve the quality and transparency of data.

C. INFORMATION SYSTEM MANAGEMENT & QUICK-WIN
The development of several online application systems in order to specifically support the operational management of
SKK Migas to become more effective, efficient, recorded and transparent, and generally in order to improve SKK Migas
performance apart of outside of the regular program of SOT and IIS.
Some management information systems and quick win applications that had been built under the direction of Chairman of
SKK Migas until the end of 2016 were as follows:
1. PSC CONTRACTORS OIL AND GAS LIFTING DASHBOARD for stakeholder and public necessity in monitoring the
lifting activities of oil and gas and condensate. This web-based application system can be accessed directly from SKK Migas
website (http://www.skkmigas.go.id) by selecting "PUBLICATION" menu, and then "DASHBOARD LIFTING".
PSC Contractors Oil and Gas Lifting Dashboard contain information related to the lifting volume of oil/condensate, gas
pipelines, Liquefied Natural Gas ("LNG"), and Liquefied Petroleum Gas ("LPG") at each lifting point across Indonesia,
accessible to all stakeholders through SKK Migass website.
LIFTING DASHBOARD

2. PIS/P3 ONLINE SURVEY AND DRILLING FUNCTION is an application system that can accommodate the needs
of Survey and Drilling Division as well as Project Management and Facility Maintenance Division of SKK Migas to conduct
business process evaluation of administration stages and technical stage associated with upstream oil and gas business
activities.
3. APPLICATION FOR MONITORING SKK MIGAS LAW CASE AND APPLICATION FOR MONITORING PSC
CONTRACTORS LAW CASE. Both online application system serve to monitor the occurrence and status of legal cases in
SKK Migas which involves employees from certain Unit/Division and in each PSC Contractor. Both applications are required
for monitoring, managing, and determining follow-up plans by SKK Migas Management from the legal side or any form of
Management support required for employees in accordance with applicable regulations.
4. APPLICATION FOR MANAGEMENT REPORT VICE PRESIDENT MANAGEMENT REPRESENTATIVE

("VPMR") is an online application system to record and monitor all the issues in the VPMR activities report in each contract
area in order to follow up the needs of coordination and management more effective and efficient.
5. APPLICATION FOR TIMESHEET MANAGEMENT is a web-based reporting system related to activities of each SKK Migas
employees with time unit per 30 minutes in a day that allows to be integrated with PMS SKK Migas in the assignment to each
employees. This application system requires every employees to complete his/her activities for a full week including every
assignment by SKK Migas Management, both on weekdays and holidays.

6. APPLICATION FOR INTEGRITY PACT is an application system used as an employees reminder on the integrity pact
signing by each employee periodically. Each employee will get a display of integrity pact that has been signed each time entry
into the SKK Migas network. Employees will be asked automatically to re-sign the integrity pact every six months.
7. APPLICATION FOR MONITORING SKK MIGAS DESENTRALIZATION BUDGET is a web-based application

system to manage and monitor the use/expenditure of SKK Migas budget in relation to domestic/foreign official travel budget,
development of national/expatriate employee (training) competence, offsite meeting and workshop/focus group discussion
with ministries/institutions in accordance with the budget limit and applicable provision.
8. APPLICATION FOR MONITORING AUDIT REPORT is a web-based online application system aimed at managing,
monitoring, and follow-up planning of each audit by external auditor on operational activities of SKK Migas in order to improve
performance of audit result and prevent recurrence of audit findings on same issue/subject.
DATA PROCESSING AND MANAGEMENT
Based on the Blueprint of Information and Communication Technology ("ICT") 2016-2018 and following up on last year's
activities in supervising and controlling the national upstream oil and gas activities related to data processing and information
systems, several integration initiatives of digital data are being and will be collected in SKK Migas database. The integrity of
the data is expected to be maintained and have valid references to prevent duplication and inconsistencies in reporting and
delivering information. The objective of the 2016 initiative on data processing was to improve data quality as an integrated
single source of truth, especially data on applications used by relevant parties in SKK Migas to support the decision-making
process.
The activities carried out are as follows:

A. DEVELOPING MASTER DATA MANAGEMENT ("MDM")
The compilation of master data completed in 2016 included the preparation of the main data aimed at the WP&B, AFE,
and POD data summarized in the MDM3 project and the compilation of MDM1 spatial main data.
Both projects take the same data source i.e. WP&B, AFE, and POD history documents. Throughout 2016, WP&B, AFE,
and POD data from 2013-2015 was processed gradually and future steps are expected to continue until it cover all years
of historical documents.

B. SPATIAL MDM1 SETTLEMENT
This activity is achieved by combining textual features with spatial features that have a geographical domain that can
complement each other. Data on contract areas, wells, fields, transportation, and production facilities that are MDM1 Spatial
material have been combined into one with MDM3 so that it can be seen in the following illustration of MDM portal:
In the MDM portal pointed out that the main data has become a single entity. When starting from the basin data, then the
entire contract area contained in the basin can be shown. Similarly, if the selection of contract areas is done, then the WP&B,
AFE, and POD data will appear to complement contract data, commitments (obligation), participating interests, and so forth.

C. IMPLEMENTATION OF DATA INTEGRATION
Implementation of data integration that had been carried out in 2016 were:
1. Improving MDM integration design from the application system MDM source data to MDM database and IOS application
as user application.
2. Developing monitoring dashboard of synchronization MDM between MDM with source application and user application.
Through this dashboard can be monitored the success status of the synchronization process, as in the picture as follows:
3. Implementation of MDM Stage 2 Integration includes data:

Integration of contract name/contract area, operator name, field name, and operating facility of application as
MDM data source into MDM database environment.
Integration of the MDM database to the SOT PM&L, SOT DM and SOT FQR application databases.
MDM integration design is as follows:
MASTER DATA SOURCE SYSTEM MDM HUB
DATABASE DATABASE
TABLE TABLE TABLE TABLE TABLE TABLE TABLE

UPDATE 1 2 UPDATE A B REGISTRY
TRIGGER
SERVICE
SERVICE SERVICE SERVICE UPDATE

MAPPING DATA MAPPING DATA REGISTRY DATA
ID DATA MASTER ID DATA MASTER ID DATA MASTER

UPDATE
EXISTING APPS NEW SERVICE UPDATE
EXISTING APPS NEW SERVICE DATA ON USER
USER SYSTEM
SYSTEM (REGISTRY) - EXISTING (NON PPDM)
DOC UPDATE
(PPDM)
NEW SERVICE DATABASE
TRIGGER
SERVICE
JDBC ADAPTER BROKER CALL SERVICE JDBC ADAPTER

TRIGGER SUBSCRIBER MAPPING DATA TRIGGER BROKER CALL SERVICE CALL USER SYSTEM SERVICE
CALL SERVICE
SUBSCRIBER PROVIDE SERVICE RECEIVE RECEIVE
UPDATE REGISTRY
(USER SYSTEM) UPDATE DATA UPDATE DATA UPDATE
PUBLIC DOC ESB FLOW SERVICE PUBLIC DOC DATA
INTEGRATION SERVER
ESB FLOW SERVICE DOC UPDATE

WEBMETHODS
SUBSCRIBE
(PPDM)
JDBC WEBMETHODS JDBC

ID DATA MASTER
NOTIFICATION
BROKEN NOTIFICATION
DATA ON USER
SYSTEM (REGISTRY)
TALEND MAPPING
PUBLISH BROKER CALL SERVICE CALL USER SYSTEM
USER SYSTEM SYSTEM SERVICE DOC UPDATE
SUBSCRIBER PROVIDE
SERVICE SERVICE (USER SYSTEM) UPDATE DATA
SERVICE RECEIVE (PPDM) SERVICE
MDM HUB UPDATE DATA RECEIVE
SERVICE UPDATE UPDATE
USER SYSTEM
DATA
SERVICE MDM HUB
ESB FLOW SERVICE
SERVICE PROVIDE
CENTRASITE SERVICE REGISTRY

NEW SERVICE DATABASE
USER SYSTEM
- EXISTING (NON PPDM)
- NEW (PPDM)
The implementation purpose of MDM data integration so that contract area data and the name of PSC Contractor used
by all functions in SKK Migas have the same format and standard and remain updated to become accurate information.
Introduction related to MDM data integration had been done in December 2016 with several Divisions in SKK Migas.

D. MANAGING TAKE OVER OF TERMINATION CA
Changes in operatorship for CA ownership or government decisions regarding managing take over of PSC Contractors
CA encourage coordination related to information technology ("IT") migration such as IT infrastructure, IT application,
telecommunication, IT asset management, petro application and data management, so the transfer in management of CA
which will expire can proceed seamless, uninterrupted operation. IT mitigation process has been running well and now
the CA which has changed its operatorship and or operation/management transfer, in the IT aspect has been running as
expected.
Due to the PSC expiration of Mahakam CA on 31 December 2017, SKK Migas formed a management and operation transfer
team of the Mahakam CA on 2 December 2015 with the data management and ICT as one of the sub-team. Activities and
follow-up that have been done by sub-team data management and ICT, among others:
Kick off meeting aimed to gain understanding, transition needs and related IT mitigation and roadmap concept of
subteam data management and ICT;
Identification of applications (including status) and data both digital and non digital;
Advanced technical team-level discussions and coordination involving Total E&P Indonesie ("TEPI") and Pertamina Hulu
Mahakam ("PHM") teams;
Digital data mitigation workshops take-over management with representatives of data user Divisions in SKK Migas, TEPI,
and PHM;
Discussion of the WP&B 2017 proposal for the preparation of the ICT transfer of PHM with TEPI;
Field trips and working meetings on ICT transition objects of Mahakam management transfer at TEPI with ICT
Management of PT. Pertamina (Persero);
Coordination to related ministries, in accordance to communication and information related to the transition of radio use
permits for management transfer of Radio Communications at Mahakam CA.
E. INFORMATION TECHNOLOGY AUDIT
In 2016, ICT audit had been conducted in 2 PSC Contractors for 5 areas which are: information technology strategy, risk
management, information security, communication network, information technology operation. The purpose of this
ICT audit was the compliance of the ICT activities implementation in the PSC Contractor to the provisions of PTK Number
053/SKO0000/2013/S0 on Management of Information Communication Technology to PSC Contractors and Output Audit
Reports of PSC Contractors ICT had submitted the results along with suggestions and inputs for PSC Contractors should
take corrective steps in accordance to the time frame.

OPERATIONS OF THE INFORMATION TECHNOLOGY
The requirement of IT facilities and infrastructures are very critical to support the operations of SKK Migas, therefore the
availability of reliable IT facilities and infrastructures is mandatory.
Service level is a mean to measure the reliability of information technology facilities and infrastructures in providing services to
answer users needs. According to 2016 performance, the overall information technology service level is 99.9%, above the
target of 99.5%.
Currently, ICT infrastructure managed by SKK Migas consists of:

A computer infrastructure comprising 188 servers with a storage capacity of 379 TB for data center at SKK Migas
head office and 82 TB for data center at disaster recovery center ("DRC") SKK Migas.
The telecommunication infrastructure used consists of internet and MPLS networks consisting of 20 Mbps and 5 Mbps
for connection with Representative Office of SKK Migas, 100 Mbps for connection with DRC, 25 Mbps for connection
with PSC Contractor, 10 Mbps for connection with archive center as well as 100 Mbps and 40 Mbps for internet
connection of SKK Migas head office in Jakarta. All these services must be maintained its availability so that the
operational activities of SKK Migas can run smoothly.
To support mobile operational activities through laptops, notebooks, or other types of gadgets, in 2016 SKK Migas had made
rejuvenation of telecommunication equipment and upgrading the IT security system, so that system security is maintained
even though accessed by using mobile devices by utilizing the public network.
New breakthroughs had been done by SKK Migas in 2016 by building meeting rooms and increasing the capacity of
training rooms that have interactive collaboration capability. This capability allows users to interact with other users indoors
or with other parties outside. Located in the 36th floor Wisma Mulia Building, the room has been equipped with touch screen
projector, video and audio conferencing tools, and web collaboration that can make the presentation more interactive,
discussing collaboratively and discussing with the participants outside the room. To support the improvement of employee
capacity and knowledge transfer, the training room now has the ability to implement online class room.
Hopefully this can support the spirit of SKK Migas to be able to carry out the work collaboratively.

CONTRACT
AREA

MAP OF THE INDONESIAN
OIL AND GAS AND UOG
CONTRACT AREA
IN 2016
164 CONTRACT AREA | SKK MIGAS ANNUAL REPORT 2016

SKK MIGAS ANNUAL REPORT 2016 | CONTRACT AREA 165
LEGEND OF MAP OF THE
INDONESIAN OIL AND
GAS AND UOG
CONTRACT AREA IN 2016
AREA I
Color Description Of CAs Legend:
Exploitation CA : 85
Exploration CA : 112
CBM Exploration CA : 44
CBM Under Termination Process CA : 5
MNK Exploration CA :5
CA Under Termination Process : 32

LEGEND OF MAP OF THE
INDONESIAN OIL AND
GAS AND UOG
CONTRACT AREA IN 2016
AREA II
Color Description Of CAs Legend:
Exploitation CA : 85
Exploration CA : 112
CBM Exploration CA : 44
CBM Under Termination Process CA : 5
MNK Exploration CA :5
CA Under Termination Process : 32


SKK Migas 2016 Annual Report Highlights Strong Performance

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SKK Migas 2016 Annual Report Highlights Strong Performance

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2016

Wisma Mulia Building 35th Floor

2 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 3

Synergize stakeholders and Production Sharing Contract

Work towards a conducive working culture through synergy,

Support and develop the national capacity to compete in

Increase state revenue to give maximum contribution to the

4 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 5

6 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 7

SKK MIGAS OVERSIGHT COMMITTEE CHAIRMAN VICE CHAIRMAN OF SKK MIGAS

8 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 9

10 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

We need to be more efficient, faster, and cooperate!

Wassalaamu'alaikum Warrahmatullaahi Wabarakaatuh

SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 11

CHAIRMAN OF SKK MIGAS

"As the supervisor and controller of the industry that becomes

AMIEN SUNARYADI was inaugurated as the Chairman of

12 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

Sanctity of a contract is a necessity that is firmly

M.I. ZIKRULLAH was inaugurated as the Vice Chairman of

SECRETARY OF SKK MIGAS

"SKK Migas in running the State Budget is required to be more

BUDI AGUSTYONO was inaugurated as the Secretary of

SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 13

"The success of the performance and achievement of

GUNAWAN SUTADIWIRIA was inaugurated as SKK Migas Deputy

DEPUTY FOR OPERATIONS MANAGEMENT

"Thank God for the permission of Allah SWT, hard work

MULIAWAN was inaugurated as SKK Migas Deputy for

14 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

"Despite the fall in oil prices, SKK Migas had surpassed

PARULIAN SIHOTANG was inaugurated as SKK Migas Deputy

DEPUTY FOR BUSINESS SUPPORT

"The decline in the economic level of upstream oil and

RUDIANTO RIMBONO was inaugurated as SKK Migas Deputy

SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 15

PROGRAM AND AUDIT WORKING

EXPLORATION PROJECT RISK CRUDE AND HUMAN

SKK Migas also has 5 Representative Offices namely:

16 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 17

EBT Mix 23% 31%

Power Plants >115 GW >430GW 25% 31%

Energy Elasticity <1 <1

18 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

EFFORTS WHICH SHOULD BE DONE SIMULTANEOUSLY

SKK MIGAS ANNUAL REPORT 2016 | INTRODUCTION 19

Key Performance Indicators (KPI) are as follows:

1 To contain the decline rate of production

2 To increase the oil and gas reserves

3 To achieve the oil and gas lifting target

4 To control the cost recovery

5 To achieve state revenue

6 To improve the governance system

20 INTRODUCTION | SKK MIGAS ANNUAL REPORT 2016

TARGETS REALIZATION % ACHIEVEMENT

a. Realization of Oil Lifting: 820 Mbopd 829.18 Mbopd 101%

b. Realization of Gas Lifting: 6,440 MMscfd 6,606 MMscfd 103%