CHINA - INDONESIA DEVELOPMENT
PLATTS - PetroChina is positioning itself for an aggressive expansion of its Indonesian upstream and downstream assets in what a senior executive called an "unlimited" investment mandate for the state-run entity.
The plans come amid expectations of increased deal-making in the energy space by Chinese oil giants with deep pockets, particularly with Beijing's backing for overseas investments under the Belt and Road Initiative.
PetroChina, the main subsidiary of China National Petroleum Corp., is also pushing into Indonesia at a time when the Southeast Asian country is going through a prolonged phase of resource nationalization that has forced foreign investors to exit the country.
This has been problematic for Indonesia's upstream sector, as state-run Pertamina struggles to maintain its oil and gas production levels, and remains ill-equipped to exploit reserves without the participation and technology of international oil companies.
It remains to be seen how much breathing space PetroChina can find within this limited investment climate amid Jakarta's tightening grip on its resources, and where the likes of ExxonMobil and Chevron have pulled out.
When asked about the size of the war-chest that PetroChina has set aside for Indonesia, Gusminar, vice president for supply chain management and operation support at PetroChina's Indonesian arm, said there was no apparent threshold.
"It is unlimited as the Chinese government has given a green light [to invest] as much as possible in Asia Pacific," Gusminar said.
China's state-controlled oil giants are sitting on record-high cash pile of $35 billion and their free cash flow generation is close to double-digit yields, paving the way for more mergers and acquisitions along with higher oil prices over coming years, according to Sanford C Bernstein Research.
NEW LICENSING ROUND
In Indonesia, oil and gas production sharing contracts are being overhauled, expiring licenses are to be relaunched under revised terms and new contracts are being drafted.
Investor interest in its new licensing round will be closely watched as it will determine the attractiveness of its new fiscal terms. The fate of expiring licenses will also signal investor interest as Pertamina may not be able to absorb and develop all the acreage on its own.
Over the next decade, 35 PSCs worth an estimated $10 billion and accounted for over 1 million b/d of oil equivalent of production in 2016 will expire in Indonesia, according to Wood Mackenzie estimates.
Backed by "unlimited" investment, PetroChina's Indonesian arm intends to participate in the bidding rounds for 2018 and acquire stakes in at least three prolific oil and gas acreages -- the East Natuna gas field, the offshore Mahakam block and the East Kalimantan blocks, president of PetroChina International Companies in Indonesia Gong Bencai told reporters at a press conference.
"From 2020, PetroChina Indonesia will move forward at a high speed. We are ready for all opportunities, be it upstream and downstream, onshore and offshore, domestic or international cooperation," Gong said.
The development of the East Natuna gas field, considered one of the world's largest gas reserves, has been hampered by territorial disputes due to its location in the South China Sea, high offshore exploration costs, technical issues and the departure of oil majors like ExxonMobil.
PetroChina said it has the technology and the pockets to crack East Natuna.
"We are strongly supported by CNPC's research and innovation, especially in enhanced oil recovery technology. We hope to team up with other firms, including Pertamina, to boost the production of aging fields with such technology," Gong said.
Gusminar said the company is also conducting informal discussions with Pertamina to acquire a 15%-20% stake in the Mahakam exploration block. "The response is very positive. We have a chance but Pertamina is in talks with Total [as well]," Gusminar said.
Pertamina, through its indirect subsidiary Pertamina Hulu Mahakam, took over full ownership of the Mahakam block in offshore East Kalimantan on January 1, 2018 from France's Total and Japan's Inpex.
The block was surrendered to Pertamina after its PSC expired at the end of 2017, and Inpex and Total are still in talks to participate in a new PSC. Pertamina eventually plans to seek partners to develop the Mahakam block.
Besides Total and Inpex, the UAE's Mubadala Petroleum has also expressed its interest in the Mahakam block, S&P Global Platts reported previously.
Indonesia's largest natural gas fields are located in the Aceh region of South Sumatra and East Kalimantan, and the Mahakam block accounts for roughly a quarter of Indonesia's dry natural gas production, according to the US energy department.
PetroChina has indicated its interest in operating the East Kalimantan contracts and is awaiting the block tender from the government, Gusminar said. This comes after Chevron said in 2016 it would not extend the East Kalimantan PSC and return the assets to the government when the contract expires in 2018.
BOOSTING CAPEX PLANS
PetroChina Indonesia plans to spend $56.9 million to develop the Jabung block in Sumatra in 2018 compared with $43.9 million last year.
The Jabung block is the biggest contributor to PetroChina's output and is expected to produce 60,000 boe/d in 2018 compared with 55,000 b/d last year, Jabung's general manager Yu Guoyi said.
PetroChina's total production from all its working areas in Indonesia is expected to rise to 100,000 boe/d in 2018 from 95,000 boe/d in 2017, according to Gusminar. It expects to produce 600 MMcf/d of gas and 80,000 b/d of crude by 2020.
|December, 14, 09:25:00|
|December, 14, 09:20:00|
|December, 14, 09:15:00|
|December, 14, 09:10:00|
|December, 14, 09:05:00|
|December, 14, 09:00:00|
PLATTS - Renewables' share in Germany's power mix is set to reach 38% this year, ahead of the government's 2020 target of 35% but below-trajectory for 2030's 65% target, utility lobby group BDEW said Thursday.
EBRD - the Bank will no longer finance thermal coal mining or coal-fired electricity generation. The Bank will also stop funding any upstream oil exploration, and will not finance upstream oil development projects except in rare and exceptional circumstances, where such investments reduce greenhouse gas emissions.
IMF - The Malaysian economy has shown resilience. Real GDP growth is projected at 4.7 percent for 2018, underpinned by domestic demand.
IMF - Bolivia's real GDP growth is projected at 4.5 percent in 2018, one of the highest rates in the region. Growth is supported by continued accommodative policies, a second economy-wide wage bonus, and strong agriculture output.