Pertamina Hulu Mahakam Incentive Encourages National Upstream Oil And Gas Sustainability

PT Pertamina Hulu Mahakam (PHM), part of the Kalimantan Regional Pertamina Upstream Subholding, until October 2023 recorded oil year to date (YTD) production figures of 26,251 barrels of oil per day (BOPD) and year to date (YTD) gas of 530 million cubic feet of gas per day (MMSCFD).

The achievement of this production is the result of maximum technical efforts for operations, considering that most of the oil and gas fields in Mahakam's WK have matured and are entering the phase of decreasing natural decline production.

"Over the last few years, we have managed to withstand the high rate of natural production decline and maintain production levels in mature oil and gas fields," said Setyo, in a written statement, Wednesday, November 15.

Sapto Edi as General Manager of PHM. This is thanks to the application of various innovations and technologies to increase the recovery rate of existing oil and gas wells.

"In addition, we are also implementing the best engineering practices in maintaining and increasing the reliability of operations and oil and gas production facilities that are decades old," he continued.

WK Mahakam is a termination oil and gas block that has produced nearly 50 years with a high natural declining rate in the range of 50 percent per year. For this reason, as the Operator, PHM with full support from SKK Migas, made various efforts to curb the decline in production, extend production age until the end of the contract by maintaining economic level, paying attention to aspects of efficiency, and continuing to maintain safety aspects.

Given that the Mahakam WK is a mature oil and gas block, the government provides incentives to PHM in the form of changes in Revenue Sharing Contracts and tax breaks. The goal is to reduce the cost burden, so that operators can produce oil and gas with economics until the end of their contract period. Upstream oil and gas incentives are stimulus given by the government to upstream oil and gas industry players to reduce operating costs/loads so that industry players can be more aggressive in implementing work programs to increase production, as well as maintain the economic level of assets.

The provision of incentives from the Government of Indonesia to the Mahakam Block in early 2021 has provided the ability for the Mahakam WK to continue the development work program more extensive, including running an exploration program aimed at opening the potential for oil and gas reserves in the Mahakam Block. This of course becomes very important to ensure the sustainability of investment and support the achievement of the national oil and gas production target.

Setyo Sapto Edi explained that receiving incentives certainly has a very significant effect on state revenues and regional development.

"For PHM, incentives are a special stimulus and attention from the government to increase PHM production for national energy security, maximize Mahakam's backup recovery and block resources, while still providing reasonable investment returns to investors and value for all stakeholders," concluded Setyo.

With incentives, PHM can carry out more activities to build new platforms, drill and ensure the sustainability of field development and exploration plans. This government policy has provided good benefits for the country, PHM and through the multiplier effect it has also had an impact on the oil and gas support industry in East Kalimantan.