Improved ICP Lifted State Revenues to USD6.99 Billion

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 317.Pers/04/SJI/2020

Date: 25 October 2020

Improved ICP Lifted State Revenues to USD6.99 Billion

The Indonesian Crude Price (ICP) average until September 2020 increased to USD42 per barrel, higher than the macro assumption of the Revised State Budget (APBN-P) which was set at USD38 per barrel. This had positively impacted the state revenues which reached USD6.99 billion or 119%, exceeding the APBN-P target of USD5.86 billion.

Head of Bureau of Communication, Public Information Services, and Cooperation of Ministry of Energy and Mineral Resources, Agung Pribadi, said the ICP realization had exceeded the target set in the APBN-P of 2020. "The ICP average in the APBN-P was set at USD38 per barrel," said Agung in Jakarta on Sunday (25/10).

Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) has projected that the second wave of the COVID-19 would average out the ICP at USD40 per barrel annually, so that the outlook for state revenues from the upstream oil and gas subsector will reach USD7.21 billion at the end of 2020.

For cost recovery, until September 2020, the realization had reached USD 5.97 billion or around 73.5 percent of the target USD 8.12 billion. Meanwhile, investment in the third quarter was spurred by Pertamina E&P, CPI, Pertamina Hulu Mahakam, BP Berau and Eni East Sepinggan. This achievement has had a significant impact on state economy.

"In difficult condition like this, the state certainly needs an economic turnaround. We believe that upstream oil and gas investment will create multiplier effects so that Indonesia can restore its economy," said Head of SKK Migas Dwi Soetjipto in a virtual press conference on Friday (23/10).

However, Dwi admitted that the Covid-19 pandemic would still impact the management of the upstream oil and gas subsector. "Because the second wave of the Covid-19 pandemic has just started, the global oil demand is still unstable. This will impact the movement in the world's oil prices," he said.

According to Dwi, Covid-19 has created impacts of postponing several projects and reducing investment. Falling sales price has also affected cash flow. Funds will be focused more on productive Oil and Gas Work Areas (WK). It is estimated that investment in the oil and gas subsector will decrease by around 30 percent globally.

Production of Rokan Work Area

Heads of Agreement for Rokan Work Area which was signed on September 28, 2020, has provided room for SKK Migas to maintain continuous production in Rokan until the contract ends in 2021.

"The investment target in Rokan Work Area until July 2021 is USD154 million; in 2020, 11 wells will be drilled with additional production of 500 BOPD and in 2021, another 107 wells will be drilled with additional production of 5,000 BOPD," Dwi explained. The number of wells to be drilled will add up as Pertamina Hulu Rokan enters the block.

SKK Migas is trying to keep the management and operation transfer of Rokan Work Area run smoothly by forming a Rokan Transition Team. "The team is making tender processes to complete the equipment and tools needed for the drilling process in accordance with the HOA so that by the end of 2020, drilling can start," Dwi said. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

Agung Pribadi (08112213555)

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