November 04, 2018

Pertamina Won the Challenge with Chevron for Rokan, Indonesia

Stratas Advisors

State-run company Pertamina is poised to take over the Chevron-operated Rokan Block in Indonesia when the current operating contract expires in 2021. Post-2021, the operatorship will be under the new gross split production sharing contract, which will run until 2041. This is the latest case of Indonesia’s increasing trend to award contracts to Pertamina. Since 2015, Pertamina has been awarded 11 contracts from the state. By awarding more strategic assets to the national oil company, the Indonesian government believes increases in national oil production will result, thus higher volumes of domestic consumption will be met by domestic supplies.

However, information about the competitive bids has been sparse, meaning that followers are left to trust the news and reporting or find novel ways to make additional assessments. Stratas Advisors chose the latter.

In short, Stratas expects Rokan production in 2025 to come in lower than the 30% of total Indonesian production currently envisioned as a result of the change in operatorship from Chevron to Pertamina. Notably, Pertamina has important hurdles to clear in order to succeed. First, Pertamina needs to implement advanced EOR technology. Second, the company needs to fund substantial capital investments. Lastly, Pertamina needs to manage the needs of the Rokan Block at the same time it manages additional PSC extensions taken over from IOCs. (Figure1)

Figure 1 – Indonesia’s Rokan Block and Principal Oil Fields Location Map


Success Hinges on EOR

Enhanced Oil Recovery (EOR) methods have been used in Indonesia for decades largely to address declining oil production and lower reserve replacement ratios. Historically, Chevron was a champion and leader in EOR production in the region. Looking to the future, ongoing development of EOR and EOR technologies is essential for optimizing these mature fields, presenting a critical challenge for Pertamina even if the company retains talent from Chevron’s departure. To be clear, the scale of operations is huge. The Rokan Block includes more than 90 oil fields, accounting for around 30% of the country’s total estimated oil production. In the Rokan Block, the Duri and Minas fields are the largest heavy oil and light oil fields, respectively.

The Duri field, one of the most important assets in the Rokan Block, was developed primarily with steam flooding, the most extensive EOR technology for improving heavy oil recovery, since 1985. To date, the Duri has produced roughly 1.5 billion barrels of oil from steam flooding operations. Early trials of EOR included efforts with “Huff and Puff” which is an embryo of the steam flooding process. It consists of 3 stages: injection, soaking and production.


First, steam is injected into the well to heat the oil within the reservoir for a certain period of time. Secondly, after sufficient stream has been injected, the well is closed for a few days; this is called the soaking stage.  Lastly, after the heat flows into productive layer, oil is extracted via producing wells. The other method tried in Duri was caustic injection. Notably, this approach proved futile and was discontinued quickly due to failures at improving oil recovery. Current Duri field operations continue to use steam flooding.

The Minas field, while producing light oil, has been developed with water flooding for decades. Recently, Indonesian production of light crude totaled about 500,000 barrels per day, of which around 140,000 barrels per day is estimated from Minas. Following the successful steam flooding implementation in Duri field, the Minas piloted a similar method beginning in 1998. Unfortunately, the field trial failed due to some technical factors.

To date, Pertamina has only applied EOR technology successfully within laboratory settings. Looking ahead, Pertamina has bold plans. In 2024, the company plans to implement a new trial using chemical injection on the Rokan block. SKK Migas, an institution that manages upstream oil and gas business activities for the Republic of Indonesia, signed a memorandum of understanding (MOU) with Sinopec in December 2017, establishing a collaboration on developing future EOR technology.  Even though Sinopec has long experience in EOR implementation, the schedule and details of the collaboration to implement the EOR technology have not yet been disclosed. Uncertainties and doubts about Pertamina’s ability to maintain Rokan Block production level after the ownership change and the company’s ability to realize production of 500,000 b/d by implementation of full scale EOR technology on fields still exist.


Want to See More? Login or Create a Account