Focus on the future in IndonesiaSeptember 14, 2020
John Anis, then-general manager of Pertamina Hulu Mahakam and now president-director of Pertamina International Exploration & Production, talks to The Energy Year about how the dual crisis has impacted the company and the economy. Pertamina subsidiary Pertamina Hulu Mahakam is developing the Mahakam block, which it took over from Total and Inpex in early 2018.
How has the dual crisis impacted Indonesia’s overall economy?
This crisis is different this time around. It is a double crisis, which translates into a double impact. We have to deal with Covid on the one hand and the low oil and gas prices on the other. The virus has had a great impact on oil and gas operations across the country due to restrictions rolled out by the government such as travel bans. Yet for socio-economic reasons Indonesia is not completely under lockdown.
The country’s budget is running short as it is being channelled into covering health and subsidising the daily livelihood of citizens. This means that little or no funding is left to develop other projects. The lack of development across the country has had an impact on job creation, which appears to be stagnant, leading to less purchase capital and thus less spending. Indonesia has an important informal market, which has come to a halt. And this is a reflection of the economy as a whole, which, like in the rest of the world, is suffering.
What direct impacts has the crisis had on your day-to-day operations?
Remote home-office work has become standard practice. We have also implemented a business continuity management system that develops a business impact analysis based on the current scenario. From here, we defined actions as to how to work with more efficiency.
Due to our operations, some of our employees are working on a rotational basis with a two weeks on, two weeks off schedule. We were forced to change this to four weeks on-and-off to reduce travelling. We have personnel on site working on marine vessels and rigs, which means they have to keep within enclosed environments. This makes social distancing and physical distancing almost impossible. We have established a 14-day self-quarantine before they go to these sites.
Challenges such as the lack of transportation, the impossibility of purchasing material from abroad (i.e. China or Italy) and the consequent delays this creates for our projects and operations are an everyday struggle. Contractors are having the same problem to a point where some are even declaring force majeure.
What is the largest risk you face at an operational level?
Above all, we are trying to take all the precautionary measures to avoid an on-site infection as this would mean a total shutdown of the platform or site at stake. This would be the worst-case scenario. Delays of certain projects have an impact, of course, but it is not something we can’t manage with our clients given the exceptional times we are living in. There is a financial impact but we can make up for it.
However, closing down an operation would be a major blow because we would have to restart the site all over again. One must understand the complexity of starting up a well, as they are very sensitive. The whole process of closing a well that has a lot of water and then restarting it at the same rate is a difficult operation. For this reason, we have drafted a robust protocol to avoid this happening. It is a matter of prediction and prevention.
To what extent is the crisis pushing efficiency and a further shift towards digitalisation?
Covid has had a micro effect on how we manage daily operations and the impact on the health of our personnel. But the second problem, which is the low oil and gas price, has had a macro effect and has directly impacted our financial situation. The Mahakam field is very cost-sensitive. Having an important brownfield is like having an older vehicle: You have to maintain it, meaning that the costs are higher.
This crisis is forcing us to be more efficient and, in a sense, we are trying to capitalise on it to change our old ways. It is said that every challenge has an opportunity within it. For example, the shift to digital and remote working has highlighted the fact that maybe we do not have to travel that much to obtain the same results. Digital technology is the key. IT and digital systems have become today’s working spaces and tools. They have changed the way we work and enhanced efficiency.
As an NOC, you have a certain responsibility to the nation. Do you think Pertamina will be at the forefront of the post-Covid recovery efforts?
Yes, we have to be. People need energy and our mandate is to provide it to the nation. What is important now is how we can ensure the continuity of supply and avoid possible disruptions. We also have to actively contribute towards a quick recovery of the industry. The fact of there being a problem does not mean we can halt operations. We still need to supply the essentials to keep this country running. However, we should not lose focus on the opportunities down the road. I believe that beyond Covid, a bright future lies ahead.