Transcript Decommissioning Workshop Surabaya 25 – 27 August 2004

Decommissioning Workshop
Surabaya 25 – 27 August 2004
(organized by BPMIGAS – facilitated by ConocoPhillips)
30/07/2004
Agenda
Day 1
• Opened by Mr. Rachmat Sudibdjo - Head of BPMIGAS
• Talk Show – 1 : - Cost mechanism post operation from regulation point of view (among others Mr.
Tjetjep Muljana was representing TI)
• Presentations :
 Premier oil : Update 2001 platform removal seminar
 Unocal : Decommissioning Cost allocation method
• Talk Show – 2 : Cost mechanism post operation from practical point of view
Day 2
• Presentations :
 CNOOC : Decommissioning, an overview from legal perspective
 BP : Strategic Cost structure & Estimation for decommissioning
 CPI : Property transfer & relinquishment – a combined PSC contractor approach
 BPMIGAS (Mr. Gde Pradnyana) : Offshore Platform Decommissioning Plan & Execution
Groups discussions : Group A : PSC’s Pre ’94 contract & Group B : PSC’s Post ’94 contract
Day 3
• Presentations of Group A & Group B
• Recommendations
• Closed by Mr. Kuswo – Head of Exploitation BPMIGAS
17/07/2015
2
Discussion
Data
• In Indonesia there are 530 offshore platforms among which 460 are
in operation and 70 are not in operation
• Among the 530, 276 platforms (52%) > 20 years
• Among the 70 not in operation, 54 are still complete, and 16 are
partially removed
• TI is listed to have 73 platforms (13.8 %) and all are operational. as
comparation BP has 210 (39.6%), CNOOC 99 (18.7%) and UNOCAL
79 (14.9%)
17/07/2015
3
Discussion
Legal Overview
• Government Regulation No. 17 year 1974 governs decommissioning
• In Indonesia, pre 1994, PSC only provides simple and unclear wording for decommissioning,
as follows : “Contractor shall be responsible for the preparation and the execution of the work
program, which shall be implemented in a workmanlike manner and by appropriate scientific methods,
and contractor shall take the necessary precaution for the protection of navigations and fishing and
shall prevent extensive pollution of the seas and rivers. It is also understood that execution of the work
program shall be exercised so as not to conflict with the obligations imposed on the government of
Indonesia by International law”
• Post 1994 PSC started setting out clauses on how to manage the execution and cost for
decommissioning :
 “ Contractor shall, after the contract expiration or termination, or relinquishment of part of the
contract area, or abandonment of any field, remove all equipment and installation
………………………………”
 “Contractor shall include in annual budget of operating cost, estimate of the anticipated
abandonment and site restoration cost…………….”
 “ Contractor shall include with requisite plan of development for each commercial discovery, an
abandonment and site restoration………………………”
17/07/2015
4
Discussion
Issues in Pre 1994 PSC
(copied from presentation of Rudi Simamora of CNOOC) 1/2
• Who should be responsible for undertaking the decommissioning and to bear the
cost incured thereof ?
 BPMIGAS views that decommissioning is the responsibility of contractor under
petroleum operation scheme as set out in PSC.
 Contractors view that decommissioning is the responsibility of BPMIGAS based on the
followings :
 BPMIGAS holds the title to the equipments purchased under work program
 Definition of work program doesn’t include post operation activities i.e
decommissioning
 GR No. 17/1974 prescibes that Pertamina or company having working relationship
with Pertamina, which is responsible for the management thereof, shall be
responsible for decommissioning
 GR No. 17/1974 brought no change in terms of managing decommissioning matters
 The sacntity of contract as guaranteed by Law No. 22/2001
17/07/2015
5
Discussion
Issues in Pre 1994 PSC
(copied from presentation of Rudi Simamora of CNOOC) 2/3
• Should the facilities to be removed totally or should it remain in place, wholly or
totally, perhaps to serve another purpose
 Geneve convention 1958 prescribes a rule of total removal
 UNCLOS 1982 envisage partial removal
 IMO removal standards, 1989 allows partial removal
 The London Convention on Prevention of Marine Pollution by dumping of Wastes and
Other Matter , 1972 allows partial removal
 Indonesia has ratified the Geneva Convention 1958 and UNCLOS 1982
 GR No. 17/1974 requires total removal
17/07/2015
6
Discussion
Concerns over the implementation of in Post 1994 PSC
(copied from presentation of Rudi Simamora of CNOOC) 3/3
• Placement of the funding program due to the BPMIGAS status and budgeting
•
•
mechanism
Managing the funding program in view of the accounting period of cost oil
recovery
Review the alternative of treating removal costs (CAPEX ? OPEX ?)
17/07/2015
7
Recommendations
Work Group A ( for PSC’s pre 1994 contract)
Legal aspect
• Clarify the responsibility for decommissioning
• The decision shall be clearly written in an applicable agreed legal product
Financial Aspect
• PSC to perform Economics Assessment in a case by case basis to understand different
scenario’s of decommissioning (Re-use, salvage value, and other use)
• Clarify the cost for abandonment and site restoration
Technical Aspects
• Finalize the draft procedure Offshore Facility Decommissioning (as the result of 2001 seminar
on platform removal)
• Develop procedure for Onshore Facility Decommissioning
• Implement a case by case Technical Assessment for abandonment and restoration
• Synchronise national & international regulations
17/07/2015
8
Recommendations
Work Group B ( for PSC’s post 1994 contract)
Legal aspect
• Review and have clear understanding of the contract terms
Financial Aspect
• Propose to use Escrow Account, ……… (a small team will follow)
Decommissioning planning
• Clarify the time frame for agreement process and technical
implementation…….. (a small team will follow)
Note : From TI two people are involved in the small team, they are : Deden
Supriyatman (DC) and Dicky Darman (Legal JHO)
17/07/2015
9