Dwi Soetjipto reappointed SKK Migas chair amid dwindling oil output
President Joko “Jokowi” Widodo has reappointed Dwi Soetjipto as chairman of the Upstream Oil and Gas Regulatory Task Force (SKK Migas) for the 2022-2026 period amid a mass departure of multinational oil companies from the country and continuing declines in oil and gas output.
Jokowi also appointed Nanang Abdul Manaf as SKK Migas deputy chairman. Nanang was president director of PT Pertamina EP, an upstream subsidiary of state-owned oil and gas company Pertamina. When Dwi Sutjipto was CEO of Pertamina from 2014 to 2017, Nanang was said to be his close confidante. After leaving Pertamina EP in 2020, Nanang was recruited as an expert staff member for SKK Migas.1
The duo of Dwi and Nanang – both former executives of Pertamina – is believed to underscore Jokowi’s drive to favor national oil companies amid the departure of global players. Pertamina has been tasked with taking over the country’s two major oil blocks: the Rokan block in Riau from Chevron and the Mahakam block from Total EP.
The interests of multinational oil companies in Indonesia’s oil and gas industry have been dwindling. Chevron will leave its US$6 billion Indonesia Deepwater Development (IDD) in the Kutai basin in East Kalimantan, and Dutch oil and gas giant Shell has decided to exit the $20 billion Masela gas project in the Arafura Sea, saying that it needs to focus on its more prospective projects.
When officially installing Dwi as SKK Migas chairman, Energy and Mineral Resources Minister Arifin Tasrif said that one of the reasons for keeping Dwi at the helm of the regulatory body was for him to jumpstart the stalled Masela project and supervise it to completion.
Dwi said his priority for 2023 would be to revive the Masela and IDD projects. In addition, Dwi promised that he would make further efforts to boost the Kasuari gas block in West Papua, which is under Genting Oil of Malaysia, by integrating the block with the Tangguh gas field, also in West Papua. Dwi was confident that if one or two major projects could go on stream, it would boost Indonesia’s oil and gas output.2
Under Dwi’s leadership, oil and gas lifting has been declining year by year, from 772,000 barrels of oil per day (bopd) in 2018 when Dwi assumed his leadership in SKK Migas, to 745,000 bopd in 2019, 707,000 bopd in 2020, 680,000 bopd in 2021 and 610,100 bopd in October 2022. Gas output has been declining in tandem from 1.4 million barrels of oil equivalent per day (boepd) in 2018 to 982,000 boepd in 2021.3
Arifin also told Dwi to stop the declining oil and gas output and boost production to achieve the government’s long-term target for the country to produce 1 million barrels of oil per day (bopd) and 12 billion standard cubic feet of gas per day by 2030. With improving oil and gas output, Arifin said, the country would have ample resources to develop more renewable energy.4
SKK Migas board of management is comprised of:
- Dwi Soetjipto, chairman
- Nanang Abdul Manaf, deputy chairman
- Sinta Damayanti, secretary
- Gen. (ret.) Eko Indra Heri, internal supervision
- Benny Lubiantara, deputy for development exploration and work area management
- Wahyu Wibowo, deputy for exploitation
- Kurnia Chairi, deputy for finance and commercialization
- Rudi Satwiko, deputy for business support
A source at SKK Migas indicated that President Joko “Jokowi” Widodo had decided to reappoint Dwi Soetjipto as head of SKK Migas as early as three months ago. President Jokowi never came up with a new name to fill Dwi's position, even though it expired Nov. 30, 2012.
"The news that Pak Dwi will be reelected has been circulating within SKK Migas since last September," said the source.
In SKK Migas' own internal circle, there has long been a rumor that Dwi has a special affinity with the Presidential Palace. From the start, the election of Dwi Soetjipto as head of SKK Migas in 2018, at 63 years of age, was due to Jokowi's influence. Even though Presidential Regulation No.9 of 2013 states that the maximum retirement age for the head of SKK Migas is 60 years.
In order not to violate the rules, the provisions regarding the pension limit for the head of SKK Migas was revoked in Presidential Decree No. 36/2018 on the implementation of management of the upstream oil and gas sector.
Another source said that the palace was pleased with the performance of Dwi Soetjipto because he never caused disturbances in the oil and gas industry. "Although the performance of oil lifting from year to year is getting worse," said the source.
In 2020, oil lifting reached 707,000 barrels per day. As of September 2022, oil lifting has only reached 610,100 barrels per day.
The same source said that Dwi was rumored to also be close with the Energy and Mineral Resources Minister Arifin Tasrif. Almost all SKK Migas policies during Dwi Soetjipto’s time received approval from Arifin.
Support also came from the industry. The same source said that many companies were happy with the leadership of SKK Migas under Dwi Soetjipto. This is because they have so far received various incentives to develop the working area of the oil and gas block. The incentives include investment credit and accelerated depreciation in the last year of the production sharing contract (PSC).
Another source stated that the government also had an interest in maintaining the diminishing production of the Rokan Block. That is why the Energy and Mineral Resources Ministry appointed Nanang Abdul Manaf, Pertamina's representative, as deputy head of SKK Migas. "Nanang's presence is expected to help SKK Migas maintain Pertamina's production in the Rokan Block so that oil lifting does not get worse," said the source.
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