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Interview

with Elizabeth PROUST, President Director and Managing Director, TOTAL E&P Indonesia

19.07.2012 / Energyboardroom

Having very recently assumed the position of President of the Indonesian Petroleum Association, how do you see your role?

The role of the IPA is to represent the oil and gas industry’s interests on a range of common issues and be the partner of the Government on oil and gas policies and strategy. Indonesia faces a strong need to accelerate the development of proven fields not yet in production and the exploration to bring new reserves. In order to achieve this, the uncertainties both in the regulatory frameworks, in the stability of the contracts and in the future pricing mechanisms for gas must be eliminated. The conditions for performing exploration work-programs must also be improved with rationalization of the regulations on local content in order to create a better match between the requirements and what is actually feasible. These various issues have had a negative impact on the development of oil and gas projects and have slowed down production in Indonesia. The IPA will therefore do its upmost as representative of the industry in contributing to resolve these matters.

There are major fields yet to be developed in Indonesia, this capital intensive and challenging businesses need a long-term, stable and attractive investment climate. Major oil and gas companies have a very important role to play in bringing competences, high technology, financial capacity and resilience. The government must give confidence to the investors and provide attractive terms to promote the development of fields and exploration..
Alongside the IPA’s representative function, the association also has a very strong role to play in assisting oil and gas companies regarding technical matters. The IPA is seeking to expand its technical forums and information sharing events. The role of the IPA in transferring knowledge around its network of companies should not be ignored. I see it as a major part of my mission to expand on these initiatives.

How do you assess the readiness of your partners in government to tackle challenging areas in the investment climate?

In comparison to previous years, the government is making a much greater effort to open up the dialogue with industry. We enjoy more meetings with bodies such as BP MIGAS and MIGAS and this in itself represents progress. Now that the stakeholders are all around the table there is a good chance for progress and mobilization.

Total has a history in the country going back to 1968; it was one of the pioneers of the PSC model; and is today the largest gas producer in the country, yet it is facing an upstream production environment which increasingly favors domestic producers. How do you see Total’s role evolving in Indonesia?

Total and the government have a partnership which has evolved over many years. Naturally, there are contractual obligations for both sides, but on top of this there is strong relationship. Total has always made a substantial contribution to Indonesia in terms of know-how and technology transfer. Total’s CSR programs are also well established and known to the authorities. From a production standpoint, Total has decades of experience in Indonesia and consequently the company can guarantee a high-level of efficiency in delivering current and future upstream projects. Currently Total’s main asset in Indonesia is the Mahakam Block which is now a mature production area with 75% of the reserves having already been produced. Total has therefore taken the strategic decision to redeploy its portfolio and acquire new Sproduction assets in Indonesia.
Given the trend towards domestic companies taking on a greater responsibility in production, Total is initiating many partnerships with Indonesian companies and these partnerships will serve to increase the transfer of technology to the Indonesian production environment. Within our strategy, Total prefers to establish its partnerships at the exploration phase, where the companies take the highest risks and then we are able develop long-term partnerships for production.

Total has been building its partnership with Pertamina in Natuna which poses significant technical problems such as 70% CO2 content. How would you sum up the value of Total’s technology and experience in Indonesia’s most demanding projects?

In the rest of the world, Total is well known as a forerunner in dealing with acid gas whether that is CO2 or sulfurous gases. Much of this experience was gained recently from a mature field in the south of France, but 30 years ago Total was already working in Russia carrying out similar programs. Total currently has other high-gas content assets in the Middle East where Total is not just gaining the experience in dealing with production challenges, but has developed its own proprietary technology such as Sprex CO2 which allows “bulk removal” of high-content CO2. Total’s project in the south of France was an industrial pilot involving capturing CO2, transporting it and then the reinjection of the gas into an existing field. This was a challenging project from the perspective of gaining acceptance and minimizing the risk, but it has improved our capabilities. I believe that Total’s experience in CO2 was a trump card in the tendering rounds by Pertamina.

Total’s second major attribute is a long track record of mastering large-scale deepwater projects around the world from Angola, Nigeria and Congo to Russia.

The third contribution made by Total is to increase the competency of human resources capable of handling demanding projects in Indonesia. There is undoubtedly a competition for experienced human resources in the country. Total currently recruits over 120 people each year in Indonesia from universities including the Bandung Institute of Technology. Currently we have 98 Indonesian employees gaining first-hand experience abroad working on FPSOs off the coast of Nigeria and Angola in order to be able to bring this deepwater competency back to Indonesia. Our employees in Indonesia are therefore gaining from our experiences around the world and have a higher skill-set as a result.

How do you see the role of an IOC in Indonesian production today?

The role of the multinational company like Total is clear. As Director General of Oil and Gas, Evita Legowo stated, there is a shift from conventional resources to non-conventional resources, from oil to gas, from onshore to offshore and deepwater projects. The multinationals can bring their experience and technologies from outside. For example, Total has a wealth of experience in non-conventional resources in Australia, the USA, and Canada. In terms of deepwater production Total is heavily involved in Africa as well as the North Sea. The national companies in Indonesia, depending on their financial capacity, are always welcome to share the risk of exploration.he plays are very complex in Indonesia and the size of the resources that we can expect is often lower than we can find in other countries. However, Total has experience dealing with deep water offshore projects and in the Makassar Strait Total can develop a high number of small-sized fields. Ultimately, it is our large exploration portfolio which will be essential for guaranteeing future success. Statistically our work programs should provide the company with discoveries and consequently a greater share of production going forward. Total’s aggressive exploration and production activity is also what Indonesia needs to increase its production as the number of wells drilled in the country is currently insufficient to achieve national production targets.

You preside over Total’s Indonesian operation at a time when the future of the Mahakam Block in 2017 will likely be decided. What do you feel is the best outcome for Total and Indonesia regarding this block?

The Mahakam block has been the primary reason why Total is the number one gas producer in Indonesia. As such, the company’s ongoing priority is to maintain a high production level from this field and Total performs still exploration and developments to achieve this. In terms of current activity the company is at the peak of its operations. Last year, Total drilled 125 wells when we had initially intended to drill 110 and every year we increase our investment budget – last year it stood at $2.3 billion. Total is still shooting seismic acquisition and alongside our drilling program we performed over 8,000 well interventions last year with projections for 9,000 this year.
Total is investing with the assumption of a positive outcome beyond 2017. Total is launching 3 new platforms in the southern part of the block which will come on stream by the end of 2012 bringing 250 MMcf per day, which is a significant development.Total has launched again the construction 3 new platforms to be installed in 2013 on the Sissi Nubi and Peciko fields. Due to the maturity of the fields it becomes less and less economic to perform new investments. Nonetheless we are concentrating on maximising our production. The company has been accelerating the investments in this block to the benefit of all stakeholders. However, very soon Total will need to have an indication of the terms and conditions of its possible participation in the block after 2017.

How does Total fit in with Indonesia’s greater demands for energy security?

Total has been active in the country’s transition from oil to gas and is the supplier for the petrochemicals plant in Kalimantan – 400 MMcf/day is delivered to this plant. Total has also started deliveries to the West terminal on Java, having committed to provide 1.5 million tons LNG in 2010. Total is therefore not just accompanying, but leading the transition in Indonesia from oil to gas for household and industrial needs. Total also started working with coal bed methane in other countries a few years ago and can apply this to Indonesia. It is fortunate that there are already large coal reserves in close proximity to our current operations in Mahakham in Kalimantan. This made it a logical step for the company to develop this resource. Total has experience in large-scale drilling and has the resources to unlock the CBM play. CBM is still at the exploration phase and the project requires not only to drill wells but also to perform pilot test in production and water management. But this is a sector which holds a lot of potential for Indonesia.

Total has another focus on alternative energy, particularly solar energy. We created a small company to promote solar energy in Indonesia and increase the access to power for people who are in remote areas and who do not have access to energy from PLN. This is working well in East Java and Total is looking to develop this type of project further.

From the first female President to the first president director of a National Oil Company, Indonesia has been a country where women have attained the highest positions. Speaking as the first female head of an IOC in Indonesia and first female chairman of the IPA, why is this a country where women can do well and what is their advantage?

Indonesia has for many years given equitable opportunities to men and women. The proportion of women attending university is quite high compared to global averages and at Total, one of our KPIs is to pursue diversity by recruiting men and women according to the proportions of students at university. I am proud to say that 30-35% of the new staff recruited to the company are women. We then focus on maintaining this equality through equal career development prospects. My experience in dealing with women at Total is that they are ambitious and keen for adventure.
It could be said that women have an advantage in Indonesia because it is a market built on relationships and it is relatively easy for women to create empathy. Indonesia functions on personal relations and networks and this perhaps creates a greater opportunity and we have observed many women running large national and international business.

How would you sum up Total’s presence in Indonesia?

Total is an Indonesian company at the same time as being international. Our employees are encouraged to undertake overseas placements, bringing back new technologies and expertise to Indonesia. 98% of our staff are Indonesian giving us our Indonesian dimension and this is why we use the term partnership in our relationship with Indonesia. The dynamism in the Indonesian oil and gas industry which once characterized the country is still possible to attain for companies who have the willingness to seek these opportunities. As Total we have strong hopes that we will be able to maintain our dynamic work programs and continue to build on our relationship with Indonesia.

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