France-based Total’s operations in Indonesia-
Natural gas constitutes one of Indonesia’s key exports. The country is fairly rich in natural gas reserves, including from unconventional sources such as coal bed methane and shale. Most gas fields are located offshore. While the country produces almost twice as much gas as it consumes, it ironically fails to meet domestic demand because of well-established export markets to which it caters in the form of liquefied natural gas (LNG). A key player in the gas industry is France-based Total, an integrated oil and gas player with interests across the globe. Southeast Asia Infrastructure takes a look at the company’s presence, scale of operations, and other key aspects affecting the Indonesian economy…
Total has had a long association with Indonesia’s hydrocarbon sector. The company began operating in the archipelago in 1968. It has been the top French investor in the Southeast Asian nation thus far, and is the chief producer of natural gas in the country. The company has a wide presence across the value chain of the petroleum sector. Total is represented by affiliates in the upstream and downstream sectors in Indonesia.
Total E&P Indonésie
Total E&P Indonésie (TEPI) has operated the Mahakam block in East Kalimantan since 1968. TEPI has been the country’s largest gas producer since 2000. A major portion of the company’s production comes from the Mahakam field, which is located in the Mahakam delta. The area includes the Tunu and Peciko gas fields. However, the licence for this asset will expire in December 2017.
TEPI began producing gas from South Mahakam Phases 1 and 2. They consist of three gas and condensate fields (Stupa, East Mandu and Jumelai) and two gas fields (Jempang and Metulang) located approximately 35 km southeast of Balikpapan. Total E&P successfully started production from South Mahakam two months ahead of schedule. First gas was produced from two wells drilled from the main Stupa platform.
Most of the natural gas produced by Total in Indonesia is delivered to the Bontang LNG plant facility, one of the largest liquefaction plants in the world. Currently, about 82 per cent of the output from this field is delivered to the facility. Total is expanding its activities in Indonesia beyond the Mahakam region, holding interests in 15 blocks in 2012. Meanwhile, the company also holds a 47.9 per cent interest in the Sisi-Nubi gas field.
The non-operated production (from the blocks in which stakes are held but production is not carried out per se) comes from the offshore Sebuku PSC (with a 15 per cent interest) that is located north of Kalimantan, in particular the Ruby gas field. The company also has two exploration blocks, namely, Mentawai, with an 80 per cent interest, and Telen, with a 100 per cent interest. It also owns stakes in inactive blocks such as Sadang (30 per cent interest), Sageri (50 per cent interest), Arafura Sea (24.5 per cent interest), Amborip (24.5 per cent interest), South West Bird’s Head (90 per cent interest as an operator) and South East Mahakam (50 per cent interest as an operator).
PT Total Oil Indonesia
In 2003, Total ventured into the downstream sector in Indonesia. It entered the segment through its associate, PT Total Oil Indonesia (TOI), which began marketing lubricants nationwide under the brand names of Total and Elf. In 2007, TOI entered the fuel business with its new consumer and retail fuels division.
Awango by Total
Awango is another affiliate of the company through which it is present in the renewable energy segment. Awango offers low-income, off-grid households affordable access to innovative, reliable solar solutions. To serve several communities, Total offers a range of solar lamps that are both less expensive and at least twice as bright as more commonly used lighting sources, such as kerosene lamps, candles and batteries.
Local collaborations
Total carries out operations in the country through extensive collaborations with domestic entities. The company’s partners include the Bandung Institute of Technology, Bank Negara Indonesia (public sector bank acting as the state’s trustee and paying agent for gas sales from the Mahakam Block), the Indonesian French Chamber Of Commerce and Industry (which supports French companies in their approach to the Indonesian market), INPEX (shareholder in the Mahakam block), the Ministry of Energy and Mineral Resources, Pertamina (national oil company), and the Special Taskforce for Upstream Oil and Gas Business Activities, commonly known as SKK Migas.
Rendering social responsibilities
Besides the core operations, Total, owing to its long association with the country, acknowledges communities and their needs. Total is involved in long-term environmental and community initiatives in areas such as education, public health and alternative energies.
The company is also shaping its business strategies to reduce the carbon footprint, owing to increasing concern with regard to global climate change. It is taking sustainability measures towards achieving this. As of April 2017, Total, through its affiliate Awango, has sold over 34,000 solar lamps in East Java province as part of its Total Access to Energy programme.
In sum
Total is giving increasing weight to operating in a sustainable manner. The company has decided to allocate 25 per cent of its planned research and development budget of $7.4 billion (for the period 2015-19) towards building environment-friendly business strategies and solutions. The company has also deployed an environmental management system at nearly 300 sites that complies with ISO 14001, which provides a framework for achieving continuous improvement in environmental performance.
As energy sources, oil and gas are expected to continue making up nearly half of the primary energy mix by 2035. Total expects to remain an oil and gas major to be able to meet this demand. However, it strives to leverage and become a frontrunner in responsible hydrocarbons, with a strong development focus on renewable energies.
