Seram Non Bula Working Area

A.  Profile of Seram Non Bula Working Area

Seram Non Bula Working Area is located in the mainland administrative area of ​​the East Seram Regency (Kab. SBT) on Seram Island with a coverage area of ​​approximately 1,352.8 square kilometers. The main field of Seram Non Bula Working Area currently is the Oseil Field, about 300 kilometers east of Ambon City and approximately 20 kilometers from Bula, the administrative center of SBT Regency.

The history of the development of Seram Non Bula field can be traced to 1895 when Royal Dutch Shell discovered oil in Bula, then in 1900, British Petroleum carried out mapping of almost the entire Bula Basin.

Furthermore, in 1969 Pertamina together with Gulf & Western started oil activities in Bula, while Seram Non Bula Working Area Cooperation Contract was only signed by KUFPEC which acted as Operator in 1999.

Citic Seram Energy Ltd (“CSEL”) is a contractor of Seram Non Bula Working Area which was established in Bermuda in 1997 as a subsidiary of the Citic Group and is listed on the Hong Kong Stock Market.

In 2006, CSEL took over 51% Interest KUFPEC (Ind) Ltd as well as the Operator of Seram Non Bula Working Area.

From the signing of the KBH for Seram Non Bula CA on May 31, 2018, it is known that several contractors have changed Seram Non Bula  CA into :

Then, since November 1, 2019 Working Area Seram Non-Bula has officially run a new contract as K3S starting from the effective date of November 1, 2019 to October 30, 2039 with the Gross Split scheme.

Broadly speaking, the historical timeline of Seram Non Bula Working Area Operators is depicted in Figure 2 below:

To date, the Non Bula Oil and Gas Working Area has 25 existing producing wells. Working Area Oil & Gas Bula produces hydrocarbons with an API grade value of 22. The reservoir of Working Area Oil & Gas Bula is located in the Manusela Formation. Oil production at the Bula Oil and Gas Working Area as of August 2021 is around 1800 bopd (data source: Directorate General of Oil and Gas).

B. PI Switch Status 10%

Based on the provisions of the Minister of Energy and Mineral Resources No. 37 Article 7, MEA cannot manage Working Area Oil & Gas directly, but must go through PPD Oil & Gas or Subsidiaries.

The mechanism for the formation of subsidiaries has been regulated in Law Number 23 of 2014 concerning Regional Government Article 341 paragraph 2 which is based on an investment feasibility analysis by a professional and independent investment analyst.

Based on the above provisions, MEA has appointed JMT Lawhouse to accompany the transfer of the 10% PI as well as provide recommendations on the feasibility analysis of Seram Non Bula Working Area investment which will be the basis for the establishment of a subsidiary (PPD Migas) which will manage the 10% PI.

Currently, the 10% PI Transfer process for the Seram Non Bull WK under the auspices of CSEL is in stage 9, namely the follow-up to the 10% PI Transfer process in accordance with the PSC (Production Sharing Contract) provisions.

Stage 9 : K3S and BUMD Follow Up the Transfer of 10% PI in accordance with PSC Provisions

At this stage, MEA and CSEL follow up with the 10% PI Transfer Process in accordance with the Cooperation Contract. The result of this 9th stage is the PI Transfer Agreement of 10% of the Non Bullous Seram Working Area.

The 9^th phase is expected to be completed in the 2^nd week of March 2022. Therefore, CSEL plans to delegate all matters related to the Transfer Process of the 10% PI Seram Non Bula CA to the company attorney who is currently in the process of being appointed. In this case, MEA already has a companion consultant who helps in the Transfer Process of the 10% PI Seram Non Bula WK, namely JMT Lawhouse.

Stage 8 : BUMD Submits Letter of Continuing Interest and Ability for 10% PI to K3S

At this stage, MEA submits a Letter of Forwarding Interest and Ability of PI 10% for WK Seram Non Bull to CSEL with a copy to the Director General of Oil and Gas, Head of SKK Migas, and the Governor on January 14, 2022 to the CSEL Office in Pondok Indah, Jakarta. This 8th stage takes place for a maximum period of 180 days from the completion of the Due Diligence process previously carried out by MEA against CSEL.

Stage 7 : Due Diligence

Currently, the development of the 10% PI Transfer of Seram Non Bula CA under CSEL is in stage 7, namely Due Diligence. Due Diligence is a complex inspection or verification mechanism against a legal subject and activities carried out from a legal point of view objectively and systematically based on agreement criteria and applicable laws and regulations.

The Due Diligence aims to obtain an overview or information regarding CSEL in the management of Seram Non Bula CA, which is not limited to licensing and legal aspects; financial aspect; technical aspects; operational aspects; production aspects; environmental aspects; employment aspects; risk and other aspects.

This Due Diligence stage begins on October 14, 2021. Due Diligence is carried out within 180 days.

The Implementation Team for Due Diligence Working Area Seram Non Bula consists of :
a.  MEA BUMD internal team;
b.  Maluku High Prosecutor’s Office;
c.  Maluku Province BPKP Representative; and
d.  JMT Lawhouse as Assistant Consultant

The scope of Due Diligence includes :
●  Preparation of reports/ legal opinions;
●  Due Diligence Assistance;
●  Risk assessment and governance assurance;
●  Negotiation assistance with K3S, BUMD/ Regency Government, and other parties related to the 10% PI Transfer process; and
●  Finalize agreements with K3S, BUMD/ Regency Government, and other parties related to the process.

The 10% PI Transfer Team from PT Maluku Energi Abadi (Perseroda) is currently collecting the data needed for the Due Diligence stage. Such data can be provided with the approval and supervision of the Directorate General of Oil and Gas.

There are two types of data sources used in the preparation of this Due Diligence Report, namely primary and secondary.

Primary Data is data or information obtained directly from CSEL when carrying out the Open Data Room, while Secondary Data is data information obtained from outside the Contractor which is used as additional information and comparative information.

Secondary Data can be obtained from :
●  Ministry of Energy and Mineral Resources;
●  Directorate General of Oil and Gas;
●  SKK Migas;
●  Tax Office;
●  Internet; and/or
●  World Professional Research/Analyst Institute, namely Wood Mackenzie.

In the process of Due Diligence Working Area Seram Non Bula, the data room is at the CSEL office located in Pondok Indah, Jakarta.

After the data is collected, the 10% PI team and the consultant team will make a Due Diligence Report which will later be used as a consideration for the Parties (MEA and SBT Regency Government) in deciding the participation of 10% PI Management (stage 8).

Stage 6: Submission of Statement of Interest & Ability by BUMD to K3S

At this stage, MEA conveys interest and ability to CSEL in writing with a copy to the Director General of Oil and Gas, Head of SKK Migas, and the Governor on March 30, 2021. This 6th stage takes place with a maximum period of 60 days from receipt of the PI offer letter. 10% submitted by CSEL.

Stage 5: Submission of Written Offer by K3S to BUMD through official letter

At this stage, CSEL submits a written offer to MEA through an official letter with copies to the Director General of Oil and Gas, the Head of SKK Migas, and the Governor on March 30, 2021. Submission of this offer is carried out within a maximum period of 60 days from the receipt of the letter from the Head of SKK Migas to CSEL.

Stage 4: Submission of the Appointment of BUMD by the Head of SKK Migas to K3S Regarding the Appointment of BUMD

At this stage, the Head of SKK Migas submitted a letter to CSEL as the K3S Operator on January 20, 2021 to be able to offer 10% PI to BUMD appointed by the Governor of Maluku. The submission of this letter is carried out within 10 working days from the receipt of the Letter of Appointment of BUMD MEA by the Governor of Maluku to the Head of SKK Migas.

Stage 3: Submission of Letter of Appointment of BUMD by the Governor to SKK Migas

At this stage the Governor of Maluku is given 1 year from the receipt of the 10% PI Offer Letter from the Head of SKK Migas to prepare BUMD. The Governor of Maluku responded to the offer letter from the Head of SKK Migas by submitting a letter of Appointment of MEA as a 10% PI Recipient to the Head of SKK Migas on November 24, 2020.

Stage 2: Offer of 10% Participating Interest in Non-Bula Oil and Gas WK by SKK Migas to the Governor

At this stage, the Governor of Maluku received an offer letter from the Head of SKK Migas regarding the 10% PI offer in the Non Bula Oil and Gas Working Area on December 5, 2019.

Stage 1: Approval of K3S Contract Extension

This stage is the beginning of a series of 10% Participating Interest Offers and Transfers to selected BUMDs carried out by K3S in the Oil and Gas WK. The 10% PI offer must be made by K3S to BUMD. This is stated in the Regulation of the Minister of Energy and Mineral Resources Number 37 of 2016 concerning Provisions for Offering 10% Participating Interest in Oil and Gas Working Areas. This 1st stage starts from the effective date of approval for the Contract Extension of Seram Non Bula CA, which is November 1, 2019.