G

em>GDF Suez, the world largest private utility company, opened two units in Indonesia to specifically support gas exploration and electricity generation. The Jakarta Post’s Tassia Sipahutar spoke with GDF SUEZ Exploration and Production International CEO Didier Holleaux and GDF Suez Energy Asia CEO for business development Indonesia Jan Bartak to find out more about the company’s plans in Indonesia.

Question: How much importance does Indonesia bring to the total business of GDF Suez Exploration and Production International?

Didier Holleaux: What we would like in the future is to have Indonesia represent something like 15 percent of our global reserves and production. We want to grow globally and we want Indonesia to be one of the countries where we grow. Our long-term target is more than 1 billion barrels of oil equivalent and therefore, we hope to have more than 150 million barrels of oil equivalent in reserves here in Indonesia.

 What have been your main challenges in the field?

The Kutai basin and East Kalimantan areas are quite challenging. In some places you have too much sand, so there is no cover layer for the reservoir and you have no accumulation of gas. You have to find exactly the right kind of sand with shale layers covering it, so that the gas or oil is trapped.

Is Indonesia very different from your other projects?

I must say that we have a good operator. Eni Indonesia has been doing a good job. We drill 20 to 25 wells each year in the world. From 2009 to 2011, we drilled nine wells in Indonesia, so this country represents a significant part of our global exploration effort. Of the nine wells drilled, most have been a success. We have a very good joint venture and very pleasing success in both exploration and
operations.

You also mentioned that you planned to acquire more assets. Do you have any specific assets you have targeted?

No, no specific assets in mind, but clearly, now that we understand what is happening geologically in East Kalimantan, we would like to invest.

Where does your gas production mostly come from? Which country contributes the most?

Today our main producing countries are Norway, the Netherlands and Germany. In terms of market, Europe is our main market for gas. And for oil, it is the world.

Mr. Bartak, what are the challenges in the power generation business line?

Jan Bartak: Geothermal is new for us. We have many types of power generators. We have nuclear, we have gas, we have coal, we have a lot of hydro, we have renewables, but we did not have any geothermal. So, this is our first geothermal effort anywhere. It was an important decision for the group to invest in a new field.

When we started our projects in Indonesia, we thought things would move faster than they actually did, but the positive thing is, that with a lot of perseverance and patience, you get there in the end. We were the first to sign the PPA (power purchase agreement) in Indonesia. There are a lot of such projects in development in the country, but we were the first who made it.

We are moving ahead. We are drilling. I would say we are serious and committed. Of course, certain criteria need be met to proceed with investment. As soon as we meet them, we will go ahead. We do what we say.

What about hydro power plants in Indonesia?

In Indonesia, there is a lot of hydro potential, but unfortunately, there is no clear regulation. If you look at geothermal, it is not simple, but at least, there is a legal and regulatory framework. This is not really the case for hydro.

It is important to identify projects at an early stage, develop them until they are substantially real, then go to PLN (state-owned power utility company), for example, and say, “Here is a project. Can we negotiate a PPA to sell the electricity?”

We have a number of prospects now, but they are relatively young. I cannot give you specific names because we have not entered into any final agreement yet. We are definitely screening the market and looking at opportunities. There are many of them.

Do you plan to have more coal-fired power plants?

Yes, but we’re not sure where yet. There are a number of criteria. You need find the right mine. For the plant, you need a site not very far from the mine and not far from the river to get cooling water, and not very far from the substation to build the transmission line.

It is quite a puzzle to find the right place. We are working to set up partnerships with coal miners and find other partners, so we can make an offer to PLN when the official request for proposal comes out. This will be a very structured bidding process, organized by PLN.

How has your cooperation with PLN been?

We cannot complain at all. At Paiton (PT Paiton Energy, an independent power producer that owns and operates three coal-fired power plants in Java), where PLN is our customer, I do not think we have any problems whatsoever. And for the geothermal project, we have successfully negotiated three PPAs. It was not an easy negotiation, but this is the case in every country and every market, so this is nothing specific. We hope we will continue to build our relationship with PLN.