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Jan 27, 2024


Written By: Arya Nugraha Aulia Rahman Yusup
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Geopolitical Unrest in the Middle East: Assessing the Risk to Global Oil Supply and Implications for Energy Markets in 2024
Early in 2024, there is a heightened risk of disruptions to the global oil supply due to the conflict in the Middle East —a region that supplies one-third of the world's seaborne oil trade— especially for oil flows that pass through the Suez Canal and the Red Sea. The International Energy Agency (IEA) has warned that the US and UK airstrikes on Houthi targets in Yemen in response to attacks on tankers in the Red Sea have expressed worries about the potential for an escalation of the conflict. This important trade route handled almost 10% of the world's seaborne oil commerce in 2023, or about 7.2 million barrels per day (mb/d) of crude and oil products, as well as 8% of the world's trade in liquefied natural gas (LNG). The primary alternate shipping route around the Cape of Good Hope in Africa prolongs voyages by up to two weeks, which puts strain on international supply systems and raises the cost of freight and insurance.Stable oil prices despite escalating tensionsOil companies are taking a cautious stance in response to these escalating geopolitical tensions in the Middle East. Mike Sommers, CEO of the American Petroleum Institute, has expressed worries about the growing chance of the crisis intensifying and derailing oil supplies. And although Oil prices have stayed comparatively steady despite the tensions; some experts attribute this to the impact of economic considerations on oil prices. Thus far, the Houthi raids and other Red Sea disruptions—such as the diverting of supplies away from the Suez Canal—have not had a substantial effect on energy prices. Experts have cautioned that tensions in Iran, particularly around the Hormuz, may have an impact on oil prices and that the longer the violence in Gaza continues, the more likely it is that a regional crisis may break out. The closure of important trade routes, which would have previously led to a significant increase in energy prices, has not had the same effect due to the market's confidence in the availability of supply.Assessing Supply and DemandThe World Bank's Commodity Markets Outlook in October 2023 provided a preliminary assessment of the potential near-term implications of the conflict. In a "medium disruption" scenario, the global oil supply would be reduced by 2-4 million barrels per day, initially increasing oil prices by 21% to 35%. In a "large disruption" scenario, with a reduction of 5-10 million barrels per day, oil prices could increase by 56% to 75% initially. Additionally, The IEA has revised its forecast for oil demand upward, anticipating a larger increase in global oil demand in 2024. The IEA's forecast indicates a balanced oil market, with world oil demand expected to grow by 1.1 million barrels per day in 2024, and non-OPEC supply growth projected to reach 1.2 million barrels per day. This balanced outlook is significant, considering the potential impact of the geopolitical tensions and disruptions in the Red Sea on the global oil supply. The agency's assessment of a "comfortable" oil market in 2024, despite the disruptions in the Red Sea, reflects the resilience of the oil market due to factors such as ample oil and gas supply, weaker demand in certain countries, and the ability of tankers to find alternative routes to deliver oil and gas products. ConclusionWhile the present upheavals and wars aren't having a big effect on the world energy markets, the international community should still be prepared and pay close attention to the Middle East's ongoing volatility. The developing scenario in the region could result in further escalation and have an effect on the energy landscape. Thus, in 2024, it will still be imperative to keep an eye on Middle Eastern geopolitical developments and any potential effects they may have on the energy markets.Written By: Arya Nugraha Aulia Rahman YusupReferences:Oil prices steady despite Middle East tensions, but risks are rising | Oil and Gas News | Al JazeeraOil Market Report - January 2024 – Analysis - IEAConflict in Middle East Could Bring ‘Dual Shock’ to Global Commodity Markets (worldbank.org)Geopolitical tensions in Middle East bear risks for oil supplies — IEA - Business & Economy - TASSIEA's Birol predicts 'comfortable' oil market despite Red Sea disruption | Reuters
Dive into the Midstream & Downstream in the Energy Sector
On Saturday, May 4th, 2024, the Science Course Division of SPE ITS SC organized an event titled "Dive into Midstream & Downstream." The event delved deep into two crucial segments of the energy industry which provide participants with valuable insights into their significance, challenges, and innovations.Mr. Dimas Cameeo Wicaksono, Assistant Project Construction at PT Perusahaan Gas Negara, kickstarted the event by shedding light on midstream activities. These activities play a pivotal role in facilitating the interconnectedness of various aspects of the energy industry. Throughout his session, Mr. Dimas covered the transportation, storage, and distribution of oil and gas, the key components of midstream infrastructure, as well as the challenges during the midstream process. He explained the complex network of pipelines, tankers, and terminals that form the infrastructure for transporting hydrocarbons from extraction sites to refineries and distribution centers. Central to midstream operations are the various components of infrastructure that facilitate the processing and transportation of oil and gas. He provided an overview of crucial facilities such as pipelines, compressor stations, storage tanks, and terminals, as well as the protection and supporting facilities in LNG terminal infrastructure. While midstream activities are essential for ensuring the availability of energy resources, they are not without their challenges. Mr. Dimas also shed light on the various issues encountered during the midstream process, such as vandalism/illegal tapping by third parties. Following Dimas's insightful presentation, Mochammad Helmy Aditya, Process Commissioning Engineer at PT Kilang Pertamina Balikpapan, took the stage to deep dive into the downstream sector. This segment explored the current trends, challenges, and innovations shaping downstream operations. One area of focus lies within the refinery operations, particularly the Fluid Catalytic Cracking (FCC) and Residue Fluid Catalytic Cracking (RFCC) units. These units are pivotal in the conversion of heavy hydrocarbon feedstocks into lighter, higher-value products. Mr. Helmy explained about FCC and RFCC units which are vital components of modern refineries that facilitate the conversion of heavy residual oils and vacuum gas oils into valuable gasoline, diesel, and petrochemical feedstocks. These units employ catalytic cracking processes to break down large hydrocarbon molecules into smaller, more desirable products. He explored the unit integration within FCC-RFCC operations involving complex coordination between various sections, including reaction, separation, treating, and upgrading. Moreover, the quality parameters of feed and product streams in FCC-RFCC operations are critical for ensuring product performance, environmental compliance, and market acceptance. Parameters such as sulfur content, octane number, density, and aromatic content are closely monitored to meet regulatory requirements and customer specifications. For PT Kilang Pertamina Internasional, adherence to stringent quality standards is essential to maintain product integrity and competitiveness in the marketplace.Lastly, Mr. Helmy also highlights the environmental considerations that play a significant role in the operation of FCC-RFCC units, particularly in minimizing emissions, waste generation, and energy consumption. PT Kilang Pertamina Internasional prioritizes environmental stewardship by implementing advanced emission control technologies, optimizing energy efficiency, and promoting sustainable practices throughout its operations.Despite being held online, the event attracted many participants who were eager to expand their knowledge of midstream and downstream operations. Participants enthusiastically engaged with the speakers by actively asking questions and participating in discussions.As the sessions drew to a close, the Research and Information Division conducted a Petroquiz covering the materials and topics presented during the event. The quiz challenged participants' understanding of midstream and downstream concepts which provided an opportunity to reinforce their learning. After an intense competition, Christian Gunawan emerged as the winner who will earn the SPE Knowledgebook as a token of recognition. Written by: Arya Nugraha Aulia Rahman Yusup
Indonesia Unveils 118 New Potential Oil and Gas Working Areas, Targets Accelerated Exploration to Boost National Production
Indonesia has taken a significant step in reshaping its upstream oil and gas landscape, with the government formally announcing 118 potential new oil and gas working areas as part of a broader push to accelerate exploration and grow the country's reserve base. The announcement was made by Director General of Oil and Gas Laode Sulaeman on May 28, referencing a presentation delivered by Energy and Mineral Resources Minister Bahlil Lahadalia at the 50th Indonesian Petroleum Association Convention and Exhibition (IPA Convex) on May 20.The initiative comes as Indonesia seeks to reverse a long-term decline in oil production while strengthening domestic energy security. The 118 potential working areas were developed through contributions from the Geological Agency of the Ministry of Energy and Mineral Resources, Lemigas, and existing contractors, with costs funded through the state budget.As of May 20, 2026, 25 of the 118 areas had already attracted formal interest or progressed to contract signing, with an additional 43 in the joint study phase. The remainder are being positioned for joint studies or direct designation as new working areas, suggesting meaningful industry appetite across the board.On the optimization side, the government has expressed strong support for PT Pertamina Hulu Energi's (PHE) push to bring idle structures back into productive use through Operational and Technology Cooperation arrangements (KSOT), under Ministerial Regulation No. 14 of 2025. PHE has prepared around 41 idle structures for KSOT, of which 22 were publicly announced at IPA Convex 2026, spanning all four operational regions: 8 in Regional 1 (Sumatra), 4 in Regional 2 (Java), 7 in Regional 3 (Kalimantan), and 3 in Regional 4 (East Java and Eastern Indonesia). The remaining structures are expected to be opened for cooperation in the near term.The scale of the initiative, covering new working areas, idle structures, idle wells, and community production schemes simultaneously, signals a coordinated government posture aimed at closing the gap between Indonesia's hydrocarbon resource potential and its current production levels. With drilling activity and partnership processes already in motion across multiple fronts, if executed as planned, the initiative could unlock new reserves and accelerate production growth from both frontier exploration areas and previously idle assets over the coming years.
Writer: Timothy Evan
Navigating Exploration in the Oil and Gas Industry of Indonesia through Upstream Series
Indonesia, renowned for its abundant natural resources, has long been a significant player in the global energy sector. With a thriving oil and gas industry that fuels both its economy and its citizens' needs, the nation stands at a pivotal moment in its quest for energy security and sustainability. Yet, Indonesia's oil and gas industry is not without its challenges. These challenges range from technical hurdles in resource discovery to the unique demands of remote exploration and drilling in challenging terrains. In response to these challenges, SPE ITS SC organized an informative event focused on the upstream section of the oil and gas industry on Saturday, October 21st 2023. This segment deals with exploration and drilling, the fundamental processes that lay the foundation for the industry. Alif Rajendra and Bunga Athira as the Project Officers of this event said that event's primary objective was to provide a comprehensive understanding of exploration and drilling techniques. As well as to close the knowledge gap by explaining the latest drilling technologies, discussing the unique challenges Indonesia encounters, and examining how the oil and gas industry is adapting to meet the growing demand for energy resources.In addition, this would also help in spreading the awareness of the challenges that Indonesia faces regarding the oil and gas industry. “We hope that by organizing this Upstream Series, SPE ITS SC members and ITS students will gain a better understanding of oil and gas science from fundamental to advanced levels, specifically for the exploration and drilling aspect of the industry.” added Bunga. The event featured Mr. Ir. Hadi Ismoyo, the President Director of PT Petrogas Jatim Utama Cendana, as the keynote speaker. He provided valuable insights into various aspects of the industry, including exploration and drilling techniques, the latest cutting-edge drilling technologies, the challenges that Indonesia encounters in its pursuit of energy resources, and the industry's responses to the increasing global demand for oil and gas.One of the event's highlights was the engaging question-and-answer session that followed the presentation. To encourage active participation, the first seven participants to ask questions received special goodie bags as tokens of appreciation from the speaker. Even after this initial round of questions, many participants remained curious and eager to engage with the speaker.These subsequent questions delved into essential topics in the exploration and drilling sector, including the socio-political aspects of the oil and gas industry, not only in Indonesia but also on a global scale. Participants were keen to understand the latest advancements and sustainable practices within the industry, reflecting a growing concern for environmental and ethical considerations in the energy sector.In conclusion, the SPE ITS SC event focusing on the upstream section of the oil and gas industry provided a platform for meaningful dialogue and knowledge sharing. It emphasized the importance of addressing the challenges faced by Indonesia's oil and gas sector in the pursuit of energy security and sustainability.The continued growth and innovation in exploration and drilling techniques, coupled with the industry's commitment to environmentally responsible practices, reflect a positive trajectory for the future. These discussions and exchanges of ideas are crucial steps toward ensuring that Indonesia remains a significant player in the global energy sector while working to build a more sustainable and secure energy future for its citizens and the world.Written By: Arya Nugraha Aulia Rahman Yusup