The Deep Water Field Alpha Plug and Abandonment Campaign – An Integrated Approach to Optimize Operations and Costs

After having been developed in the early 2000's and put on production since then, the deep water (700 M water depth) Field Alpha is now at the end of field life and in the plug and abandonment (P&A) process. Although this field-life phase does not make any money for an E&P operating company, it can be a liability and put the company's reputation at stake, if not done correctly. Therefore, like any other field-life phases, it requires a professional and multidisciplinary integrated approach to deliver it while reducing the company's exposure. P&A campaign involves many stake holders: the local authorities, its technical and operational representative / auditor, the operator's well engineering community, the subsurface team, e.g., petrophysics team, and the operator's management. Understanding all their expectations and KPIs is primordial to prepare and successfully deliver such operations. The P&A process relies on the placement of adequate "barriers" inside the well to guarantee blockade of any potential reservoir fluid communication either within separate reservoirs (to avoid any reservoir re-pressurization through cross flow) or with seabed / surface which could impact the environment. As part of the well barrier, annuli cement quality and efficiency must be checked by cement bond evaluation. The petrophysics team has the responsibility to both define, in collaboration with others team members, the cement quality criteria and then to evaluate the cement quality in timely and efficient manner. In this campaign, which is expected to run for more than a year, with several petrophysicists involved both in the preparation phase and in the operation phase, e.g., execution and results validation, consistency in the process is of utmost importance. This paper presents the workflow put in place by PETRONAS Carigali during the Field Alpha P&A campaign. It emphasizes on the petrophysicist role and responsibilities from the preparation phase, during the operations, and through the results validation. The learnings and experiences acquired during the Deep-Water Field Alpha P&A campaign are now going to be transpose to domestic and international assets by means of corporate guidelines and workflows.

China: capital flight or renminbi internationalization?

During 2014–2016, many analysts have claimed the occurrence of a capital flight in China due to the reduction of the country's foreign reserves by over US$800 billion. This paper aims therefore to answer the question: did China really undergo a capital flight in this period? Its methodology includes a detailed analysis of the Chinese external stocks and flows between 2014 and 2016, and an examination of the currency hierarchy and the international usage of the renminbi (RMB). The authors conclude: the fall in the foreign reserves that occurred in China in 2015–2016 was partially due to (i) a strategy of the Chinese government to diversify its international assets; and (ii) Chinese residents (private entities) increasing their foreign-asset holdings. Besides that, there did indeed occur a capital flight in China in 2015–2016, mostly due to a reduction of the non-resident deposits and loans, but these outflows were partially in RMB. Due to that core difference, the effects on the domestic economy are much lower. Furthermore, the RMB outflows may contribute to the internationalization of the RMB.

Reserves and Resources Management: A Continuous Improvement of the Business Processes

Managing oil and gas reserves and resources of Pertamina, an Indonesia state owned energy company, has always been challenging processes as the company's portfolio is sparsely located throughout Indonesia. Moreover, since November 2013 the company has also managed its international assets spread across three regions, namely Africa, Asia, and Middle East. In total, there are ~480 fields and ~870 geological structures with different degree of geological background, environment, uncertainty, and maturity of the fields/projects. Obviously, to cope with all those complexities, Reserves Management Department need to figure out its way to properly manage reserves and resources of the company. Reserves and resources of oil and gas is a key strategic priority of the company. It is aligned with both portfolio management and development and production of the assets. Company decision in terms of work program and budget is also mainly derived from reserves and resources potential of the projects. Therefore, to obtain a standardized reserves and resources management, the company has launched company guideline which is mainly influenced by SPE Petroleum Resources Management System (SPE-PRMS, 2007). SPE-PRMS is a project-based system, where reserves and resources estimation, categorization, and classification are on project basis. To properly manage all the projects, since 2019, Reserves Management Department introduced a tool named Project Box which enable reserves analyst to properly map all the projects, evaluate the portfolio, and monitor the progress of the project both in development and exploration phase. Furthermore, to be aligned with company's digitalization campaign, all the reserves and resources data, Project Box, and many other strategic information are stored and maintained in an in-house software named Promyst which will be launched in early 2021. This tool will enhance data accessibility for both management and analyst, increase data integrity and security, provide data analysis platform, moreover this software could also generate cost efficiency for the company. In 2017, along with the final version of the company guideline, the company has fully adapted PRMS. This paper will explain how the company adapt PRMS to its company guideline in which some necessary adjustments took place with respect to company's business processes, the application of Project Box throughout all company's subsidiaries, and implementation of Promyst along with its features and future projection of the software. The result and benefit of implementing those items will be explained in this paper. These extensive works performed by the Reserves Management Department contribute significantly to the company not only for technical but also for commercial aspects therefore promoting a good corporate strategic planning and decision making.

Banks’ international assets and sovereign default risk

Purpose This paper aims to investigate the nexus between banks’ foreign assets and sovereign default risk in a panel of 15 developed economies. The empirical evidence suggests that banks’ foreign exposure is an important determinant of sovereign default probability. Design/methodology/approach Using data from the consolidated banking statistics (total foreign claims on ultimate risk basis) by the Bank of International Settlements, the author constructs a measure of bank international exposure to peer countries. This measure is then used as the target variable in a panel regression for sovereign credit default swaps. The model includes 15 European and non-European developed economies. Identification is discussed extensively in the paper. Findings Quantitatively, a 1% increase in banks’ cross-border claims increases sovereign default risk by about 0.19%. The relationship is weaker when banks are more capitalised. On the other hand, governments are more vulnerable to credit risk spillovers from banks’ international portfolios when having higher debt to GDP ratios. Originality/value To the best of the author’s knowledge, this is the first paper that attempts explicitly to establish an empirical connection between banks’ international assets and sovereign default risk. To the author’s opinion, this paper represents a contribution to our understanding of how sovereign credit risk spills over across countries. It also extends significantly the existing literature on the determinants of sovereign risk (that primarily focused on fundamentals, market characteristics – such as liquidity – and global factors). This paper ultimately sheds some new light on the role of intermediaries in the international transmission of credit risk, also adding to today’s discussion about the linkages between banks and sovereigns.

Assessing the Time-Frequency Co-Movements among the Five Largest Engineering Consulting Companies: A Wavelet-Base Metrics of Contagion and VaR Ratio

Diversification in a portfolio is an important tool for the systematic risk management that is inherent to different asset classes. The composition of a portfolio with domestic and international assets is seen as one of the main alternatives for building a diversified portfolio, as this approach tends to reduce portfolio return exposure depending on country factors. However, in scenarios where industry factors are predominant, international diversification can increase systematic risk in a portfolio centered on a single asset class. This study is a pioneer in using wavelet-based methods to identify intersectoral co-movements, based on a portfolio of shares of the world’s top five consulting engineering companies, providing an innovative way to be applied to this phenomenon. Our evidence indicates that companies share a strong pattern of co-movements among themselves, especially in cycles of 32 to 64 days, suggesting a higher exposure to risk for portfolios with an investment horizon in long-term cycles.

Managing the International Reserve Assets in the Context of Debt Sustainability

The article is aimed at researching the adequacy of international reserve assets, their management in terms of ensuring debt sustainability, as well as financial-economic assessment of liquidity and solvency of the borrowing State. Based on the carried out study, it is determined that liquidity of the State, as a functional element of solvency of the State, provides for the ability of the State to mobilize the necessary resources, taking into account the transactional mechanism of asset transfer from one unit to another in order to ensure an adequate level of solvency of the debtor State. In addition, within the terms of the carried out analysis of the system infrastructure, it is worth noting that there is a relation between the solvency of the State and its liquidity, since the latter category is part of the first, but these concepts are not identical. The provision of international assets, as the dominant element of debt sustainability, acts through the mechanism of financial and monetary security, thus, an assessment of the adequacy of international assets in the part of sufficiency of their volumes to cover the needs of foreign trade operations, servicing and repayment of the State’s sovereign obligations to creditors must be done. A monitoring of the main indicative values of the assessment of the status and structure of international liquid assets and their relationship with economic indicators is carried out. Ways to improve the system of management of international reserve assets in order to ensure debt sustainability are proposed. Priority directions of future researches are allocated, which should be aimed at substantiate the impact of currency risks on the debt sustainability of the State.