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Indonesia oil production may fall 3.6% this year

Publication Date : 18-10-2012


The average daily output of Indonesia's oil industry is expected to drop by 3.6 per cent to 870,000 barrels per day (bpd) compared to last year due to unplanned oil field shutdowns and aging oil wells, a government official said.

In a hearing with lawmakers yesterday, R. Priyono, the chairman of upstream oil and gas regulator BPMigas, said it was unlikely to achieve the initial target of 930,000 bpd specified in the 2012 State Budget Law.

US-based energy giant Chevron's subsidiary, Chevron Pacific Indonesia (CPI), is the largest contributor to this year's oil output by producing 343,212 bpd, state-owned Pertamina EP comes second with 127,889 bpd, followed by France-based Total E&P Indonesie with 66,400 bpd, ConocoPhillips Ind Ltd. with 44,306 bpd and Pertamina Hulu Energi North West Java Offshore with 34,056 bpd.

While acknowledging that Indonesia was in the phase of falling oil production, as the country had yet to find new major oil fields, Priyono said several unexpected problems had further hindered the output.

"In total, we have lost a total of 52,000 bpd due to disruptions," he said.

Indonesia has lost 9,000 bpd so far due to the a pipeline break incident of CPI in September 2010 at its oil fields in Riau as well as a fire on one of the China-based Cnooc's oil ships that happened in 2011, according to BPMigas.

Delays pertinent to the transfer of West Madura Offshore (WMO) confessions from South Korea's Kodeco to state owned oil and gas producer PT Pertamina also played part in lowering overall output.

"The delay cost us about 5,500 bpd," Priyono said.

Despite the poor oil output, the supervisory body still expects a US$34.46 billion of revenue from the oil and gas sector by the end this year, higher than the government's initial target of $33.5 billion due to higher-than-expected crude oil prices.

In the hearing with the legislators, BPMigas also reported that total investment in the oil and gas sector this year may reach $15.08 billion or higher than last year's figure of $14.02 billion.

"Most of the total investments will be used to support operational production activities, the expansion of oil fields and to finance big projects," he said.

In the last five years, the big projects in the oil and gas sector include Cepu block, which is operated by ExxonMobil Corp., North Belut block (ConocoPhillips), Train 3 at Tangguh gas plant (BP Indonesia) as well as Tunu 13B and Peciko 6A (Total E&P Indonesie).

According to Priyono, Indonesia was now relying on Cepu block, whose infrastructure projects were currently in the finishing phase to boost Indonesia's oil production to go beyond 1 million bpd.

The government planned to boost dwindling oil production by increasing Cepu’s production from 20,000 bpd, now to reach 165,000 bpd by 2014.

Contacted separately, an expert with the ReforMiner Institute, an Indonesian energy sector think-tank, Pri Agung Rakhmanto, said as long as the government relies on existing oil fields, annual average oil production would continue to fall.

"The only way to boost oil production would be either by exploiting new oil fields or by implementing a big scale of enhanced oil recovery [EOR] technology" he said, adding ReforMiner predicted that production this year would be between 860,000 to 880,000 bpd.

In addition, BPMigas also reported that the nation's natural gas production this year was estimated to reach 8,412 million cubic feet per day (mmscfd), down by 0.04 per cent from last year's 8,415 mmscfd.

Oil and gas production this year is estimated at 2.367 million barrels of oil equivalent a day, down by 1.6 per cent from last year's 2.405 million barrels oil equivalent per day.


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