Belanak facility officially inaugurated
The Jakarta Post/Jakarta
President Susilo Bambang Yudhoyono has officially commissioned a new floating production facility in the South Natuna Sea's Belanak oil and gas field on Friday, from which the country is expected to reap at least US$7.5 billion in revenue a year.
Funded by U.S. oil giant ConocoPhillips (COP) at a cost of more than US$800 million, the field -- the first major project launched by the new government -- is to start producing next month.
"Using this Belanak floating production storage and off- loading (FSPO) facility, we hope to boost state revenue, which would in turn increase the people's welfare," Susilo said before officially signing the project.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro has said the country would reap about 85 percent of Belanak's oil output; initially at 20,000 barrels a day, which would gradually increase to about 100,000 bpd in one year.
According to the head of the country's oil and gas regulatory implementing body (BP Migas), Rachmat Sudibyo, Indonesia would be entitled to a share worth up to $7.5 billion a year.
"That was based on the assumption that the crude oil is priced at $35 per barrel," Rachmat said.
In total, the facility has the capacity to process 100,000 barrels of oil and condensate a day and a storage capacity of 1 million barrels.
It can also produce 25,000 barrels of liquefied petroleum gas (LPG), which can be used as a cooking fuel.
In addition to the revenue, Rachmat said, the Belanak field would also boost the nation's relatively stagnant oil production.
"We expect it could help increase our crude oil output to 1 million barrels a day next year."
By the end of September, the country's oil production stood at 966,465 barrel a day of crude, as against the 1.2 million quota set out by the Organization of Petroleum Exporting Countries (OPEC).
Of the total, ConocoPhillips has contributed a net crude oil production of 15,000 bpd. It also produces 248 million standard cubic feet per day of gas, or 8 percent of Indonesia's natural gas output.
The project -- at 300 meters in length and 60 meters in width, or the size of three soccer fields combined -- is currently one of the largest floating production facilities in the world.
The government is hoping the project will entice more investment into the sector. The country's crude oil output had been declining by an average 16 percent a year, Purnomo said.
Investment was also badly needed to explore and develop the country's huge, yet largely untapped, gas reserves, he said.