Belanak facility to up RI's oil output: Purnomo

Belanak facility to up RI's oil output: Purnomo

Dadan Wijaksana, The Jakarta Post, Jakarta

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said
on Tuesday the nation's yearly crude oil output had declined by
an average of 16 percent over the past years but a new production
facility would push output back to above 1 million barrels per
day (bpd).

As of September 2004, Indonesia's oil production was at
966,465 bpd of crude, below its quota of 1.27 million bpd set by
the Organization of Petroleum Exporting Countries (OPEC).

With proven reserves running dry, the commissioning of an
US$800 million floating production facility in the Belanak field
in the South Natuna Sea later this week would help boost the
country's oil output, said Purnomo.

He said that at its peak, the Belanak floating production
storage and off-loading (FSPO) facility could produce up to
100,000 bpd of crude oil.

"It won't be that large at the beginning but it should reach
that peak level in less than a year."

The Belanak project -- to be officially launched by president
Susilo Bambang Yudhoyono on Friday -- is the first major project
to be inaugurated by the new government.

The Belanak FPSO, which is the size of three soccer fields, is
one of the largest floating production facilities in the world.

"It will not only produce crude oil, it will also produce gas,
condensate and liquefied petroleum gas (LPG) in significant
amounts," Purnomo said, although the natural gas would be used in
part to supply Malaysia and Singapore.

The project was funded by U.S. oil giant ConocoPhillips (COP),
with the Indonesian government assured of 85 percent of the crude
oil output, added Purnomo.

ConocoPhillips at present, has net crude oil production of
15,000 bpd. The company also processes 248 million standard cubic
feet per day of gas, or 8 percent of Indonesia's entire natural
gas output.

Separately, the Cepu oil and gas block, located on the border
areas of Central and East Java, also has potential to boost oil
production in the country, Purnomo said.

"But, the current problems surrounding the Cepu block need to
be resolved soon. I will leave the discussions to the related
parties, but it needs to be resolved quickly, so it does not
disrupt production," he said.

American energy firm ExxonMobil took over the operating rights
of the block in 1999 from state oil and gas firm Pertamina, and
that contract expires in 2010.

In 2001 however, after investing millions of U.S. dollars, it
announced the discovery of significant oil and gas reserves in
the area. It discovered an estimated 600 million barrels of oil
and between 700 billion and 1.25 trillion cubic of feet of gas.

ExxonMobil and Pertamina had signed in July this year an
agreement that would pave the way for both firms to set up a
joint venture to control the block after 2010. However, the
previous government replaced Pertamina's management in August,
which led to a controversy as the new president of Pertamina
promptly announced that the company would not extend the
ExxonMobil contract.

Elsewhere, the commissioning of the Belanak field, according
to Purnomo, would send a signal to the market and investors that
the country's oil and gas sector remained attractive to invest
in.

"Hopefully, this (Belanak project) will attract other
investors into the country, some of whom could embark on new
explorations nationwide."