Doubts linger over govt's oil production target
Leony Aurora, The Jakarta Post, Bandung
Analysts and industry players have expressed a wide range of views over the government's target of raising the country's oil production to 1.3 million barrels per day (bpd) by 2009, with some saying it would be challenging and others saying it would be downright impossible.
The government needed to come up with new breakthroughs and out-of-the box thinking if it wanted to attain the optimistic target, the panel of speakers and prominent members of the audience said at a symposium titled "To raise Indonesia's oil and gas production", which was held here by the Association of Petroleum Engineering Experts (IATMI) last Friday.
Such approaches had to be taken to encourage exploration, which had more than halved since 1998 as investors waited for the country's turmoil to subside and for the implementation of the new Oil and Gas Law, president of Chevron Pacific Indonesia (CPI) Wahyudin Yudiana said.
"It's a pity that we could not raise production amid the current high oil prices," said Yudiana, whose company produces some 50 percent of Indonesia's total crude output.
The government could offer incentives to promote joint exploration in eastern Indonesia, where most of the unexplored basins are located, to major existing producers like Chevron, ExxonMobil, ConocoPhillips and BP.
"If one major find is discovered, the areas around it will become attractive," said Yudiana.
Panelist TN Mahmud, former CEO of Arco Indonesia, suggested that the government form a crisis team that would report directly to President Susilo Bambang Yudhoyono to coordinate efforts to boost exploration and restore investor confidence.
The target of 1.3 million bpd by 2009 is unrealistic, he said. "We have lost the momentum in recent years," said Mahmud. Even if there were coordinated national efforts taken right away, the results would only become apparent five years down the track.
It would be impossible to repeat the experience of the late 1960s, when, within five years, the oil and gas sector saved the state budget after the country faced near bankruptcy. The Local Autonomy Law and investors' disappointment with the state's failure to honor the sanctity of the contract in the past were cited as being among the reasons for this.
According to figures from the Upstream Oil and Gas Regulatory Agency (BP Migas), some 80 percent of crude and condensate output, which this year is estimated to average at 1.075 million bpd, comes from fields that have passed their peak production.
Indonesia's oil production is declining by 5 percent annually due to aging fields and lack of exploration.
BP Migas chairman Kardaya Warnika said at the event that the agency was making various efforts to boost production and called the government target "quite difficult but not impossible".
In the next three years, the agency will fast-track processes, applying special licenses that will enable some work to start before the plan of development (POD) is approved and providing incentives for "brown" fields, said Kardaya.
"We will also speed up the development of the Cepu block and conduct enhanced oil recovery efforts," he added, referring to the country's largest untapped oil reserves that are currently the subject of a prolonged dispute between state oil and gas firm PT Pertamina and ExxonMobil.