Major oil producers see significant drop in output

Most oil producers in Indonesia have experienced significant production drops over the past few years, despite their intensive production recovery programs.

Among oil companies that have seen production declines are Caltex Pacific Indonesia (CPI), China's CNOOP, Exspan, ConocoPhilips, BP, Vico, PetroChina, Pertamina and Medco Energi International Tbk.

Caltex, the country's largest oil producer, produced about 525,000 barrels of crude oil per day (bpd) in 2004 and 2003, down from 596,400 bpd in 2002 and 663,300 bpd in 2001.

Caltex, a subsidiary of U.S.-based Chevron Texaco, operates a number of oil blocks in Riau province, with 107 active oil fields and 6,569 production wells.

Caltex's production decline has partly been caused by the natural depletion of oil reserves in aging oil fields. Many of its fields -- including the 50-year-old Duri and Minas fields -- produced less oil than expected over the last few years, a source at the company said.

The government's decision to transfer the operation of the CPP block to state oil and gas firm Pertamina and the Siak regional administration in Riau in 2002, has been cited as another reason for the drop.

Medco Energi International Tbk, the country's largest listed oil and gas firm, expects to produce about 59,211 bpd in 2004, close to its 2003 production output. But the figure shows a significant drop from 69,370 bpd in 2002. The 2004 output will include the crude oil produced by the company's newly acquired oil operator, Novus Petroleum Ltd.

Production from Novus will add at least 5,000 bpd to the company's total oil production this year, a source at the company said.

The company's declining oil production is primarily due to the natural drop in production at the aging Kaji Semoga oil field in Rimau, South Sumatra.

CNOOC's production of crude oil also declined, totaling 94,900 bpd in 2003, down from 115,000 bpd in 2002, and from 125,700 bpd in 2001.

Most of the country's oil and gas operators have been actively engaged in intensive programs, either to increase production in existing fields or from new exploration projects. But only a few of them have produced a positive result.

Unocal Indonesia Company, a subsidiary of Unocal Corporation, for instance, is among those that have successfully increased their production levels, thanks to its new exploration projects.

Unocal's crude oil production is expected to reach 108,000 bpd this year, an increase from 53,900 bpd last year. This would partly be due to the commencement of production at its West Seno field in South Sulawesi last August, said Unocal Indonesia's spokesman Sutanto Tatang.

The West Seno field, operated by Unocal Makassar Limited, produces about 40,000 bpd, said Sutanto.

To contain a further oil drop, Caltex has been optimizing oil production in its existing wells through the Enhanced Oil Recovery (EOR) program.

The technology has successfully contained a further drop in the company's existing oil wells. "Without using this technology, the fall in the oil production at Caltex would much higher," the insider source said.

Meanwhile, following its successful acquisition of Australia's Novus Petroleum Ltd in July 2004, Medco Energi International has been engaged in the exploration and acquisition of oil fields and blocks in the country.

Medco is currently conducting exploration projects to seek more oil reserves in several fields, including Asahan, North Sumatra, Merangin-I in South Sumatra and Simenggaris in East Kalimantan.

Medco has also taken over a number of oil fields form other operators to further increase its production. The newly acquired fields include Langsa oil block in Aceh, taken over from MODEC, Japan, and Lematang oil block in South Sumatra, acquired from the Petroleum Development Associates LLC (PDA).

Medco has also acquired Sanga Sanga field in East Kalimantan from Tesoro Petroleum Indonesia and Tuban block in East Java from Ensearch Far East Ltd.

Meanwhile Pertamina reported on Friday that it booked a profit of Rp 9.8 trillion (about US$1.8 billion) as of November this year, an increase of seven percent from the same period, last year.

Pertamina's president director Widya Purnama said in Jakarta on Friday that the state owned oil and gas company, the second largest oil producer in the country after Caltex, produced about a total of 132,230 barrels of oil per day (bpd) and 1,073 million cubic feet of gas per day during the January-November period.

The crude oil and gas were produced from it own oil fiels and from those operated in partnership with other oil companies.

The company's crude oil production from its own fields reached a total of 49,700 barrels per day, an increase of 14 percent as compared to those in the January-November period , last year. While the production of gas from its own operation rose by 20 percent to 818 million cubic feet per day.

Pertamina also discovered new oil reserves of 2.4 million barrels during the January-November period. --Sudibyo M. Wiradji