Major oil producers see significant drop in output

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