Oil and gas exploration down in 2003
Fitri Wulandari, The Jakarta Post, Jakarta
Oil and gas exploration has slowed this year compared to 2002 because oil and gas companies have postponed high risk explorations until next year and focused on development, a senior official said on Tuesday.
However, revenue from the sector is expected to be on a par with last year.
Rachmat Sudibyo, the head of Oil and Gas Upstream Regulatory Body (BP Migas) said oil and gas explorations in 2003 only resulted in 54 new wells, much lower than 102 in 2002 and 132 in 2001.
"Many oil and gas companies preferred to postpone drilling activities until next year because the risks of exploration are higher than the benefits," Rachmat told reporters in a press conference on BP Migas performance in 2003.
Rachmat added companies opted to focus on developing their existing oil and gas fields this year.
BP Migas was set up in 2002 following implementation of Oil and Gas Law No. 22/2001. It takes control from state oil and gas company PT Pertamina of the supervision of exploration and production or upstream activities in the oil and gas sector.
Rachmat said exploration activities were expected to pick up next year when companies carried out activities that had been postponed.
According to Rachmat investment for exploration is expected to increase to US$300 million in 2004, up from $207 million this year.
Investment for developing existing oil and gas fields was projected to increase to $1 billion in 2004 from $917 million this year.
Revenue from the oil and gas sector was expected to reach between Rp 70 trillion to Rp 80 trillion, at a similar level to 2002.
Rachmat said state revenue could be increased in the future once new projects started production.
BP Migas has announced 10 new oil and gas projects which would commence between 2003 to 2007. Some of the big projects are oil fields in South Balam in Riau operated by Caltex which begun operation this year and are expected to produce 55 million barrels of oil (MMBO) over a 20-year period.
The Oyong oil and gas field in Sampang, Madura operated by Australian firm Santos is expected to start operation in 2004 with a production of 5.7 million barrels of oil and 90 billion cubic feet of gas (BCF) over a nine-year period.
American firm Amerada Hess will start operation in 2004 at Ujung Pangkah gas field in East Java and is expected to produce 444 BCF of gas over 13 years.
Chinese CNOOC will start operation in 2005 in Southeast Sumatra to produce 2.3 MMBO and 365 BCF of gas over 10 years.
"BP Migas would encourage investors to intensify their oil and gas exploration activities," Rachmat remarked, adding that it would expand the domestic market for natural gas and increase the use of local products in oil and gas investment.
Up to 2003, Rachmat said, oil reserves stand at 9 billion barrels, while natural gas reserves reach 176 trillion cubic feet (TCF). The oil and gas reserves are projected to last for 20 years and 60 years respectively.