Oil, gas firms to increase investment next year
The Jakarta Post, Jakarta
Two oil and gas firms plan to make new investments next year in what seems to be a positive development in the country's oil and gas sector, which has seen output declining due to a lack of investment.
PT Caltex Pacific Indonesia (CPI), the local unit of U.S.- based oil and gas giant ChevronTexaco Corp., said on Wednesday it planned to spend as much as US$300 million next year to develop new oil fields in the country.
CPI president director Wahyudin Yudiana Ardiwinata was quoted by Bloomberg as saying that most of the money would go to develop the Rokan and Siak onshore blocks in Riau province and to increase light oil output from the Bekasap field.
It has also submitted a proposal to state oil and gas firm PT Pertamina to team up in developing the latter firm's oil fields in South Sumatra and East Java.
CPI is the top oil producer in Indonesia, which operates in four areas around Sumatra island under production-sharing contracts with oil and gas upstream regulator BP Migas. The company produces about 510,000 barrels of crude oil per day, lower than 770,000 per day in 1998.
Meanwhile, Bloomberg also reported that Santos Ltd., Australia's largest natural gas producer, planned to double spending in this country to about $100 million next year as it starts developing two projects.
The news agency quoted the president of Santos' local unit, Chris Newton as saying that the company would start developing the Maleo gas field and Oyong oil and gas project off East Java next year.
Santos announced in August that it had delayed the startup of the Maleo project to 2006 from 2005. The company owns 75 percent of the Madura concession area, where Maleo is located, while Canada's Talisman Energy Inc. owns the remainder.
The company's plan to develop the $130 million Oyong project was approved by the Indonesian government, Cue Energy Resources Ltd., a partner in the project, said in September.
Oyong will start producing gas in the first quarter of 2006 and may start pumping oil earlier than that to take advantage of high crude-oil prices. Santos owns 45 percent of the project, Singapore Petroleum Co. owns 40 percent and Cue 15 percent.
Indonesia has seen its oil declining by an average of 5 percent a year over the last five years, according to Bloomberg.
The fall has been blamed on aging oil fields and a lack of new investment as investors have worried about various uncertainties including unfavorable government regulations, security threats and labor conflicts.
According to data from the Ministry of Energy and Mineral Resources, Indonesia's crude oil output declined by 0.5 percent in October to about 962,000 barrels per day (bpd) from 966,465 bpd in the previous month.
Indonesia's production of condensate, a light oil produced in association with natural gas, rose to 127,000 bpd from 118,445 bpd in September.
The lower oil output as made Indonesia, with the second lowest output among members of the Organization of Petroleum Exporting Countries (OPEC), a net oil importer since the beginning of the year, thus causing the country to miss out the current oil price bonanza.
Some observers have suggested that the government must make a decision to quit OPEC because of the declining output.
Former Pertamina president Baihaki Hakim was quoted in the press earlier as saying that as long as the country could not attract new investment to boost its oil output, its status as an OPEC member, which also means paying annual membership fees, was no longer worthwhile.