Oil production facilities face shortage of spare parts

JAKARTA (JP): Most of the country's oil and gas production facilities face a shortage of spare parts due to the difficulty in importing the equipment, an oil executive said yesterday.

President of PT Caltex Pacific Indonesia Baihaki H. Hakim said local vendors could not import the parts because overseas companies were refusing letters of credit issued by local banks.

He feared the situation would force the country's oil and gas companies to reduce production.

"If the situation persists through the next five months, we will have to reduce our output," Baihaki said.

Many foreign banks have reportedly refused to accept letters of credit issued by Indonesian banks due to their financial performance amid the economic crisis which has rocked the country since the middle of last year.

The rupiah's sharp depreciation against the dollar has caused severe problems for local banks due to their huge foreign debts.

The closure of 16 private banks last November has also lowered foreign banks' confidence in the country's banks, analysts have said.

Baihaki earlier said Caltex, which is the country's largest oil producer, planned to increase its output by 25,000 barrels per day (bpd) to about 800,000 bpd this year.

But, Baihaki said, the company had canceled the plan due to the difficulties it faced in obtaining equipment for its production facilities.

"If anything, maintaining current production is already difficult for us." Baihaki said, adding the company's current output stood at 760,000 bpd.

Caltex, which is jointly owned by United States giant oil companies Chevron Corp. and Texaco Inc., currently exploits four blocks in Riau: the Coastal Plains Pakanbaru, Rokan, Mount Front Kuantan; and Siak blocks.

Baihaki said the country's oil and gas producers were also discouraged from increasing their output following the slump in oil prices. (jsk)