Fri, 22 Dec 2000

Pertamina predicts drop in crude oil output next year

JAKARTA (JP): State oil and gas company Pertamina and its foreign oil and gas production-sharing partners have forecast a drop in Indonesia's crude oil production to 463.2 million barrels (mmbo) next year from this year's output of 515.6 million barrels.

In its year-end report, Pertamina's foreign contractors' management body (BPPKA) said on Thursday that oil production declined from 542.1 mmbo in 1998 to 519.9 mmbo in 1999, and 515.6 mmbo this year.

"The projection for 2001's oil production of 463.2 mmbo or 90 percent of this year's realized output, is because production from new wells has not come on stream yet so as to make up for the natural decline in oil production," BPPKA said in its report.

But the head of BPPKA, Herucokro, added that Pertamina's partners had the potential to pump up to 483 mmbo of oil next year, slightly higher than they had projected.

"The budget of 463.2 mmbo is based on the projections of our partners, but we see that there is potential to further raise it," Herucokro explained.

According to him, Pertamina's own estimate of 483 mmbo had in fact already been factored into the 2001 state budget.

He added that Pertamina's partners would revise their projections.

Another sharp difference is the estimated oil price for next year, with Pertamina's partners pegging the oil price at $21.98 per barrel, as against the government's projection of $24 a barrel in its state budget.

BPPKA in its report further estimated that Indonesia's oil output would gradually decline to 460 mmbo by the year 2005.

Pertamina also estimated that gas output would decline next year to 2.2 trillion cubic feet (tcf) from this year's 2.4 tcf.

However, BPPKA gave assurances that the slight decline in gas production would not affect Indonesia's commitment to buyers of its gas or liquefied natural gas (LNG).

BPPKA also said that the drilling of exploratory wells dropped sharply from its target. Of the budgeted 136 projects, only 63 projects had been brought to fruition this year.

It said that conflicts with locals in designated prospecting areas had hampered the efforts of many oil companies in finding new reserves.

BPPKA said that foreign oil and gas companies planned to spend up to US$5.28 billion next year on exploration and production, a $785 million increase over the current year.

Most of the expenditure would be on production activities, which would amount to $2.87 billion. For this year, realized production expenditure is estimated at $3.01 billion.

But the budget for exploration activities of $752 million would exceed this year's realized exploration spending by $164 million.

Herucokro said that the fresh investment would largely be connected with Indonesia's first deepwater project in the West Seno oil and gas field located in offshore East Kalimantan.

The field, jointly operated by Unocal Corp. and Mobil Corp., is estimated to contain about 150 million barrels of recoverable oil and gas reserves.

Throughout the development of the project, Herucokro went on, the consortium would spend some $600 million on the construction of the platform and equipment.

He said that the consortium would conclude a tender early next year for the development of the platform, and the project was expected to be up and running by 2002.

Other investments, he said, were for the construction of gas pipelines and other facilities associated with the new gas supply contracts with Singapore and Malaysia.

Pertamina has said that it would soon sign a gas sales contract with the Singaporean gas firm Gas Supply Pte Ltd for the supply of gas from Sumatra to Singapore.

As for Malaysia, he said, Pertamina was expecting to sign a contract with its Malaysian counterpart Petronas in April next year.

Herucokro added that he expected Pertamina could start supplying Malaysia with gas from the West Natuna fields, which are located in the South China Sea, by 2003. (bkm)