Pertamina to order its oil contractors to cut production

JAKARTA (JP): State oil and gas company Pertamina said it will order its oil contractors to cut production by an average of 3,000 barrels per day (bpd) each to honor Indonesia's latest commitment to cut production by 30,000 bpd.

Gatot Wiroyudo, chief of Pertamina's directorate for foreign contractors, said the production cut would affect only those which produce more than 20,000 bpd operating old oil wells.

Contractors which produce more than 20,000 bpd operating new oil wells would be allowed to maintain their current output, he said.

"Operators of new oil fields are allowed to maintain output so that they have the chance to get a return on their investment," Gatot said on the sidelines of Pertamina's hearing with the House of Representatives's Commission V for mines and energy, industry and trade, investment, manpower, and environment.

He said there were ten contractors which would be affected by the production cuts, including Caltex Pacific Indonesia, Unocal, Maxus and Total.

He said the country's oil production was 1.31 million bpd in June and would be 1.28 million bpd from July.

OPEC member countries agreed last week to lower their oil production in 1998 by 2.6 million bpd, while non-OPEC oil- producing countries also pledged to lower their production by 500,000 bpd.

Meanwhile, mines and energy minister Kuntoro Mangkusubroto expressed optimism that the price of crude oil would reach $17 a barrel by November following an agreement to lower world oil production by 3.1 million bpd.

Kuntoro said the reduction in oil output agreed during the OPEC ministerial meeting last week in Vienna was the largest in OPEC history.

"This is very good news indeed, because this way the price of oil is expected to increase further to a level higher than US$13 per barrel as set in the state budget for fiscal year 1998/1999," he was quoted by Antara as saying. (jsk)