Thu, 21 Apr 2011

Jakarta (ANTARA News) - Indonesia`s oil production can be boosted by reactivating the many old but still productive oil wells it has inherited from the Dutch but have been neglected so far, an observer said.

"Out of the 13,824 existing old oil wells in Indonesia, only 745 have so far been reopened while the rest remains neglected," Sayogo Heru Prayitno, an oil and gas affairs observer at the Yogyakarta-based National Veterans` Development University (UPN), said here Wednesday.

Speaking at a Focus Group Discussion on the topic "Spurring Oil Lifting from Old Oil Wells", Sayoga said the old oil wells were scattered across Indonesia, namely in Aceh, Riau, South Sumatra, Java, East Kalimantan, Maluku and Papua.

The old wells might by now be located under school buildings, in forests or on privately-owned land so that obtaining permission from the owners of the locations to reactivate them could prove to be difficult, Sayoga said.

Under Energy and Mineral Resources Minister`s Regulation No 01/2006,, Sayoga noted, regional administrations were authorized to reopen and manage old oil wells with funds from their regional budgets.

An old oil well could yield five to ten barrels of oil per day, Sayoga said, adding that some of the old wells had been made productive again with traditional and unsophisticated equipment.

For the old wells to produce optimally, they must be reopened and operated with appropriate technology, he said, adding that the government should also simplify the procedures to obtain permits to reactivate them.

Meanwhile, Rudi Rubiandini, an Upstream Oil and Gas Regulatory Agency (BP Migas) official, said Indonesia`s oil and gas production had continued to drop over the last 10 years.

The decline happened as fewer and fewer major companies invested in Indonesia`s oil and gas sector due to the unstable political climate and national security issues, he said.

"Meanwhile, the paradigm of oil exploration has changed in that exploration activity has shifted to the eastern parts of Indonesia where infrastructures are still inadequate for effective production," he said.

Rudi said the reactivation of old oil wells might not result in a significant rise in national oil production which had been projected at 970,000 barrels per day but it would at least contribute to local economic development.

The director of Central Java energy company PT Sarana Patra Jateng, Bambang A Mulyadi, said his company was interested in the the possibility of operating old oil wells but it needed an official essurance that a given old well could still produce oil.

PT Sarana Patra Jateng was now producing oil from 38 wells in Blora and 44 others in Grobogan District, Central Java,

State oil and gas company Pertamina had set the price of oil from old wells at Rp. 1,200 per liter or US$ 21 per barrel and private companies at around Rp. 3,000-3,500 per liter, Bambang said.

He also said the government should issue proper regulations on trading in oil from old wells to prevent it from becoming an object of speculative practices.