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NEWS UPDATES Asean Affairs        21  April 2011

Indonesia won’t reach oil production target

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The Indonesian government acknowledged on Wednesday that it would miss its oil production target in 2011, putting the blame on unplanned shutdowns and declining reserves.

It originally projected output of 970,000 barrels of oil per day in the 2011 state budget, but Rudi Rubiandini, secretary of upstream oil and gas regulator BPMigas, said production would only reach 945,000 bpd at the most this year.

“We have failed to produce at maximum capacity in the first quarter. It is hard to ramp up oil production for the rest of the year,” he said.

As of earlier this month, oil production stood at 919,000 bpd. The government also fell short of its 965,000 bpd production target last year, with oil companies blaming unplanned shutdowns for production of 954,000 bpd.

Priagung Rakhmanto, an analyst at the Reforminer Institute, said the government’s targets were overly ambitious.

“Their target is hard to reach. We all know oil production is declining year by year,” he said, adding that the only solution was more exploration.

Oil and gas companies have proposed a target of 952,000 bpd this year, Priagung said. “It’s already below the target. The government is pushing oil and gas companies too much.”

BPMigas noted 201 cases of disturbed oil production between January and April, 76 percent of which were unplanned shutdowns that resulted in a loss of 22,000 bpd. More than 100 stoppages were due to faulty equipment, and the regulator said poor management and maintenance cost about 7,600 bpd.

Of Indonesia’s 240 oil and gas fields, Rudi said, 60 are currently producing while 40 are just starting output. The other 140 had “unknown status.”

Rudi urged the government to encourage more exploration in the oil and gas sector. “I think the government must give incentives to investors so they can explore offshore fields,” he said.

He also bemoaned the lack of interest in new oil and gas fields from big industry players.

“Only small investors have won the tenders of oil and gas fields offered by the government in the last few years. We need more big investors that are able to explore offshore oil and gas fields in east Indonesia,” Rudi said.

Companies are reimbursed for exploration costs in their production-sharing contract with the government. However, the government said in January it would not reimburse granted assets, fines, interest payments, administrative costs or criminal sanctions, bonuses paid to the government and costs incurred before a contract is signed.

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The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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