ASEAN KEY DESTINATIONS
Pertamina sets high output target despite poor performance in 2014
Despite failing to meet its production target last year, state-owned oil and gas giant PT Pertamina has increased its output target for 2015.
Pertamina reported that it oil production last year reached 259,000 barrel of oil per day (bopd), which is around 7.5 percent lower than the initial target of 280,200 bopd. Meanwhile, its gas output in 2014 stood at 1,562 million standard cubic feet per day (mmscfd), slightly below the target of 1,568 mmscfd.
Pertamina upstream director Syamsu Alam said a number of oil blocks saw high output last year. The West Madura Offshore (WMO) block and the Offshore North West Java (ONWJ) block saw increased output in 2013, but the overall target could not be achieved due to declines in most of its existing oil blocks.
“In WMO, production reached 26,000 bopd, about 26 percent higher compared to its output when we took over the block. In ONWJ, we lifted 44,000 bopd, or 47 percent higher than when we acquired it,” Syamsu said.
For this year, the company expects oil output to touch 351,000 bopd, according to upstream director Syamsu Alam. The figure will be a 35.5 percent increase from its production realization in 2014.
In gas output, the company is targeting around a 6.8 percent increase to 1,668 mmscfd.
Indonesia, a former member of the Organization of Petroleum Exporting Countries (OPEC), has been struggling to halt production declines, particularly in aging fields. The government has asked production sharing contract (PSCs) holders, also known as contractors, to carry out more exploration works to increase hydrocarbon resources. However, exploration in the sector has never been an easy job, particularly in Indonesia, where resources are now estimated to be located in frontier and deepwater areas, with the chance of successful well drilling standing at only around 10 percent.
Moreover, oil and gas companies are currently assessing projects that are still feasible and economical amid ongoing oil-price declines.
The benchmark Brent crude oil price for February delivery touched US$56.27 per barrel on the last day of 2014, according to figures from Bloomberg. The West Texas Intermediate (WTI) for February delivery reached $53.16 per barrel.
World oil prices have recently been under pressure, particularly due to the global supply glut as the US is experiencing a shale boom while other producers are aiming to secure their market share by maintaining their production
Energy think tank Wood Mackenzie has estimated that offshore oil and gas projects in Indonesia will only be economical at an oil price of $80 per barrel while some onshore projects will remain economical at a price as low as $40 per barrel.
The Indonesian Petroleum Association (IPA) estimated that given current oil prices, oil and gas contractors in the country would cut their capital expenditure by around 20 percent. The Upstream Oil and Gas Regulatory Task Force (SKKMigas) revealed that according to contractors’ work plans and budgets, spending in the upstream oil and gas sector would reach $22.2 billion in 2015, a 13 percent decline from about $25.6 billion in 2014.
Pertamina finance director Arief Budiman said the company planned to invest about $5 billion in 2015.
“However, we may need to review the plan, whether it is still feasible with the current weak prices,” Arief said.
Under the current production volume plan, Pertamina expects its revenue and profit to increase by around 10 to 15 percent. However, as Arief said, the real figures would depend on the company’s assessment of project economics amid declining oil prices.
Syamsu added that Pertamina, which ranks 122 among Fortune’s global 500 firms, would continue its mission to expand overseas as the company could not solely rely on reserves found in Indonesia. - See more at: http://www.thejakartapost.com/news/2015/01/02/pertamina-sets-high-output-target-despite-poor-performance-2014.html#sthash.sVYTBGVr.dpuf
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below