LOS ANGELES, -- Indonesia is unlikely to raise its planned output to 1.3 million b/d of crude oil by 2009 due to the lack of exploration and development, according to Cyril Noerhadi, finance director of Indonesian oil and gas company PT Medco Energi Internasional.
Noerhadi said the government's target of 1.3 million b/d of crude oil could be achieved only from discoveries and improvement to production from existing fields. He said significant recent discoveries include only wells on the Cepu Block in Centra Java and Jeruk Block in Madura and require development.
Part of wait for production, he noted, involves resolution of a dispute between state-run PT Pertamina and ExxonMobil over operatorship of the Cepu Block.
The dispute between Pertamina and ExxonMobil, each with a 45% stake in the venture, has delayed work in the project.
Noerhadi said the Indonesian government needs to review its fiscal regime to make it attractive to foreign investment. At present, he said, foreign investors prefer oil and gas ventures in Vietnam, Thailand, Russia, and Kazakhstan.
"This is ironical because chances for success in oil exploitation in Indonesia have reached 30%" he added.
His remarks echoed earlier criticism by the 45-member US-Indonesia Business Council, which recommended that the government generate a well-defined oil and gas policy (OGJ Online, Jan. 24, 2006.)
Noerhadi's comments coincided with a government announcement on Feb. 6 that Indonesia produced 955,000 b/d of crude oil and condensate last year, missing its targeted output for the year by 120,000 b/d.
Minister of Finance Sri Mulyani Indrawati said the country set a target of 1.075 million b/d of crude and condensate in the 2005 state budget. She did not offer an explanation for the shortfall.
Despite falling production, the value of Indonesia's oil and gas exports rose 16.58% year-on-year in December 2005 to $1.86 billion, as both oil export volumes and prices rose, according to a report by the Central Bureau of Statistics on Feb. 1.
Despite the improved income, the Indonesian economy has been struggling to keep pace with the cost of the country's own increasing imports of oil. Indonesia consumes 1.35 million b/d and imports about 390,000 b/d.
As a result, on Jan 24, Bank Indonesia said its foreign exchange reserves as of end-2005 dropped to $34.72 billion from $36.32 billion a year earlier, partly due to the oil price spike.
On Jan. 26, PT Pertamina said it may reduce its fuel imports for this year by 20% due to lower domestic consumption brought about after the government raised fuel prices in October 2005.
Pertamina said it reduced its fuel import target for February to 6.4 million bbl from 7.6 million due to sufficient fuel stock. It said fuel imports have fallen from 17 million bbl in September to 12 million bbl in December and to an estimated 8.4 million bbl in January.
Indonesia has an Organization of Petroleum Exporting Countries quota of 1.45 million b/d of crude but has failed to meet the quota since early 2002.
Eric Watkins, Senior Correspondent
Oil & Gas Journal
February 06, 2006