BPMIGAS: Production below target due to lack of new investments

Indonesia?s oil production again fell short of target in March this year due to lack of investments made by operators to boost production, oil and gas regulator BPMIGAS said.

According to the latest data issued by the agency, the country?s oil production totaled only 885,000 barrels per day as of March 8, or about 45,000 bpd below the target of 930,000 bpd stated in the revised 2012 state budget.

Oil operators were still unable to meet the production target although the target had been lowered from 950,000 bpd stipulated in the original state budget.

Rudi Rubiandini, Deputy for Operation of BPMIGAS, said in Jakarta on Thursday that the country?s oil production was still below the target because a number of major operators held their investment due to uncertainty in their contract extension.

A number of foreign oil operators halted their investments because they feared the West Madura offshore (WMO) case could occur again, he said. As widely reported by newspapers, the government had refused to extend the contract of Korean oil company Kodeco Energy on the WMO block and instead gave it to state oil and gas Pertamina although the company had invested a lot of money to boost production during the last five years of its contract.

Major contractors, which failed to meet production target, included Chevron Pacific Indonesia which produced 351,669 bpd of 357,200 bpd target, Pertamina EP 124,028 bpd of its 135,000 bpd target, Pertamina HE-WMO 12,501 bpd of 23,000 bpd target, and Total EP Indonesie which produced 73,031 bpd only, below its target of 85,500 bpd.

Total is still awaiting for the government?s decision on whether or not its contract which will end in 2017, will be extended.

Rudi said that Total?s production was within target during the past two years, but it began to decline lately as the company has been reduceing its investment. He also said Pertamina?s production was also short of target because the company spent larger part of their money to acquire new concession areas rather than for exploration and production activities.

Pertamina spokesman Mochamad Harun disagreed with Rudi?s statement, saying that the production was lower because uncertainty in investment climate and difficulties in obtaining necessary permits from the local governments.

Earlier Total E&P Indonesie?s President Director Elisabeth Proust said that the company has pledged to boost investment in order to minimize production decline that was due to natural oil depletion, down to 3 percent from about 10 percent at present. (*)