Govt urges oil firms to develop marginal fields

Indonesia's Mines and Energy Minister has urged oil companies operating in the country to develop marginal fields and carry out enhanced oil recovery projects to boost production, and pledged incentives if they do.

Indonesia, Asia's only OPEC member, currently produces around 1.10 million barrels per day (bpd) of crude oil and condensate output of 150,000 bpd.

It is failing to meet its OPEC quota of 1.125 million bpd as condensate is not included in that number.

"There are about 60 marginal oil fields that have not been developed. If the fields can be developed then it has potential to add production between 200,000 to 300,000 bpd," Purnomo Yusgiantoro told reporters.

"We understand to develop those marginal fields is not easy, especially in cost. We will give them incentives but case-by-case. We want oil companies to propose something to the government on how to develop these fields," he added.

Rachmat Sudibyo, head of the Indonesian oil watchdog BP-Migas, said the government is considering reducing the share it takes of oil and gas revenue to encourage contractors to develop marginal fields.

Indonesia's standard oil production contract split is 85 percent for the government and 15 percent for the contractor.

"To bring the marginal fields to be economically viable, we have to reduce government sharing in the split. That is the incentive (that) can be given although the consequence is the government revenue will be less. We are considering giving a fair split which will benefit oil contractors and the government," Sudibyo said.

Purnomo said he believed Indonesia still has big oil reserves as recovery in conventional production is only 40 percent.

He also said it was important to have enhanced oil recovery projects in many oil fields through new technology.

"For example, who can predict before that there are high oil reserve in Cepu operated by ExxonMobil. We believe potential is there in other fields too," Purnomo said.

Indonesia said in August Cepu held 500 million barrels of oil, while ExxonMobil said it was too early to be specific about volumes, although it would exceed 250 million.

Purnomo said Indonesia currently has around nine to 10 billion barrels of proven and potential oil reserves. (*)