Indonesian oil output may decline 50 percent in next decade

Indonesian oil production will decline by 50 percent in the next decade unless there is a boost in investment in the sector, Indonesian Petroleum Association (IPA) president Chris Newton said Tuesday.

Newton told the IPA conference in Jakarta that liquids production in Indonesia peaked 10 years ago and is now in steep decline. ?The decline is largely structural with 70 percent of all fields mature and these mature fields responsible for 88 percent of production.?

?By the end of 2005, we expect oil and condensate production in Indonesia to have averaged some 1.06 million barrels per day (MMBPD), a 2.5 percent decline on 2004 and well short of the budget target of 1.13 MMBPD,? Newton said.

According to Newton, gas story is a little brighter with the national gas production still above 8.0 billion cubic feet per day (BCFD). However, this is lower than the 1996 peak of 8.7 BCFD. ?Unlike oil reserves, gas reserves are increasing and offer a reserves life ratio of 35 years compared to 11 years for oil,? he said.

Despite price increases and some supply constraints, domestic consumption of oil products continues to grow at more than 5 percent per annum and is expected to average at least 1.07 MMBPD (62 million kiloliters) beyond 2005. This will make the national oil consumption higher the national oil output and thus make Indonesia a net oil importer.

?The President of Indonesia has recognized the importance of reserving this production decline and has, I understand, set BPMIGAS the aggressive target of delivering 1.3 MMBPD in 2009. The IPA and its member companies are committed to support this objective by way of a new trust based partnership with BPMIGAS,? Newton said.

In order to reach the target, Newton said, the nation's oil and gas investors needs to boost investment in production fields to stem output decline; accelerate development of new fields such as Cepu; accelerate and boost investment in exploration activities. (godang/dino)