Major oil producers unable to raise production target

Indonesia?s major oil and gas producers will unlikely be able to raise their production targets next year either due to the decline in oil reserves or due to lengthy bureaucratic procedures in obtaining government approvals for their new exploration and production activities.

Of the country?s five major oil producers, only state-owned oil company PT Pertamina has expressed optimism that it will be able to raise its production target to 117,000 barrels of crude oil per day (bpd) this year and 125,000 bpd in 2009.

The other major oil and gas production sharing contractors such as Chevron Pacific Indonesia (CPI), ConocoPhillips, and ExxonMobil have admitted that it would be unable to increase their production targets as expected by the government.

Speaking during a hearing with the budgetary commission of the House of Representatives on Monday, CPI?s President Director Suwito Anggoro said that the company?s oil production was estimated only to reach 405,000 bpd this year, lower than the company?s initial target of 408,000. In 2009, the company would further lower production target to 308,000 bpd, he said.

Suwito said that the lengthy bureaucratic procedures that had to be passed by the company in obtaining necessary approvals in conducting new exploration and production activities had also contributed to the decline in the oil production, in addition to the decline in oil reserves in major oil wells.

Meanwhile, ConocoPhillips?s President Director Jim Taylor said that the company would also lower production target from its main field, Natuna B block to 42,000 bpd from about 78,000 bpd this year due to the faster-than-expected drop in gas reserves in newly developed fields.

Meanwhile, ExxonMobil?s Vice President Maman Budiman said that the Cepu oil field, which is jointly owned by ExxonMobil and Pertamina, would reach its peak production of 165,000 bpd by the end of 2012.

He said that a preliminary production of 20,000 bpd would be commenced by the end of this year, albeit with high operating costs, so as to meet the government?s program to boost oil production target.

?The preliminary production (project) is separate from the main production. It was designed with limited production facilities," Maman said.

Meanwhile, Medco's Director of Producing Assets Budi Basuki said Medco's production would decline by 6-7 percent next year, from 33,000 bpd to 30,000 bpd.

The firm plans to drill 15 exploration wells next year, up from 7 this year, in order to increase output, according to Budi.

The government has proposed a net production target of 950,000 bpd in the 2009 state budget, lower compared to the 2008 target of 977,000 bpd but many observers consider that the target is still too low. (Bernard)