Oil production continues to decline despite increase in exploration spending

The country?s crude oil production has showed a continued decline during the past three years despite the continued increase in exploration costs during the period, Kompas reported on Thursday.

According to data obtained by the newspaper, the assumption of the crude oil production in the state budget continued to fall from 1.3 million barrels per day (bpd) in 2002 to 1.27 million bpd in 2003 and to 1.15 million bpd in the proposed 2004 state budget.

The decline is in the contrary to the continued increase in the government?s expenditure to recover oil exploration costs spent by oil producers. The recovery cost for oil exploration rose from US$3.9 billion in 2000 to $4.34 billion in 2001 and to $5.07 billion in 2002.

The decline in the crude oil production has become a controversy because the government said earlier that there would be an increase in the crude production of between 1,500 bpd and 2,000 bpd a year.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro acknowledged that there was a decline in the production of the country?s crude oil because the expected increase of about 1,500 bpd a year in the crude oil production could not be realized.

He, however, said that the increase in the exploration spending should not go in line with the crude oil production level. ?The increase of the exploration spending was also contributed by the increase in prices,? he said. (*)