President issues instruction to meet production target

President Susilo Bambang Yudhoyono has issued a new regulation to step up coordination among government offices involved in exploration and production of oil and gas so that the target to produce 1.01 million barrels of oil per day in 2014 could be achieved.

However, the new regulation contained in Presidential Instruction No 2/2012 would not be enough, if there is no strong commitment in the part of oil production sharing contractors that operate new oil and gas fields.

If there is a delay in the production of the Banyu Urip Block, which is operated by Mobil Cepu Ltd (MCL), the target will be difficult to achieve. Upstream authority BPMIGAS estimates that a delay in the production of the Banyu Urip block would cause production to only reach 940,000 bpd in 2014.

?The target can be achieved only if the Banyu Urip field goes on stream in the middle of 2014,? BPMIGAS Deputy for Operation, Rudi Rubiandini said s quoted by Kontan

Rudi said, in general, the Presidential Instruction would help cope with difficulties in exploration and production activities such as in obtaining permits from local governments. According to him, with their autonomy power, local governments often delay the issuance of local permits such as those related to the licenses for land use.

?The delay in the issuance of licenses for land use has often forced contractors to change the exploration schedule,? he said, adding that in addition to licensing problems, other difficulties also include overlapping in concession areas and the local governments? demand to involve local workers in exploration and production works.

In the new Presidential Instruction, the President orders the improvement in the coordination among 15 ministries and related government offices in order to achieve the target to increase oil production to 1.01 million bpd.

The ministries and government offices mentioned in the Presidential Instruction include the economic coordinating minister?s office, the energy and mineral resource ministry, the finance ministry, the public works ministry, the home affairs ministry, the agricultural ministry, forestry ministry, the legal and human rights ministry, and state enterprises ministry.

In addition, the President also wants improvement in the coordination among government agencies including national land agency (BPN), BPMIGAS, governors, regents and mayors. (*)