UPDATE 1: Oil production at 5 percent below target: BPMIGAS

By Bernard Loebs

The country's oil and gas industry has thus far been unable to meet the oil production target set by the government and the House of Representatives with their output averaging 880,701 barrels per day (bpd) as of April 30 this year, less 5.3 percent than the target of 930,000 bpd set in the revised 2012 state budget.

During a hearing with the House?s Commission VIII which oversees energy affairs on Tuesday, upstream authority BPMIGAS?s Chairman R. Priyono blamed the below-target output on the underperfomances of big oil producers such as Chevron Pacific Indonesia (CPI), state owned oil and gas firm PT Pertamina and Total E&P Indonesie (TEPI).

He said CPI, which accounts for around half of the country?s oil output, was still unable to bring its oil production in Riau to the normal level because reserves at its oil fields remained cold and frozen due to the lingering impacts of months-long stoppage of gas supplies in 2010. Gas supplies to CPI?s fields were disrupted since October 2010 following a leak incident on the pipeline owned by PT Transportasi Gas Indonesia (TGI), a subsidiary of PT Perusahaan Gas Negara (PGN), that delivers gas to fields from southern Sumatra.

?CPI is still losing a potential production of 20,000 bpd,? he said.

Meanwhile, the West Madura Offshore block in East Java operated by PT Pertamina Hulu Energi (PHE), a subsidiary of Pertamina, was still producing at less 10,000 bpd than the normal level since the block?s KE-40 platform, which was hit by a vessel last year, was still unable to operate. The other reason is the lack of investment in the field by the previous operator in the period prior to the takeover of the block by Pertamina.

In the meantime, TEPI, which operates the giant Mahakam oil and gas block in East Kalimantan, has seen its oil production declining due to the depletion of reserve at Peciko field, Priyono added.

CNOOC lost oil production amounting 4,000 bpd at the South East Sumatra block due to a fire incident that hit one of the block?s production facilities that is Lentera Bangsa FSO, according to Priyono.

Priyono noted that during the period, only five contractors were able to exceed their oil production targets. They produced a combined 18,406 bpd compared to the target of 17,517 bpd.

The five are ExxonMobil Oil Indonesia (Aceh), which produced 3,589 bpd compared to the target of 3,190 bpd; BP Berau (6,367 bpd vs 6,000 bpd); Medo EP Indonesia (1,510 bpd vs 1,500 bpd), Kangean Energy Indonesia (1,510 bpd vs 1,500); JOB Pertamina-Costa Int. Group (Gebang) (33 bpd vs 27 bpd).

Priyono also said the country?s oil and gas contractors had proposed an oil lifting of 846,000 bpd for next year, while BPMIGAS proposed the oil lifting to be between 880,000 and 910,000 bpd. Meanwhile, in the state budget proposed by the government the oil lifting was targeted at between 910,000 and 940,000 bpd.

The contractors have also proposed a gas lifting of 8,000 bbtud, which is equal to 7,733 mmscfd or 1.334 million bpd of oil, for next year. BPMIGAS however has proposed the gas lifting to be between 7,860 and 8,160 bbtud (7,600-7,900 mmscfd or 1,320-1,390 boepd). Meanwhile, the state budget proposed by the government set the gas lifting target at between 7,740 and 8,160 bbtud.

Editing by Johannes Simbolon