Once an oil exporter, Indonesia this year is expected to import about 500,000 barrels of crude per day as its production continues to decline below the target as set in the 2011 state budget at 970,000 barrel per day (bpd).
"We predict that our oil and condensate production would only reach about 950,000 bpd up to the end of the year. After all, at present the average oil production level is only about 910,000 bpd," Head of the Upstream Oil and Gas Regulating Agency (BP Migas) R Priyono said.
BP Migas, he said, would face difficulty to achieve the production target of 970,000 barrels per day (bpd). According to the BP Migas chief, unplanned shutdowns of oil fields have been among the causes of the declining in the country’s crude production.
The government is actually targeting a crude production of 1.2 million bpd, a figure which is still below the domestic need of about 1.4 million bpd. This would force the government to import crude at the amount of over 500,000 bpd.
Increase in production is much expected from oil contractors. However most of them have not yet fulfilled their commitment.
The BP Migas said 77 or 72 percent of 107 oil and gas blocks signing contracts between 2002 and 2008 have yet to fulfill exact commitment to conduct explorations. Only 30 or 28 percent of them have met the commitment, according to BP Migas data made available on Monday.
Earlier at a meeting with Energy and Mineral Resources Minister Darwin Saleh, BP Migas Chief R Priyono said 23 or 24 percent of the 77 blocks failed to meet the commitment because of contractors’ internal problems.
The internal problems concerned among others operators’ rights, finance, and holding companies’ priorities, the data show. Meanwhile, 15 or 16 percent of the 77 blocks failed to meet the commitment because of overlapping claims to land, 14 or 15 percent because of geological and geophysical factors, and 12 or 13 percent because of compensation problems.
The data show 10 or 11 percent failed to meet the commitment due to the absence of supporting equipment and services, 9 percent due to operational problems, 8 or 9 percent due to the absence of data and 2 percent due to special conditions such as those in Aceh and border areas.
In an effort to raise production, BP Migas will discuss it with the government. "Thus, to achieve the 950,000 bpd this month, the remaining production must be set at an average of 970,000 bpd," he said.
He said that efforts carried out so far to increase production were among others preventing the unplanned shutdowns particularly in the work areas of ConocoPhillips and PT chevron Pacific Indonesia. BP Migas will also do its best to reduce the declining production rate which at present is about two percent to below one percent, or at least similar to the achievement made in 2010.
Production in 2010 was set at 965,000 bpd but the realization was only 956,000 bpd. The declining in the country’s oil production caused Vice President Boediono to express concern on Wednesday that the oil sector had not yet shown good performance.
"There is a sector I am not happy about namely our oil sector which is not performing well. Oil production has dropped," he said in his address at the opening of the 35th Indonesia Petroleum Association (IPA) Convention and Exhibition.
The rate of oil explorations is still far before the need to increase production to achieve the production target of 1.2 million barrels a day. Therefore, the government is serious to cooperate with oil investors and industrialists to settle problems.
To overcome the situation, the vice president said, it needs cooperation to find the right and sustainable model and real improvement in its implementation. "We also need to work hard to find a way to get quicker gains," he said.
Among the ways are, he said, increasing efforts to exploit the potentials of oil production hike and eliminate unexpected production stoppages that would affect oil production.
"I will ask BP Migas and the ministry of energy and mineral resources to pay a serious attention to the issue," he said.
In the meantime, Energy and Mineral Resources Minister Darwin Saleh has promised to increase the country’s crude oil production as requested by Vice President Boediono.
"The request of the vice president is a challenge," the minister said here on Wednesday. His ministry and the BP Migas would cooperate closely to raise national oil production.
According to the minister, the recent decline in oil production has been caused more by unplanned shutdowns. "We will ask contractors to reduce the number of shutdowns," he said.
The long-term challenge was how to speed up the production increase through enhanced oil recovery (EOR) efforts such as the use of surfactant in the field of PT Chevron Pacific Indonesia (CPI).
"We have applied the EOR system but we still need time to carry it out perfectly. If that already happens oil production will peak in the 2025-2030 period," he said.