Oil Production Capacity Fail to Achieve Target
3 March 2014 13:20 WIB
TEMPO.CO, Jakarta - The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that oil production will be almost 60,000 barrels a day short of the 2014 target of 870,000. SKK Migas claimed that the amount will not achieve the oil and gas lifting target, which was set to 870,000 barrels per day, as stated in the 2014 State Budget. SKK Migas was only able to confirm a production peak of 813,000 barrels per day.
Initially, SKK Migas had announced a maximum 804,000 barrels daily production capacity. Later on, the task force said that with 'production optimization' 9,000 additional barrels would be produced each day. It is not clear when these changes would come into place, or at which sites.
"I think the number is conservative because there have been no significant findings," said SKK Migas chief Johannes Widjonarko.
He explained that the declining target was due to unavailability of new wells for the last few years. Cepu Block, which was projected to start operating in July this year, has been delayed.
"Cepu will be operational in November 2014," he said.
For the initial stage, Cepu Block is projected to produce 26,000 barrels a day. The target will be increased gradually to be 80,000 barrels and eventually to reach its peak at 165,000 barrels in 2015.
Earlier, Refor Miner Institute vice director Komaidi Notonegoro predicted that the oil and gas production for 2014 would be relatively similar to last year. The figure was predicted to be at 830,000-850,000 barrels.
"The target would be achieved if the government worked hard to supervise the oil and gas cooperation contractors," Komaidi told Tempo.
Samuel Asset Management chief economist Lana Soelistianingsih said the target revision would jeopardize Indonesia’s trade balance because oil consumption is always larger than its production.
"The foreign exchange reserves will be spent to cover for oil imports," she said.
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