RI'S OIL OUTPUT SHOWING UPWARD TREND

By Andi Abdussalam

     Jakarta, May 14 (ANTARA) - Government officials are upbeat that Indonesia's oil output will exceed one million barrels per day (bpd) this year after observing an upward trend in the country's oil production since January.

        "Indonesia's oil production could exceed one million (bpd) at the end of this year," Head of the Upstream Oil and Gas Regulatory Body (BP Migas), R Priyono, said Tuesday.

        According to data made available by BP Migas, Indonesia's average oil output in the last five months was 977,835 bpd. However, the figure is still well below the country's daily oil consumption of about 1.2 million bpd.

        In order to narrow or fill the gap between consumption and output, Vice President Jusuf Kalla said the government was planning to raise its oil output by 200,000 bpd to 1.2 million bpd by 2010.

        "I think we will be able to raise our crude oil production to 1.2 million bpd by 2010 as we have adequate potential oil resources," he said at a dialog with employees of state oil and gas company Pertamina's processing unit in Balikpapan, East Kalimantan, last week.

        According to R Priyono, the prediction that the one-million bpd production level could be exceeded was based on the upward trend in national oil production in 2008.

        Priyono said Indonesia's daily crude and condensate production in January was recorded at 955,847 bpd, February 986,848 bpd, March 985,872 bpd, April 978,060 bpd and May 982,550 bpd.

        It is expected that the upward trend would help the government raise its oil output and achieve its target since Indonesia had turned from an oil exporting state to an oil importing nation.

        Early in 2007, the government announced a target of increasing oil and gas production by 30 percent to 1.3 million barrels per day and 8.5 billion cubic feet per day, respectively by 2009.

        Indonesia, once one of the most important oil exporters in the world, has become a net oil importer in recent years due to a continued decline in its crude production.

        Its oil output reached its first peak in 1977, at approximately 1.6 million barrels per day, rising from 500,000 barrels per day in only 10 years.

        Production peaked a second time in 1995, again just over 1.6 million barrels a day but it began to decline steadily in the years that followed.

        The country, now the second smallest member of the Organization of Petroleum Exporting Countries (OPEC), is in a dire need of private investment to boost oil and gas output in its aging fields.

        Oil industry observer Dr Kurtubi said Indonesia's failure to manage its oil wealth properly in the past few years had caused its crude oil production to decline and led to its dependence on oil imports which had now placed the country in a difficult position.

        Kurubi said that as a result of the improper management of the country's oil potentials, the government was now facing difficulties in maintaining the state budget amid the sky-rocketing crude prices in the world market.

        "Indonesia could have reaped huge profits from the current world crude price hikes but mismanagement of our oil potentials has caused us to face difficulties now," Kurtubi said.

        In the current situation where crude oil prices have surged to around US$125 per barrel, the government had to spend a large amount of funds on oil imports.

        "If we want to be safe and gain profit from world crude price hikes, we have to pump up at least 1.3 million barrels per day. If that level is achieved we will be safe in the face the world oil turbulences," he said.

        With an output of 1.3 million barrels per day, the government could afford Rp26 trillion to Rp30 trillion in fuel oil subsidy without having to raise domestic fuel oil prices, Kurtubi said.

        According to Vice President Jusuf Kalla, Indonesia has large potentials to raise its oil production to meet its rising consumption, he said.

        "We have so far been able to export our oil. The market for our oil is already clear. In this country of 220 million, we will not lose the market," he said.

        BP Migas chief R Priyono said the upward trend of the country's oil output could be further boosted now that new oil fields have started production.

        He said additional crude production would come from 16 new oil fields whose plan of development (PoD) would be carried out this year. The volume of additional production from the new fields was predicted at 71,000 equivalent barrels of oil per day (boepd).

        "We are optimistic the upward trend in Indonesia's oil production would continue," he said. (T.A014/A/HAJM/15:00/....) (T.A014/A/A014/N001) 14-05-2008 14:59:31