INDONESIA TO CUT ITS OIL LIFTING

By Andi Abdussalam

Jakarta, April 26 (ANTARA) - The government has decided to cut its oil lifting target for this year from 965,000  barrels per day (bpd) to 955,000  bpd but still needs the House of Representatives (DPR)'s endorsement to put it into effect.          The government's decision to cut its oil production target was reached at a meeting between  Energy and Mineral Resources (ESDM) Minister Darwin Zahedy Saleh and the Executive Board of the Oil and Gas Regulating Agency (BP Migas) last week.          "Although we have decided to reduce the oil lifting target, we are still waiting for the endorsement of the DPR before the decision can be implemented," Darwin Zahedy Saleh, said.          He said the decision was reached after a long and tough debate  between the ESDM minister, BP Migas and the House Commission VII on energy affairs at a working meeting last week. The lawmakers themselves were at the meeting divided on the matter.       Some of the legislators said  the 955,000 bpd target should be endorsed as soon as possible but  others wanted  the government and the BP Migas first to provide the latest data on the production of oil contractors before it was approved. The house was expected to approve the oil lifting cut this week.          The ministry of energy and mineral resources and the BP Migas are doing their best  to make  oil production achieve  the target set at the state budget. In this case, various sides need to work in synergy in order to create  conducive conditions for investment in the  oil and gas sector.          BP Migas noted that in order to achieve the target a number of constraints had to be overcome, such overlapping land ownership, cost recovery and other problems related to the issuance of Law No. 32 / 2009 on Environment Protection and Management and Law No. 26 / 2007 on Land Master Plan.          These problems were feared to hamper investment in the oil and gas sector, as there was a down-ward trend where in 2009 investment in the upstream oil sector was only US$10.874 billion which was lower than that in 2008 which stood at US$12.096 billion.          Due to this down-ward trend, the government had decided to downsize its oil lifting target this year.          Earlier, legislators opined that the government was reluctant to reduce its production target for this year's revised state budget (APBN-P 2010) and avoiding discussions on it.          "This is for the first time the energy minister is reluctant to discuss about the oil lifting so that our discussion about  oil lifting was not focused," Satya Widya Yudha, House Commission VII member of the Golar Faction, said.          At a previous meeting with the House, a number of legislators even expressed confidence that the plan to reduce the oil lifting figure was feasible. This was because the government and  BP Migas had also proposed a different  oil lifting figure.          Satya said the oil-lifting figure should  be proposed by the energy minister in his capacity as coordinator in the energy sector while the BP Migas was actually under the coordination of the minister.           "Although BP Migas is responsible to the President based on the law,  it is under the command of the ESDM minister," the legislator said.          That was why the lawmaker questioned why there should be different figures between those proposed by the minister and by the BP Migas.          "BP Migas Chief Raden Priyono said that his agency is only able to produce up to 917,000  barrels per day while Oil and Gas Director General Evita has proposed 965,000 barrels per day ," Dewi Aryani Hilman of the Indonesian Democratic Party of Struggle (PDIP) faction, said.          Minister Darwin Zahedy Saleh said the government was sure  965,000 barrels per day was a realistic oil lifting target.          "The government and the House decide the oil lifting target and crude oil price while  BP Migas is the executing agency," Minister Darwin Z Saleh said.          In the meantime, Coordinating Minister for  Economic Affairs  Hatta Rajasa was optimistic that Indonesia's oil production can reach one million barrels per day (bpd) in 2012. "Indonesia's oil lifting should increase to one million bpd in 2011 or 2012 at the latest," Hatta said,     Hatta said it was very likely that Indonesia would reach a one million barrels oil production because it had large untapped oil reserves and oil potentials that could be exploited.           "Indonesia still has about 9 billion barrels of oil potentials in various parts of the country, particularly in the eastern regions," he said.  The minister said that in order to achieve the one million bpd target, investment and technology were needed to drill new oil wells. But so far, calculations of the investment  needed to achieve the target had not yet been made.          "The key to the success of achieving the target is how to increase investment and use technology," he said.           At present, Indonesia's oil lifting target is 965,000 barrels per day, which is higher than that of the previous year which was set at 960,000  bpd.          However, the government is now waiting for the endorsement of the cut in the target from 965,000 bpd to 655,000 bpd for the 2010 revised state budget.      (T.A014/B/HAJM/15:20/A/O001) 15:37: