INDONESIA NEEDS HARD WORK TO MEET ITS OIL PRODUCTION TARGET

By Andi Abdussalam

Jakarta, March 5 (Antara) - After failing to achieve its oil lifting target last year, Indonesia has set a higher oil production target this year and will need to work hard to achieve it.          Moreover, Indonesia is heading for an energy crisis that can be averted only by increasing its oil and gas production.          According to a deputy at the upstream oil and gas regulator (SKK Migas), Aussie B. Gautama, Indonesia is facing an imminent energy crisis, requiring the country from now on to carry out its own explorations.          The government should encourage Indonesian companies to carry out oil and gas explorations, Aussie said at a panel discussion on "enhance oil recovery (EOR)."     In general, Indonesia could not meet its oil and gas lifting target in 2013, yet for 2014 it set an even higher target that will pose heavy challenges in the oil and gas sector. SKK Migas' acting head Johanes Widjonarko said production in 2013 was below the target set at the 2013 Revised State Budget.          The SKK Migas said the country's oil production in 2013, averaged 825,000 barrels per day falling short or 98.3 percent of the target of 840,000 barrels set in the state budget.          Production of gas also was below target reaching only 1,218,000 Barrels Of Oil Equivalent Per Day (BOEPD), or 98.4 percent of the target of 1,240,000 BOEPD, Johanes Widjonarko said.            As a result state revenues from the oil and gas sector totaled only US$31.4 billion, or 99 percent of the target of US$31.7 billion set in the state budget for 2013, Johanes said.          "The main hurdles faced are land clearance and procurement," he noted at a hearing with Commission VII on energy affairs of the House of Representatives, here on Monday.          The failure to achieve the target has also caused state revenues from the oil sector to not maximize. The difference is actually small, namely US$0.3 billion out of the target of US$31.7 billion and the realized one at US$31.4 billion.          "We faced many constraints, including land clearance, procurement and weather factor," Johanes Widjonarko told a hearing with the energy Commission VII of the DPR last month.          Therefore, in the 2014 State Budget the government set a production target of oil at 870,000 BOPD and natural gas at 7,175 billion British thermal unit per day (BBTUD).          The amount is equivalent to 2,110,000 barrels of oil per day. The state revenues from the oil and gas were also targeted at US$30.6 billion in 2014.          The oil production target is bigger than what the SKK Migas has previously discussed in its working and budget program (WP&B) 2014. It predicted an oil lifting of 804,000 BOPD and natural gas at 6,853 BBTUD.          However, this target is hard to achieve. The government should encourage Indonesian companies to carry out oil and gas explorations, Aussie B. Gautama said at a panel discussion on EOR recently.          The government should not rely only on foreign oil companies to carry out exploration because currently foreign investors are less interested in oil explorations in Indonesia.          Aussie said state-owned oil and gas company Pertamina should be given a larger share of explorations.          He said he believed the question is not only about cost or the availability of fund to finance explorations. He pointed out Pertamina has acquired an oil block at a price of US$1.75 billion in Algeria.          He said China has succeeded in using the EOR technology to produce 1 million barrels of crude oil per day for 38 years.         "If China could why we could not," he said, adding "we could start with determination even if it will take time."    To increase oil production and to achieve the target, Minister of Energy and Mineral Resources Jero Wacik asked oil contractors (KKKS), particularly the six ones, which had just signed production-sharing contracts (KKS), to carry out explorations soon.          "I called on all contractors who sign the contracts today to work beginning tomorrow. They should not delay the work for years because the people are waiting for the (oil) proceeds," the minister stated after the signing of the KKS.          The contracts which were signed at the secretary general office of the Ministry of Energy and Mineral Resources covered conventional oil and gas working exploration areas for 2014.          "If the explorations are started this year, about 10 to 15 years to come the oil and gas proceed could already be produced. However, if they are not started now, what will our next generation get," the minister explained.          He said what was signed on Wednesday last week (Feb. 26) was aimed to increase oil and gas production, which would commence with explorations.          The six production sharing contracts for the exploration schemes have a total commitment value of US$5.23 million. This is based on a 2D seismic survey on a 3,550 km sq km, a 3D seismic survey on a 1,165 sq km and the drilling of eight exploration wells.***2*** (A014/INE/H-YH) EDITED BY INE     (T.A014/A/BESSR/A/Yosep) 05-03-2014 23