Indonesia's crude oil output was strong in the first quarter of 2016 on the back of higher-than-expected oil production of several oil companies in Indonesia. According to Indonesia's oil & gas regulator SKK Migas the nation's oil production totaled 833,000 barrels per day (bpd) in the January-March 2016 period, exceeding the oil lifting target that was set in the 2016 State Budget (830,000 bpd). It also means that the globe's low oil prices at the year-start, touching 12-year lows at around USD $27 per barrel, did not make local oil companies cut back on production rates.
Higher oil production realization in Indonesia comes on the back of rising output at the Banyu Urip field (part of the Cepu Block in East Java). This field, which came online in 2015, is the largest existing oil field in Indonesia, containing an estimated 450 million barrels of oil. The operator of this field, ExxonMobil Cepu Ltd, said local oil output has been exceeding the target level of 165,000 bpd starting in early March. Previously ExxonMobil Cepu Ltd said the top production rate at this location was estimated at around 165,000 bpd.
Meanwhile, Chevron Pacific Indonesia - the biggest oil producer in Indonesia - also managed to exceed its oil lifting target. Yanto Sianipar, Vice President Strategic Business Support at Chevron Pacific Indonesia, told reporters the company's oil production at the Rokan field in Riau was higher-than-targeted without informing the exact figures. Earlier it was reported that Chrevon Pacific Indonesia targets a combined oil lifting target of 243,000 bpd from all its oil wells in Indonesia in 2016.
Crude Oil Price:
Sudirman Said, Indonesian Minister of Energy and Mineral Resources, said Indonesia needs to develop sufficient oil buffers that can meet domestic demand for at least 30 days in times of trouble (for example in case of natural disasters or the breakout of a war). Currently - considering the rising domestic oil demand level - the nation's oil stocks (managed by state-owned energy company Pertamina) can only last for 22 days. Minister Said stated that this level is far behind the oil stock level of several regional peers, such as Vietnam (two months) and Myanmar (four months). Meanwhile, the USA have oil buffers that can last for seven months, while those in Japan can meet domestic demand for six months.
Further Reading: Overview & Analysis of Indonesia's Crude Oil Industry
Therefore, Said wants to see more investment in oil refineries as well as in oil exploration in Indonesia in the next five years. Over the past two decades Indonesia's oil production has plunged sharply due to the lack of new oil exploration. This trend is caused by the relatively weak investment climate of Indonesia (weak legal certainty and weak infrastructure) while the larger oil fields are located offshore (in deep sea) causing production costs to rise steeply.
Production Target per Oil & Gas Contractor in 2016:
|Oil & Gas Contractor
|2016 State Budget
|Chevron Pacific Indonesia
|Mobil Cepu Ltd
|Total E&P Indonesia
|PHE ONWJ Ltd
|CNOOC S.E.S Ltd
|ConocoPhillips Indonesia Inc Ltd
|South Natuna Sea Block B
|Petronas Carigali Ketapang
|Chevron Indonesia Company
|PetroChina International Jabung Ltd
|Virginia Indonesia Company (VICO)
|BOB - BSP Pertamina Hulu
|Sub Total 13 Largest Contractors
|Remaining 70 contractors
|Total Oil Lifting Indonesia
Source: Bisnis Indonesia