SKK Migas, Indonesia's upstream oil and gas regulator, announced that oil production in 2013 averaged 825,000 barrels per day (bpd), thus falling short of the target (840,000 bps) set in the State Budget (APBN). Meanwhile, the country's gas production averaged 1,218,000 barrels of oil equivalent per day (boepd), short of its target (1,240,000 boepd). As a result, total state revenues from the country's oil & gas sector also fell short of the government's target. In 2013, these revenues totaled USD $31.4 billion instead of USD $31.7 billion.
Reasons that were cited for the failure to meet the state target were land clearing and procurement hurdles (causing delays in oil block operations), extreme weather conditions and illegal oil tapping.
Extreme weather conditions hampered repairments of the mooring hawser of floating storage and offloading of Cinta Mas off Tuban (East Java). This then led to a loss of around 19,000 bpd. SKK Migas estimates that 1,100 bpd were lost due to illegal oil tapping.
Starting in the 1990s, Indonesia's crude oil production experienced a steady downward trend amid a lack of exploration and investments in this sector due to weak government management, bureaucracy, an unclear regulatory framework and legal uncertainty regarding contracts. Today, Indonesia's total of oil refineries have roughly the same combined capacity as a decade ago, indicating that there has been limited progress in oil production, resulting in the current need to import oil to meet domestic demand. The decline in Indonesia's oil production in combination with increased domestic demand turned Indonesia into a net oil importer from 2004 onwards, implying that it had to terminate its long-term membership (1962-2008) in the Organization of Petroleum Exporting Countries (OPEC).
SKK Migas said that it is important for Indonesia not to rely solely on foreign oil companies to engage in oil exploration in order to avert a potential energy crisis in the future as foreign companies are currently less interested to engage in oil exploration in Indonesia.
Indonesia's target for oil production in 2014 is 804,000 bpd. This is lower than last year's target (and result) as production at current oil fields is declining while no new fields have been found. Oil reserves in 94 percent of Indonesia's primary oil fields are shrinking implying that explorations for secondary and tertiary layers are needed.