Oil production in Indonesia is targeted to be lifted to 1 million barrels per day (bpd) by October or November 2014 according to SKK Migas, the government unit that manages upstream activities in Indonesia's oil and gas sector. Crude oil production in the first quarter of 2013 was 830,900 bpd, eight percent lower than the target in the country's state budget. Indonesia's oil output has fallen steadily in the last decade due to a lack of exploration and other investments in the sector that was once the engine of Indonesia's economic growth.
However, the Banyu Urip oil field in East Java (part of the Cepu block) constitutes the largest known oil reserve (containing around 450 million barrels of oil) that Indonesia is yet to exploit, and which can contribute significantly to the government's production target of one million bpd from 2015 onwards. This USD $1.3 billion project in which Exxon Mobil and state-owned enterprise Pertamina each hold a 45 percent stake, is expected to commence production in July 2014 (originally it was planned to start production in May 2014). Production is estimated to reach 165,000 bpd starting from late 2014 or early 2015.
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). However, Indonesia targets to re-join the OPEC around 2020; an ambitious target that will require more investments as well as a conducive investment climate in the country's oil sector.