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
Working Area
2016 State Budget
Chevron Pacific Indonesia Rokan         243,000
Mobil Cepu Ltd Cepu         168,430
Pertamina EP Indonesia          98,510
Total E&P Indonesia Mahakam          55,720
PHE ONWJ Ltd ONWJ          37,300
CNOOC S.E.S Ltd S.E. Sumatra          31,650
ConocoPhillips Indonesia Inc Ltd South Natuna Sea Block B          19,280
Petronas Carigali Ketapang Ketapang          18,030
Chevron Indonesia Company East Kalimantan          14,470
PetroChina International Jabung Ltd Jabung          13,970
Virginia Indonesia Company (VICO) Sanga-Sanga          12,110
BOB - BSP Pertamina Hulu CPP          11,450
PHE WMO West Madura          10,030
Sub Total 13 Largest Contractors         733,950
Remaining 70 contractors          93,940
Total Oil Lifting Indonesia       ±830,000

Source: Bisnis Indonesia