23 oil, gas projects may ‘fall behind schedule’

Upstream oil and gas regulator BPMigas on Friday announced that 23 exploration and production projects across the country could start behind schedule due to various problems, hurting the country’s efforts to boost production.

BPMigas oil and gas project manager Iwan Ratman said predicted delays were mostly due to revisions in plans of development (POD), issuance of authorization for expenditures (AFE) and late tender processes.

However, he gave assurances the delays would not cause major disturbances to the country’s oil and gas production in 2011, as only two projects — the Jambi Merang gas field in Jambi and the Sukowati oil field in East Java, which were previously expected to begin productions early this year — had experienced delays.

“We hope the impact of the delays to production this year won’t be too severe, but we haven’t estimated the potential loss,” he said at his office in Jakarta.

The Jambi Merang field was expected to begin gas production in December last year. The agency hopes the production will go on stream in April 2011.

BPMigas said the largest contributor to delays was poor project management by production sharing contract (PSC) holders, accounting for 25 percent of all delays, followed by late issuance of AFEs by 21 percent and problems in the tender process in 20 percent of projects.

Iwan reported that this year, BPMigas registered 53 exploration and production projects with a total investment of around US$20 billion, higher that the Energy and Mineral Resources Ministry’s target of $16 billion.

BPMigas will work harder to encourage PSC holders to fulfill all investment commitments they have made, he said, adding that if they failed to make good on their commitments, the government would not hesitate to revoke their contracts and “take back the blocks”.

To meet the growing energy demand in the country, Indonesia needs to crank up oil and gas production. In 2010, the country failed to achieve its production target of 965,000 barrels of oil per day (bpd), producing only 954,000 bpd.

This year, the government has set a target to produce 970,000 bpd. However, the target may seem overly ambitious after BPMigas spokesperson Gde Pradnyana announced that as of Friday, the country’s oil production was only around 911,000 bpd.

Fortunately, the country’s declining oil production is offset slightly by increased gas production. Indonesia produced 1.32 million barrels of oil equivalent per day (boepd) of gas in 2008. The following year, production increased to 1.41 million bpd and jumped to 1.5 million bpd in 2010.

Indonesia’s gas production is predicted to increase as more gas fields in the country are developed.

Iwan said the South Mahakam block operated by Total E&P Indonesie was projected to begin production in 2014. He said the block’s production could reach between 300 million standard cubic feet per day (mmscfd) and 400 mmscfd.