Ika Krismantari, The Jakarta Post/Jakarta
The Cepu oil and gas block is expected to be producing some 10,000 barrels of oil per day by the end of 2008, following an agreement to fast-track the development of the block between its operators and the government.
The block is operated by U.S. energy giant ExxonMobil and state oil and gas firm PT Pertamina.
Abdul Muin, the deputy chairman of the upstream oil and gas regulatory agency (BPMigas), said Monday that the low output -- far lower than the block's estimated peak capacity of 165,000 bpd -- was the best that could be hoped for if the operation of the block was to be brought forward from 2009.
Muin said that talks had been held to discuss other scenarios, including those under which the operators would produce more than 10,000 bpd, but for fear of further delays, the government had decided to stick with 10,000 bpd.
Exxon president director Peter J. Coleman said recently that Exxon and Pertamina were seeking ways, together with BPMigas and Lemigas, the government's oil and gas research and development center, to find a solution so as to meet the government target.
Besides oil production, Muin also said that the two sides had agreed that the operators would start developing the block's gas reserves if proven reserves reached 2 trillion cubic feet.
Currently, potential gas reserves stand at 1.3 trillion cubic feet.
Exxon spokesperson Maman Budiman confirmed the agreement to The Jakarta Post, saying that Exxon would now further discuss the details of the equipment needed to produce 10,000 barrels per day.
Separately, BPMigas is asking Chevron Pacific Indonesia to update its exploration plan for the Kisaran block, which is located in North Sumatra, after the existing plan produced no significant results.
It was earlier reported that Chevron planned to sale its 50-percent stake in the block.
Chevron spokesperson Santi Manuhutu said the company was in the process of reevaluating the block.
Chevron signed a production-sharing contract to develop the block in 2001. In 2002, it brought in Pacific Oil and Gas, with each side holding a 50 percent interest in the block.
Chevron has committed to spending about US$13.25 million on developing the block.
