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Gas output to rise slightly

Despite the additional gas supply from Tangguh field, Indonesia’s gas output will only rise slightly as some aging fields produce less gas

Alfian (The Jakarta Post)
Jakarta
Wed, February 4, 2009

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Gas output to rise slightly

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espite the additional gas supply from Tangguh field, Indonesia’s gas output will only rise slightly as some aging fields produce less gas.

R. Priyono, chairman of upstream oil and gas regulator BPMigas said the country’s gas production target for 2009 was 7.50 billion cubic feet per day, only slightly higher than  the 7.46 billion cubic feet of gas per day produced in 2008.

“Production in several fields, like the Arun fields (in Aceh), have been decreased,” Priyono told reporters Tuesday.

Data from BPMigas shows that several gas contractors, in particular those with aging fields, have set lower output targets for this year.

These contractors include energy giants Total E&P Indonesie, Vico Indonesia, Petrochina International Jabung Ltd., BP West Java Ltd., CNOOC SES Ltd., Chevron Indonesia Co., and Premiere Oil  Natuna Sea B.V.

However, several other gas companies have set higher production targets than those in the previous year.

Included in this group are state oil and gas firm PT Pertamina, ConocoPhillips (Grissik) Ltd., ExxonMobil Oil Indonesia Inc., and Kodeco Energy Co., Ltd.

“Hopefully, the increasing output from these fields will at least balance the decline in other fields,” Energy and Mineral Resources Minister Purnomo Yusgiantoro said.  Priyono said the Tangguh project in Papua is expected to start production in April, around two months later than initially scheduled for February.

“Some more time is needed to finish the commissioning process in the project’s second train,” Priyono added.

Tangguh is a massive project, exploiting gas fields in the Bintuni Bay area in Papua, with total proven gas reserves of 14.4 trillion cubic feet.

Priyono said the Tangguh project in April expectedly would produce 500 MMscfd (million standard cubic feet per day) of gas.  Tangguh will carry out its first gas delivery in May, he added.

Evita H. Legowo, director for oil and gas at the ministry, said the country’s declining output both for gas and oil could only be addressed with the discovery of new sources which could be exploited.

“Now we are tendering 31 oil and gas blocks and we expect to open tenders for the new fields in April or March,” Evita said.

In a bid to secure the gas supplies for domestic industries, the government has repeatedly said it will put first priority on domestic consumption rather than overseas exports.

However, Purnomo said that gas exports remained important especially for some gas projects which required expensive technology.

He cited Chevron’s deep-water oil and gas projects off East Kalimantan.  “The project is expensive because it is a deep-sea project. Gas output from this field cannot be sold domestically because the domestic prices cannot be high enough.

“The choice is either the project is postponed until the domestic prices becoming higher, which is unlikely to occur, or the gas is exported overseas after the project fulfills its domestic obligation,” Purnomo said.

Indonesia, the world’s fifth largest liquefied natural gas (LNG) exporter, is striving to boost gas production to meet ever-increasing demand, both from overseas and domestic markets.

The government has said it would definitely  honor existing gas export commitments, but will from now on prioritize the commodity for the use of the domestic market.

Vice President Jusuf Kalla reiterated that commitment on Monday in a speech in gas-hungry Japan.

Japan, the world’s largest LNG market, has been seeking additional gas supply from Indonesia. At present, Indonesia supplies around one fifth of Japan’s gas demand.

For 2009, oil output is targeted to reach 980,000 barrels per day.

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