Indonesia's high hopes for a major contribution of oil from the massive Cepu block may take longer than expected as the block will only produce a maximum of 20,000 barrels oil per day (bopd) from 2010 to as early as the third quarter of 2011, the regulator says.

The 20,000 bopd has been set as the block's early production level, upstream oil and gas regulator BPMigas told lawmakers during a hearing with the House of Representatives Commission VII overseesing energy and mineral resources.

Earlier the government had expected the block to begin producing the 20,000 bopd from January until December this year.

This production level has even been included in the government's 2009's state budget oil lifting assumptions.

The government also expected that from December onward the block's production would continue to increase until it reached the peak production of more than 150,000 bopd. However, as of today, the block has yet to reach this target.

BPMigas's planning deputy Achmad Luthfi told the lawmakers that the early production facilities for producing 20,000 bopd would only be completed in August.

"The facilities have the capacity of 20,000 bopd. We expect the facilities to begin production in August, but the first production, of course, will not immediately reach 20,000 bopd.

"We expect the production of 20,000 bopd to be reached sometimes in 2010," said Luthfi.

He added the level of production would be stagnant at 20,000 bopd until as late as the third quarter of 2011.

"The permanent facilities will only be completed in the third quarter of 2011," said Luthfi.

"What I have informed you was a reality," Luthfi said in responses to strong criticism from some of the legislators.

The Cepu block, discovered in March 2001, is located at the border of East Java and Central Java, and is said to have estimated proven reserves of 600 million barrels of oil and 1.7 trillion cubic feet of gas.

Mobil Cepu Ltd, a local subsidiary of United States energy giant ExxonMobil, and state oil and gas company PT Pertamina each holds a 45 percent participating interest in the block.

A consortium of enterprises controlled by provincial administrations holds the remaining 10 percent participating interest.

Amid the declining trends in the country's oil production, the government has high hopes resting on the Cepu block.

At its peak, which has been forecast to reach the level of 165,000 bopd, it would represent roughly about 16 percent of the country's current oil output.

ExxonMobil's spokesman Maman Budiman did not give the date as to when the company expects the block to reach its peak production.

He simply said that this would be "as soon as possible."

"Currently, the main facilities with the production capacity of 165,000 bopd is in the process of preparation for the EPC (engineering, procurement and construction) contract tender," he said.

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