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mid mounting pressure to boost Indonesia’s oil production, upstream oil and gas regulator BPMigas said it would tighten its supervision of production sharing contract (PSC) holders to prevent unplanned shutdowns that could hurt production.

The agency said that from January to March this year, 32 PSC holders failed to achieve production targets set out in the 2011 state budget, mostly because of unplanned shutdowns due to aging equipment.

BPMigas head R. Priyono said Friday his agency would summon PSC holders that failed to meet the targets to discuss strategies to prevent production from declining further this year.

“We’ll summon PSC holders whose facilities experienced unplanned shutdowns. The shutdowns may be caused by aging production facilities that may be 20 years old,” he said after a meeting at the Energy and Mineral Resources Ministry in Jakarta.

BPMigas said almost all major oil companies operating in the country failed to achieve their production targets.

Korea-based Kodeco Energy could not reach its target of producing 29,000 barrels of oil per
day (bpd) and only produced 16,372 bpd as of March due to uncertainty over the extension of its contract at the West Madura offshore block in East Java. The operation of the block was officially taken over by state oil and gas firm PT Pertamina starting May this year.

Chevron Pacific Indonesia only produced 359,713 bpd in the first quarter of this year, 2.7 percent
below its target of 370,000 due to the shutdowns at its 368 wells and oil coagulation in its pipeline
network.

ConnocoPhillips also failed to meet its target of 61,000 bpd. BPMigas said that in the first three months of this year, the company could only produce 51,337 bpd.

Disappointing results were also seen at Pertamina EP, the upstream business unit of Pertamina, which failed to reach its production target of 132,000 bpd by producing only 122,817 bpd.

Priyono said in his presentation to the ministry that BPMigas had targeted to prevent the country from losing more than 12,000 bpd this year due to unplanned shutdowns.

Last year, the country lost 14,043 bpd, while in 2009, it lost 21,510 bpd.

“There are some constraints in boosting production such as the fact that 70 percent of oil production facilities are aging and drilling of new wells is hampered by land acquisition problems,” he explained.

Priyono added that poor weather also constrained production activity.

Given all factors, he said he was not sure the country’s target of producing 970,000 bpd this year could be achieved. He estimated production would only reach between 914,000 bpd and 940,000 bpd by the end of this year.

To ramp up production in the future, BPMigas plans to encourage PSC holders to boost production and conduct enhanced oil recovery (EOR) procedures to optimize production in aging fields.

The agency said it would also request those companies to improve maintenance of their production facilities to prevent more unplanned shutdowns.

“We’ll also instruct PSC holders to drill more new wells to increase production and closely monitor the execution of their planned projects,” Priyono said.

The director general for oil and gas at the Energy and Mineral Resources Ministry, Evita Herawati Legowo, promised to improve coordination with local administrations to tackle problems of land acquisition.