T

he government plans to cut this year’s oil production target from 970,000 barrels of oil per day (bpd) to 945,000 bpd as most of the country’s major oil companies have failed to meet their production goals.

Oil and gas regulator BPMigas chief R. Priyono said he was optimistic that the revised target was realistic despite the current trend of declining production. As of last week, the production rate was only 906,000 bpd.

“The target is made by observing field facts. We’ve analyzed the declining production rate as well as efforts to crank it up. We also still have around 30,000 bpd which couldn’t be produced in the past several months due to maintenance activities,” he told reporters at the Energy and Mineral Resources Ministry in Jakarta.

The revision will be proposed to the House of Representatives in hearing sessions discussing the revision to the 2011 State Revenues and Expenditures Budget meetings scheduled from July 4 to 27.

BPMigas earlier announced that it would encourage all production sharing contract (PSC) holders to apply enhanced oil recovery (EOR) technologies to increase production in their working areas starting next year.

The agency’s vice chief, Hardiono, revealed that several PSC holders, such as PT Chevron Pacific Indonesia at the Minas field in Riau, Medco at the Kaji-Semoga in South Sumatra and PT Pertamina EP at the Limau field in South Sumatra, had submitted proposals to apply the advanced technologies.

“BPMigas is waiting for other PSC holders to apply the technologies,” he said.

He explained that applying EOR technologies would be vital to supporting the country’s efforts in ramping up oil production as the amount of oil in place (recoverable oil in existing reservoirs) might still reach 43 billion barrels.

“If EOR technologies can recover 10 percent of the total oil in place, it means that we’ll have an additional production of 4.3 billion barrels. It is larger than Indonesia’s proven oil reserves, which are only 3.7 billion barrels,” said Hardiono.

BPMigas planning deputy Haposan Napitupulu said that in the past 10 years, the country’s proven oil reserves decreased 2.4 percent per year. The country’s total production was 344 million barrels in 2010, but it could only be replaced by 140 million barrels in new discoveries, he added.

“Ideally, the amount of oil discovered has to be the same as the amount of oil produced,” he said.

According to the agency’s data, Indonesia achieved its peak oil production levels in 1977 and 1995, when production reached 1.65 million bpd and 1.6 million bpd respectively.

In addition to promoting EOR technologies, Hardiono said that BPMigas also aimed to attract more exploration activities, particularly in the eastern part of the country. Currently 91 percent of oil and gas activities are located in western Indonesia, while the remaining 9 percent of activities are located in eastern regions.

He expected that the government would create legal frameworks that gave certainty for foreign investments in the oil and gas industry.

“We have to create a conducive investment climate. Currently, many investors have held off on their investment plans because they have doubts. They are afraid that in the future regulations may change and hamper their investments,” he said