Headlines

Production target ‘depends
on Cepu block’

Keep on pumping: Several oil and gas engineers work on a drilling rig at PT Chevron Pacific Indonesia’s Minas field in Riau. President Susilo Bambang Yudhoyono issued last week a presidential instruction containing specific tasks for 11 ministers, the head of the National Land Agency, governors and regional heads to ensure that the country produces 1.01 million barrels of oil per day in 2014. Bloomberg/Jonathan Drake

The fate of the government’s plan to produce 1.01 million barrels of oil by 2014 fully depends on the operation of the Cepu Block on the border of Central Java and East Java, upstream oil and gas regulator BPMigas says.

The block will start producing 70,000 barrels of oil per day (bpd) in mid-2014 from the current production of 22,000 bpd and reach a peak output of 165,000 bpd in late 2014, BPMigas operation deputy Rudi Rubiandini reported.

“So, in the full year of 2014, we will get additional supplies of around 70,000 bpd from the block. Combined with the other blocks’ production of around 940,000 bpd, the target of 1.01 million bpd will be exceeded,” he said on Tuesday. Rudi said the new presidential instruction calling for an increase in national oil and gas production was a good legal basis to eradicate all constraints for achieving the national production target. The instruction was signed on Jan. 10 by President Susilo Bambang Yudhoyono.

The instruction was issued to 11 ministers, the National Land Agency head, governors and regional heads across the country. Among the ministers were the coordinating economic minister, the energy and mineral resources minister, the public works minister, the finance minister, the transportation minister and the environment minister.

Yudhoyono assigned Energy and Mineral Resources Minister Jero Wacik to study the prevailing laws and regulations and propose revisions to those considered to hamper production increases. The ministry has also been mandated to approve or reject plans of development (POD) submitted by BPMigas in 90 days maximum.

Finance Minister Agus Martowardojo was instructed to provide tax and custom facilities to support the production increase. Environment Minister Balthasar Kambuaya was mandated to accelerate the
approval of the environmental impact analysis (Amdal), environmental management scheme (UKL) and environmental monitoring scheme (UPL).

BPMigas was ordered to process PODs submitted by contractors in 31 days, work program and budget (WP and B) in 25 days and authorization for expenditure (AFE) in 38 days.

Yudhoyono also requested that all governors supervise regional heads to ensure that they did not hinder the country’s oil production. Regional heads are also mandated to accelerate permission issuance for oil exploration and exploitation activities.

“If all the President’s instructions are followed and executed well, the target of 1.01 million bpd is possible,” Rudi said.

According to BPMigas’ calculation, in 2012 the country’s oil production will hit 930,000 bpd, and increase to 940,000 bpd in 2013 and then increase to 1 million bpd once the Cepu block is in full swing.

The executive director of the ReforMiner Institute, Pri Agung Rakhmanto, agreed that the Cepu block was a crucial factor in Indonesia’s efforts to ramp up its oil production. The target could be achieved if the block produced 165,000 bpd on schedule, he added.

Jero has requested Cepu block operator Mobil Cepu Limited, which is a subsidiary of US-based ExxonMobil, to speed up the development of the Cepu facility and complete the project in 2013.

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