Petrochina has two weeks to complete permits: BPMigas

Upstream oil and gas regulator BPMigas has ordered Petrochina International Jabung Limited, operator of the Jabung block in Jambi, to complete all permit making processes in two weeks to add to the block’s production.

If the permit problems are solved, the block will be estimated to have an additional oil and gas production of 6,000 barrels of oil equivalent per day (boepd), comprising 1,600 barrels per day (bpd) of oil and 21 million standard cubic feet of natural gas per day (mmscfd).

“The additional production comes from 18 wells that have been drilled by the company at the block. Thus, we request that the company solve all permit problems by two weeks from now,” said BPMigas head Priyono after meeting West Tanjung Jabung regent Usman Ermulan at his office in Jakarta on Tuesday.

As reported earlier, Petrochina drilled the 18 wells, although several permits, particularly on environmental management and monitoring efforts (UKP-UPL), had not been issued. For such a violation, BPMigas imposed administrative sanctions by ordering the company to replace its general manager.

“That case only happened at the Jabung block, not in other Petrochina working areas in the country,” Priyono reported.

He urged the company to process the permit as soon as possible to maintain the production rate at the block, considering its natural production decline had reached 20 percent per year. He added BPMigas had requested the regional administration accelerate the permit making processes.

“The additional production from the block and its natural gas in particular, will be allocated to fulfilling the local demand,” said Priyono.

Currently, the Jabung block produces 53,000 boepd of oil and gas.

Regent Usman Ermulan affirmed his commitment to supporting BPMigas’s policy. He said the regional administration would not complicate permits for upstream oil and gas activities.

The regent was willing to issue drilling permits after being assured that Petrochina was ready to ramp up production to the level it was prior to the operation being stopped, due to the permit problems.

West Tanjung Jabung needed gas supplies for electricity and fuel for fishermen, he reported. “We buy the gas at an economical price,” he said.

Permit problems and conflicts with regional government are among non-technical issues long hindering the country’s efforts to increase oil and gas production.

BPMigas revealed earlier that non-technical problems contributed around 60 percent to the decline of oil and gas production.

As of early February, Indonesia’s oil production fell to 886,508 bpd from 905,000 in 2011. This year’s target is 950,000 bpd, an amount that critics have indicated is unrealistic.