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Indonesia may miss oil output target this year as operators wary after graft scandal
Indonesia, formerly Southeast Asiaâs sole representative at the Organization of the Petroleum Exporting Countries (OPEC), may miss its crude oil production target this year following the uncovering of a graft case that has highlighted the uncertainty in the countryâs upstream oil and gas sector
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ndonesia, formerly Southeast Asia's sole representative at the Organization of the Petroleum Exporting Countries (OPEC), may miss its crude oil production target this year following the uncovering of a graft case that has highlighted the uncertainty in the country's upstream oil and gas sector.
Gde Pradnyana, the secretary of the Upstream Oil and Gas Regulator Special Task Force (SKKMigas), said over the weekend the provisional upstream regulator was now struggling to calm down wary oil and gas contractors over the country to keep operations going, following the recent detention of Rudi Rubiandini in bribery allegations.
Rudi, previously the country's deputy energy and mineral resources minister, was detained on Aug. 13 in a graft case related to crude oil that involved Singapore-based oil trader Kernel Oil.
'As regulators, we must try to reassure the oil and gas companies to carry on with their activities although it is undeniable [that the graft case] does make them cautious,' said Gde in an interview.
Indonesia recently cut its oil output target from 900,000 barrels per day (bpd) to 840,000 bpd, or 6 percent lower, amid production decline in the past years due to aging oil fields, which prompted the country to leave OPEC in 2008.
This week, following Rudi's arrest, the oil output reached 819,000 bpd or 2.5 percent below the target and 2 percent lower than the output last month.
Gde, however, downplayed the speculations that the graft case involving the regulator, which was formed in November last year as a temporary replacement for the now-defunct BPMigas, influenced the country's oil production.
'The low production occurred due to several planned and unplanned shutdowns,' he said.
Meanwhile, Lukman Mahfoedz, the chairman of the Indonesian Petroleum Association (IPA), the country's umbrella for giant oil and gas contractors, said that Rudi's arrest would instead give a positive signal to the oil and gas companies.
In a separate interview, Lukman said that as the Corruption Eradication Commission (KPK) recently touched the oil and gas sector, the investors would perceive Indonesia as a country which promotes reliable law enforcement.
'I believe that oil and gas companies will continue their investment plan here,' he said.
However, not all of the industry players agreed with the representative.
A foreign oil and gas executive who preferred to remain anonymous said that the recent situation nowadays did give chills to the industry, citing that 'it took years [for Indonesia] to build a reputation and just one night to
destroy it'.
Earlier this year, after deeming their basins uneconomical, oil and gas contractors such as US-based ExxonMobil, Norway's Statoil, US-based ConocoPhillips, US-based Marathon and Netherlands-based Tately NV have all decided to return their blocks in the eastern part of Indonesia.
American companies Hess and Anadarko have reportedly left Indonesia after deeming the country's investment climate 'unfavorable'.
' JP/Amahl S. Azwar
