T

he government is expected to book reduced earnings from the oil and gas sector this year due mainly to aging fields and extreme weather.

The Finance Ministry official in charge of state budget policy, Askolani, said on Friday that for every decline of 10,000 barrels per day (bpd), the country would lose around Rp 2 trillion (US$164 million) to Rp 3 trillion.

'€œThat is with the assumption that the ICP [Indonesian Crude Price] is constant,'€ he was quoted as saying on Friday by kompas.com.

The average ICP in January was $105.08 per barrel, down from $107.20 per barrel in December last year.

The oil and gas sector contributed Rp 252 trillion to the Indonesian economy last year, compared to
Rp 301 trillion in 2012, according to figures from the Energy and Mineral Resources Ministry. The ministry is projecting oil and gas earnings of Rp 286 trillion this year.

The country initially targeted to produce 870,000 bpd this year, up from 826,000 bpd last year. That number, however, was seen as unrealistic because based on contractor production plans received by the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas), production would only reach 804,000 bpd.

SKKMigas has also said that inclement weather had disrupted production at a number of offshore facilities in late January. These disruptions caused daily production to fall by 70,000 bpd to around 740,000 bpd from the normal range of 810,000 to 820,000, according to SKKMigas spokesman Elan Biantoro.

'€œRepairs were conducted and we are now back to normal. Production was 809,557 bpd last Thursday,'€ Elan said on Friday.

He said that SKKMigas would try to encourage oil contractors to make their operations more efficient so they could up production to meet the national target. Elan added that SKKMigas saw the possibility of an additional 25,000 bpd on top of contractor projections totaling 804,000 bpd.

'€œThe 25,000 bpd is our effort to reduce the gap [between what contractors will produce] and the national production target,'€ he said.

Energy and Mineral Resources Deputy Minister Susilo Siswoutomo has said his office had considered proposing a revision upping the targeted production to around 820,000 bpd.

Oil and gas contractors in the country have proposed $25.6 billion in total investment for this year, 32 percent higher than the $19.3 billion spent last year, as part of their development plan to boost reserves and production.

The country had 3.7 billion barrels of oil reserves as of the end of 2013, according to Elan. He cited that minimum additional reserves per year should be similar to production so that the country would be able to maintain the level of production from the discovery of new fields. (rcf)