T

he use of temporary facilities, which have supported early production at the Banyu Urip oilfield in the Cepu block, is likely to be extended as the government seeks optimum output from the asset.

The Energy and Mineral Resources Ministry'€™s upstream director at the oil and gas directorate general, Djoko Siswanto, said the authorities and contractors were currently discussing mechanisms to extend the utilization of the temporary facilities to support production at Banyu Urip. A contract for the usage of the temporary facilities is due by the end of this year.

'€œThere are currently audits by SKKMigas, BPK and Ernst & Young to verify how much money has been spent for the facilities and how much output has provided returns on the investment. Those are necessary to determine how long we will have to extend the utilization of the facilities,'€ he said.

Banyu Urip, which is expected to be the backbone of national oil production, is currently running at a production level of around 80,000 barrels per day (bpd) from its temporary production facilities. The temporary facilities, which are utilized under a leasing scheme, were first brought into operation in 2009 when the government aimed to accelerate output from the field to support national oil production.

Under an initial plan, use of the temporary facilities would cease once development of the main facilities was completed. The main facilities, which would be able to accommodate production of up to 165,000 bpd, should have been completed this year. However, the project has faced a series of delays and the main facilities are currently around 97 percent complete.

Upstream Oil and Gas Regulatory Task Force (SKKMigas) deputy chairman Zikrullah, said that a ramping up of production following the completion of the main production facilities was likely to occur in December.

 '€œA ramping up of production will be achieved in December. However, the peak of 165,000 bpd will be unlikely until around January,'€ Zikrullah said.

The government'€™s eventual production target of 205,000 bpd in Banyu Urip, he continued, could still be reached next year.

'€œWe can reach 205,000 bpd if the temporary facilities are maintained. However, we have to consider various things because forcing production at the field could affect the reservoir and shorten its lifetime,'€ Zikrullah added.

State-owned oil and gas company Pertamina, through its subsidiary Pertamina EP Cepu, holds a 45 percent interest in the Cepu block while ExxonMobil Indonesia'€™s subsidiary ExxonMobil Cepu Ltd. owns another 45 percent stake.

The remaining 10 percent stake is held by the Cepu Block Cooperation Bodies, which consist of locally owned companies run by the administrations of Blora and Bojonegoro regencies, and the provincial administrations of East and Central Java.

The development of Banyu Urip had been delayed several times for various reasons, including proposed changes in details of the development, policy difficulties with the local administration and a prolonged land-procurement process as well as recent incident involving its workers.

 '€œWe continue to see strong capacity of the Banyu Urip wells and will work with SKKMigas to maximize production from the field,'€ ExxonMobil Indonesia vice president for public and government affairs Erwin Maryoto said when was asked about the planned extension of the temporary facilities.