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Contractors to spend nearly $16b in 2010

Although this year’s investment has failed to meet the target, an upstream oil and gas regulator claims that oil and gas contractors have proposed a US$15

Alfian (The Jakarta Post)
Jakarta
Thu, December 31, 2009

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Contractors to spend nearly $16b in 2010

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lthough this year’s investment has failed to meet the target, an upstream oil and gas regulator claims that oil and gas contractors have proposed a US$15.99 billion  investment for upstream activities in 2010, or a 41 percent increase from investment in 2009.

Anditya Maulana, head of the operation division at BPMigas, told reporters Wednesday the investment figure was based on the work program and budget (WPNB) submitted by oil and gas contractors to BPMigas.

“Of the total planned investment, $13.63 billion is expected from production working areas, while the remaining $2.36 billion is expected from exploration working areas,” he said.

Energy analyst Pri Agung Rakhmanto said the figure from the production working areas was still reasonable as two massive oil and gas projects, the Cepu block and the Tangguh gas fields, were likely to attract huge investment next year. However, he said the high figure was not necessarily a good indication.

“Please remember that part of the investment will be paid back by the government to the contractors under the cost recovery mechanism,” he said.

Pri Agung questioned the $2.36 billion investment planned for the exploration working areas.

“As we know, many oil and gas blocks have failed to attract investors recently,” he said.

The high investment figure was also proposed by the contractors in 2009. BPMigas said that oil and gas contractors initially proposed a $15.15 billion investment in 2009, but only $10.87 billion of the plan was realized.

“This was caused by the increasing efficiency of contractors and the fact that some projects were delayed both in EPC [Engineering, Procurement and Construction] and drilling,” said Priyo Widodo, head of BPMigas’s division in charge of government revenue shares, adding the investment in the delayed project would be continued over the  coming years.

BPMigas also reported that the country’s oil lifting in 2009 was at 949,138 barrels of oil per day (bopd), or 98.8 percent of the state budget’s target of 960,000 bopd.

“This is a result of some delayed projects and unplanned closures that occurred in several working areas,” said Susanto, head of the field operations division at BPMigas.

“More than 197 unplanned shutdowns occurred in 2009 and this caused a loss of about 22,000 bopd of oil,” Susanto added.

BPMigas said it would strengthen its monitoring of the contractors’ maintenance works to avoid similar problems in the future.

There are currently 232 oil and gas contractors operating in Indonesia. As many as 64 contractors are in the production stage, while the remaining 168 contractors are in the exploration stage.

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