The Jakarta Post
Indonesia’s oil and gas lifting fell slightly below the government’s revised-down targets for the third quarter, led by lower gas output even as oil output slightly surpassed expectations.
Lifting reached 1,689 thousand barrels of oil equivalent per day (mboepd) as of Sept. 30, which is 0.4 percent below the revised state budget target of 1,697 mboepd, as oil and gas prices remained weak in the third quarter.
Oil lifting reached 706.2 mboepd, which is 0.2 percent over-target, led by surpluses from state-owned Pertamina and United States-based Chevron, Upstream Oil and Gas Special Regulatory Taskforce (SKK Migas) data show.
Meanwhile, gas production reached 5,502 million metric standard cubic feet per day (mmscfd), which is 1 percent off-target, led by output shortfalls from Pertamina and US-based ConocoPhillips, similar data show.
“Under such conditions, the [industry’s] performance is pretty good. Operations and investment go on but the processes are slower because of COVID-19,” oil and gas practitioner Tumbur Parlindungan told The Jakarta Post on Monday
The global oil and gas industry strained under the weight of weak energy demand in the third quarter as countries restricted economic activity as a result of the COVID-19 pandemic even though, by then, restrictions were looser compared with the second quarter.
Reflecting the demand changes, global crude oil price benchmark Brent reached US$40.59 per barrel on Wednesday, recovering from this year’s lowest point of $19.24 per barrel in April, but still well below last year’s average of around $60 per barrel, Reuters data show.
“Oil prices will stay like this until demand returns to normal,” added Tumbur.
In response to low oil prices, SKK Migas revised down earlier this year its oil lifting target by 4 percent to 725,000 mboepd. The task force also lowered its gas lifting target by 14.2 percent to 5,727 mmscfd.
SKK Migas then revised down its upstream oil and gas investment target by 15 percent to $11.8 billion for this year. The industry attracted $6.9 billion as of September, 68 percent of the year-end target.
Many oil and gas companies, including big names such as Chevron and Shell, have slashed their capital expenditure budgets for this year by 30 percent as a result of weak demand.
“We have taken steps to prevent even sharper declines in investment,” said SKK Migas head Dwi Soetjipto at a press briefing on Oct. 23.
He was referring to nine relief schemes introduced over the past few months for oil and gas producers. The schemes include erasing a liquefied natural gas (LNG) tax and postponing abandonment and site restoration fees.
Low oil and gas prices prompted Chevron and Shell to plan, respectively, an exit out of the nationally strategic Indonesia Deepwater Development (IDD) project and the Masela Block.
Going forward, the biggest risk faced by the oil and gas industry is a second wave of COVID-19, which would trigger fresh lockdowns, said Dwi, echoing the words of many industry analysts.
“We might face a second wave early next year with other smaller waves and those will affect global oil prices,” he said.