2008-2009 DATA CONSULT. All rights reserved.


July 2009


Current Issue

The world oil industry has expanded fast in the past four years with crude oil prices soaring to unprecedented high of more than US$140 per barrels early 2008. 
Indonesia, however, failed to gain from the surge in the oil price as the country’s crude oil output has tended to decline over the past several years. The country even has become a net import of oil. 

The past several years saw the country failed in reaching its oil lifting target as many oil wells have been too old with oil deposits almost depleted.  Some major producers including Chevron, which operate the country’s largest oil fields in Riau,   recorded a decline in output in 2008. Medco EP, the subsidiary of PT Medco Energi Internasional, the largest Indonesian private energy company, is also expected to post a decline in crude oil production in 2009.

The country’s oil lifting target set in the 2009 state budget is 950,000 barrels per day. In the first two months of 2009, production overshot the target attributable mainly to contributions from Petrochina Jabung, Pertamina EP and BP Tangguh.

The prospects of  upstream oil industry depend much on success in  explorations for new potential  oil reserves such as the Cepu block in East Java.

Oil reserves dwindling 

Indonesia‘s oil reserves in the past decade has declined although rising 2.8% in 2006 to 4,370 million barrels. In the following two years the proven reserves shrank again, down 8.5% to 4,000 million barrels in 2007 and to an estimated 3,700 barrels in 2008. 

Potential reserves, however, still give hope of good prospects in the future.  In 2008, potential reserves still reached 4,471.72 million stock barrels.

Central Sumatra holds the largest reserves 

Central Sumatra  holds the largest oil reserves of 4.163.75 million barrels. The second largest reserve is in the Cepu Block in East Java. 

There are a number of areas with  oil reserves  of more than 500 million  barrels each  such as Central Sumatra, East Java, South Sumatra, Kalimantan,  and West Java. Other than proven reserves of 3.7 million   barrels  in 2008, there are potential reserves  totaling 4.5  million barrels . 

The  prospects of the country’s upstream oil industry in the country will depend on  success in explorations. 

Explorations decline in 2008

Seismic surveys are imports of tant part in oil explorations. There are two types of seismic survey – 2 dimension survey and 3 dimension survey. 

In 2008, seismic surveys of 2 dimensions   covered a total area of 452 sq. km all on shore – down from 30,335.67 sq. km in 2007 that included on shore surveys covering 23,522.17 sq. km and offshore surveys covering 6,833.5 sq. km. Meanwhile, 3 dimension surveys also showed a declining trend – down in coverage to 240 sq. km  all onshore  from 12,774.5 sq. km in 2007. 

Among seismic surveys held in 2009 include 2 dimension seismic survey  of  offshore oil and gas  deposits  in East Muriah block in the Java sea  in July.  The surveys are expected to last two months. 

The surveys will cover a total area of 4,999.97 sq. km. near the Bawean Island.

Crude oil production  on the decline 

The country’s  crude oil production  has been on the decline in the past several years as most of the wells have been too old and almost depleted.  In 2008, however, the crude oil production  (lifting) rose 3%  to 358,718,699 barrels  from 348,357,604 barrels in the previous year. 

BP Migas said 85% of oil wells in the country  have been too old  with production shrinking 15% a year on the average.  Discovery of new reserves is not enough to make up for the  decline in the productivity of the old wells. Discovery of new reserves will  support  long term  operation. 

Short term increase in output could be made  with the use of higher technology  such steam flood technology for enhance recovery.  The steam flood technology   cold increase oil production by three times  the production with primary recovery . The technology could also  lengthen  the economic life of an oil field. 

The technology has been used in the oil field of North Duri Area 12 of PT. Chevron Pacific Indonesia (CPI)  in  Riau.

CPI uses gas supplied by ConocoPhilips for the steam flood  injected to the oil well . The government has asked ConocoPhilips to supply its gas mainly for the steam flood  application. 

Another technology is infill drilling enhanced oil recovery (EOR) that could turn out extra  production   of up to  290 barrels per day   from the entire wells  of CPI
BP Migas, which oversees the operation of upstream oil industry, also seek  to boost crude oil production  by accelerating  development of a  water flood pilot project of  Pertamina E&P  in the fields of Kenali Asam  and  Bunyu.

Water flood  technology would be used in the fields of Nglobo, Talangan Jimar, Tanjung,  and  Rantau.

The government has encouraged contractors  holding the cooperation contract to boost production by developing  old and neglected  oil fields  and abandoned wells. 

Lifting fluctuating 

In 2009, the government target for oil lifting is 950,000 barrels per day . The target was overshot in the first months of 2009 . The target was overshot in February, March and April, but production fell below target in January, May, June  and July. 

Averagely,  the country’s crude oil production  in the first seven months of this year averaged 925.13 barrels per day   or  well below the target . 

Some producers report decline in  production 

Some producers suffered a decline in production  this year. Apart from Chevron, which recorded  a decline in output  in production from its oil field in  Riau, E&P Indonesia  is forecast to suffer a decline  in output from 33 thousand barrels per day in 2008  to 30 thousand barrels per day  in 2009..

Medco, which  has just sold its assets  in oil blocks in Tuban  and  Tarakan,  East Kalimantan, also recorded a decline in output .The Tuban block was sold to PT Pertamina  and the Simenggaris block, Tarakan in  East Kalimantan  to  Salamander Energy (Simenggaris) Ltd. Medco sold  25% stake held by its subsidiary PT Medco E&P in Tuban (participating interest/PI)  to Pertamina,  and a 21% stake in the Simenggaris PSC block . Crude oil production  of  Medco is expected to rise again only in 2011  when most of  its key projects begin to come on stream.

Its seven key projects include a  bio-ethanol project in Lampung to come on line in 2008, the Singa block  in  Lematang to come on stream in 2009, The A block of Aceh in 2011, the 47 Block in Libya  in  2011, the  Rimau Block in  2011, the  Senoro Block in   Toili  in  2012.

Chevron Pacific Indonesia the largest producer 

In the last four years, there was change in the ranks of oil producers in  Indonesia.  In 2006, PT Pertamina was the second largest producer , but its position declined since 2007  and in the first quarter of  2009 it  was relegated  in the list to the 9th largest producer . 

Foreign oil companies - Chevron Pacific Indonesia (Chevron), ConocoPhillips (Conoco), China National Offshore Oil Company (CNOOC),  and  Petrochina – dominate crude oil production  in the country. 

Medco EP Indonesia (Medco) is the only Indonesian company  among major oil producers in the country . It  was the sixth largest producer in 2006  and the 5th in 2009. 

Pertamina has continued  to record a decline in output  from 42 million  barrels in 2006 to 9.05 million  barrels  and  7.7 million  barrels in 2007 and 2008 respectively. 

Chevron maintains the lead  among the producers  of crude oil  in Indonesia although its has reported a decline in output in the past  several years.  In 2006,  crude oil production of  Chevron reached 176 million  barrels. The  production level dropped 4.5%  to 168 million  barrels in  2007  or  461.7 thousand barrels per day  an down again to 4.2%  to  161 million  barrels  or  441 thousand barrels per day  in 2008.  In the first quarter of  2009, the production of   CPI reached 38.4 million  barrels.

Other than  Chevron,  major produces include Total EP Indonesie (Total). Crude oil production  of  Total has fluctuated  in the past several years.  In 2008, its production totaled 35.1 million  barrels  up  from 32.3 million  barrels in 2007.

In the first quarter of 2009, the production of Total reached 8.9 million  barrels or 297.4 thousand barrels per day. 

Related Topics

ICN - July  2009

  • Macro economic targets in Draft State Budget
  • State expenditures set at Rp 1,009 trillion in 2010
  • Increase recorded only in defense budget
  • Subsidies down
  • Conclusion

  • Current Issue
  • Oil reserves dwindling
  • Central Sumatra holds the largest reserves
  • Saudi Arabia Saudi has the world largest oil reserves
  • Explorations decline in 2008
  • Crude oil production on the decline
  • Lifting fluctuating
  • Some producers report decline in production        
  • Chevron Pacific Indonesia the largest producer
  • Profile of producers
  • World oil production stagnant
  • Exports falling
  • Imports        
  • Consumption down
  • Oil price picking up in 2009
  • Government offers new blocks        
  • Several block nearing end of contract
  • Prospects and Conclusion

  • No standard required for lube oil
  • Producers of lube oil base in Indonesia
  • Lube oil blending plant
  • Producers of lubricant oil cooperate with automotive producers
  • Cooperation with workshops
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