Oil production from Java's Cepu block delayed to 2009

Eric Watkins
Senior Correspondent

LOS ANGELES, Jan. 4 -- Indonesian officials say the Cepu block in the border area of Central and East Java will start producing oil in first quarter 2009, one quarter later than originally scheduled (OGJ, Sept. 11, 2006, Newsletter).

Trijana Kartoatmodjo, deputy head of the upstream oil and gas regulatory body BP Migas, said the block, operated by ExxonMobil Corp. and state-owned PT Pertamina, would produce 25,000 b/d of oil, eventually rising to 165,000 b/d.

Trijana said the delay in the block's operation had been caused by problems in clearing land, with opposition coming from locals who have concerns about environmental damage.

The government has been anxious to speed up development of the oil field to help curb declining oil output in the face of increased domestic demand. A net importer of oil since late 2004, Indonesia wants Pertamina to raise its oil production to 250,000-300,000 b/d from 140,000 b/d.

The Indonesian economy has been hard-hit by financing the gap between domestic sales and price rises on the international market over the past year. Indonesia pays market rates for imported oil, but it subsidizes domestic consumption.

Contact Eric Watkins at hippalus@yahoo.com.

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