A substantial increase in exploratory drilling in Indonesia during the next 3 years will result from the signing of new production sharing contracts.
Far East Oil Report, published by County Natwest Woodmac, Edinburgh, predicts the number of wildcats and appraisal wells in Indonesia to increase from 120 this year to a peak of about 190 in 1993.
Exploratory drilling fell from 217 wells in 1985 to 82 in 1987 because of the collapse in crude oil prices and a lack of new production sharing contracts.
In 1979-82 state owned Pertamina awarded an average of 11 contracts/year. In 1983-86 the average was only three/year. The number of new contracts has since increased, with 10 awarded in 1988, 19 in 1989, and an expected 20 this year.
After the peak of 1993, the report says, the drilling rate will decline quite rapidly unless the current contract impetus can be maintained. And it adds that exploration levels will ultimately depend on the success of wildcat drilling, particularly in Indonesian frontier areas where most of the virgin acreage is still to be licensed.
The analysts rate Indonesia as still one of the most attractive places for oil companies to spend their exploration dollars. The availability of acreage, a relatively stable oil price environment, and companies' desire to expand upstream portfolios worldwide have caused a general resurgence of interest in the Far East as a whole.
PRODUCTION OUTLOOK
Indonesian oil production, currently about 1.25 million b/d, will rise during 1990-91 but decline through the rest of the decade. Production from future discoveries will only help stabilize production levels into the mid-1990s.
Production will fall to less than 1.3 million b/d in 1998, then decline quite sharply. Barring future exploration successes, Indonesia is set to become a net importer of oil in 1998, the report said.
Gas production will continue at its current high level of 4.179 bcfd until 1997. But production will then decline unless new LNG contracts are signed or current contracts are rolled over.
Operating costs per barrel vary among operators in Indonesia, says the report. Weighted average operating cost is estimated at $2.03/bbl.
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