Eric Watkins
Senior Correspondent
LOS ANGELES, Sept. 5 -- ExxonMobil Corp. hopes to start output from Indonesia's Cepu crude oil and natural gas project by the planned date of 2008, but a company official said initial volumes will be small due to development problems (OGJ, June 12, 2006, Newsletter).
"There are options for us to bring forward some of the production but in smaller volume," Peter Coleman, ExxonMobil Indonesia president, told reporters after meeting Indonesian Vice-President Jusuf Kalla.
He did not specify the nature of the discussion, but Indonesian state media reported that ExxonMobil is in talks with drilling contractors and that it expects to wrap up negotiations with them by the first half of 2007.
The Indonesian government has approved the Cepu development plan, but an official at the state's upstream regulator BP Migas said some problems have arisen since the approval, including land-clearing, which could delay the start of production until 2009.
BP Migas earlier urged ExxonMobil and its partner PT Pertamina to speed up development of Cepu. In March, when the joint development agreement was signed, Energy and Mineral Resources Minister Purnomo Yusgiantoro had requested a "fast-track" development scheme.
The agreement sparked hopes for development that would quickly bolster Indonesia's sagging crude oil output. Production fell to 887,000 b/d in July, reportedly a 35-year low and down from 900,000 b/d in June, due to production problems in several oil fields as well as scheduled maintenance.
The government wants to step up local production because it subsidizes domestic purchases of oil. The decline in local production raises volumes of oil that Indonesia must purchase international prices.
Contact Eric Watkins at [email protected].
