Indonesia will see a 17.5% decline in oil production by 2018, with the country’s crude volumes falling steadily to 800,000 b/d, according to the most recent Indonesia Oil and Gas Report from analyst BMI.
In its report, BMI forecasts that Indonesia will account for 4.32% of Asia-Pacific regional oil demand by 2013, while providing 10.91% of its supply.
It said Asia-Pacific regional oil use of 21.4 million b/d in 2001 reached 25.68 million b/d in 2007. It should average 26.32 million b/d in 2008 and then rise to 29.65 million b/d by 2013.
Regarding natural gas, in 2007 the Asia-Pacific region consumed 421 billion cu m (bcm), with demand of 595 bcm targeted for 2013.
Production of 336 bcm in 2007 should reach 483 bcm in 2013, but implies net imports rising from 85 bcm/year in 2007 to 111 bcm in 2012.
Indonesia’s share of gas consumption in 2007 was 8.04%, while its share of production was 19.87%.
By 2012 its share of gas consumption is forecast to be 7.47%, with the country accounting for 18% of supply.
Lower OPEC basket price
In third quarter 2008, BMI estimates that the Organization of Petroleum Exporting Countries’ basket price averaged $113.60/bbl, down 3.4% from second quarter 2008. The OPEC basket price averaged $112.41/bbl in August and $97.16/bbl in September.
The estimated third-quarter 2008 average prices for the main marker blends are now $115.67/bbl for Brent crude, $117.22/bbl for West Texas Intermediate, and $113.43/bbl for Russian Urals (Mediterranean delivery).
BMI said its forecast for 2008 as a whole is unchanged from the last oil market report. “We are still assuming an OPEC basket price average of $110/bbl for 2008,” the analyst said.
Based on recent price differentials, this implies Brent at $113.33/bbl, WTI averaging $114.58/bbl, and Urals at $110.36/bbl.
“Our central view is that the OPEC basket price will fall from $110/bbl in 2008 to $96[/bbl] in 2009, before settling around $90/bbl in 2010 onwards,” BMI said.
Indonesian GDP growth
BMI forecasts Indonesian real gross domestic product growth at 6.1% for 2008, down from 6.3% in 2007.
“We foresee 5% growth in 2009, 5.2% in 2010, 5% in 2011, followed by 5.1% in 2012, and 5.5% in 2013,” the analyst said.
Efforts are being made by the Indonesian authorities to encourage investment in new oil and gas supply, in order to stem the decline in production.
Numerous international oil companies work in partnership with national oil company Pertamina and the state.
“We are estimating oil and gas liquids production of no more than 930,000 b/d by 2013, although the country is expected to pump 975,000 b/d in 2008,” BMI said.
Consumption on the rise
Consumption is forecast to increase by around 2.5%/year to 2013.
BMI said its estimates imply demand of 1.28 million b/d by the end of the forecast period. The import requirement would therefore be 350,000 b/d by 2013.
Gas production rising to an estimated 87 bcm by 2013 should provide end-period export potential of 43 bcm, with supply risk on the downside.
Oil consumption between 2007 and 2018 is set to increase by 22.1%, with growth slowing to an assumed 2%/year towards the end of the period and the country using 1.41 million b/d by 2018.
Gas production is expected to rise from around 67 bcm in 2007 to a possible 92 bcm by 2018.
With demand growth of 49%, this provides an export capability peaking at almost 48 bcm in 2012, before falling to 42 bcm by 2018, largely in the form of LNG.