Cepu oil flow may be delayed, Indonesia lawmakers told

Production of 20,000 b/d of oil from Indonesia's Cepu block, which the government had hoped would play a major role in boosting the country's output, may take longer than expected, lawmakers have been told.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 26 -- Production of 20,000 b/d of oil from Indonesia's Cepu block, which the government had hoped would play a major role in boosting the country's output, may take longer than expected, lawmakers have been told.

"The facilities have the capacity of 20,000 b/d," said Achmad Luthfi, deputy for planning at state oil and gas regulator BPMigas. "We expect the facilities to begin production in August, but the first production, of course, will not immediately reach 20,000 b/d."

Luthfi told lawmakers during a hearing with the Indonesian House of Representatives Commission VII, which oversees energy and mineral resources, that production from the block is epected to reach production of 20,000 b/d sometime in 2010.

Luthfi's statements reflect a change in government views that earlier expressed confidence Cepu block would begin producing 20,000 b/d in 2009—even including the figure in its 2009 state budget.

The government also expected that from December 2009 the block's production would continue to increase from 20,000 b/d until it reached peak output of more than 150,000 b/d.

However, Luthfi said the level of production from Cepu would remain at 20,000 b/d until as late as the third quarter of 2011. "What I have informed you [of] was a reality," said Luthfi in responses to strong criticism from some of the legislators.

ExxonMobil Corp. spokesman Maman Budiman did not give a date as to when the company expects the block to reach its peak production, saying only that this would be "as soon as possible."

Budiman said, "Currently, the main facilities with the production capacity of 165,000 b/d [are] in the process of preparation for the [engineering, procurement, and construction] contract tender."

Cepu block lies on the border of East Java and Central Java and is said to hold proved reserves of 600 million bbl of oil and 1.7 tcf of natural gas.

ExxonMobil subsidiary Mobil Cepu Ltd. and state-owned PT Pertamina each hold a 45% stake in the block, with the remaining 10% controlled by local government administrations.

Contact Eric Watkins at hippalus@yahoo.com.

More in Drilling & Production