Indonesia, despite falling oil flow, to stay in OPEC

May 9, 2005
Indonesia intends to remain a member of the Organization of Petroleum Exporting Countries despite its falling oil production.

Indonesia intends to remain a member of the Organization of Petroleum Exporting Countries despite its falling oil production.

“I have asked OPEC about the matter, and they said that when you want to join the organization you have to be a net exporter. But when you are already there and have become a member, you will continue to be a member,” said Purnomo Yusgiantoro, Indonesia’s minister of energy and mineral resources.

“In OPEC, comparison should be made on a crude-to-crude basis. Crude exports should be compared to crude imports as well,” he added, according to the state-run Antara news agency.

On a crude-to-crude comparison, Indonesia is still viewed as a net exporter, even though the margin is relatively small, Yusgiantoro said. “But it is not impossible that we could turn to be a net importer,” he added without elaborating.

Indonesia’s oil production has declined by 5%/year over the past 10 years to less than 1 million b/d. The country became a net importer of crude oil in 2004 when its exports dropped to 30,000 b/d from 100,000 b/d in 2003.

In February, reports from the Central Statistics Agency said Indonesia’s oil and gas imports-including crude oil and oil products-increased by 52% in 2004 due to the country’s declining oil production and domestic demand rising as much as 7%/year (OGJ Online, Feb. 24, 2005).

Yusgiantoro announced plans for incentives to encourage bids for as many as 43 oil and gas blocks this year. Indonesia failed to attract investment in about 20 blocks in 2004.

He expressed confidence that the 43 oil licenses would be taken up in 2005, saying that 10 will be offered in an open bidding process, while 10 others have been named by bidders themselves.

The government also announced it would invite bidders to take part in a tender later this month to resume operation of two producing oil fields formerly operated by production-sharing contractors.

Mountain Front Kuantan (MFK) oil field in Riau and Wailawi oil field in East Kalimantan will be offered through open tender without preference for state companies, said Novian M. Thaib, a director at the Oil and Gas Directorate General.

Wailawi oil field, formerly operated by Vico Indonesia, and MFK, operated by PT Caltex Pacific Indonesia, each produce around 500 b/d of crude oil.

The two foreign contractors reportedly relinquished their rights to the fields to the government after determining them to be noncommercial.

Novian said a number of small oil companies, which he did not name, have indicated interest in taking over operation of the fields.

Meanwhile, state-owned Pertamina announced a small discovery in an old well in Rantau oil field in Aceh. The discovery flowed 705 b/d of oil.

Ridwan Nyak Baik, Pertamina general manager in Aceh, said the April discovery, in the regency of Aceh Taminag, will increase Pertamina’s oil production in the province.

Ridwan said the P-29 well was the fifth to be found producing oil in the past 6 months in Aceh. The earlier finds include P-75, with output of 1,500 b/d; P-363, at 1,000 b/d; P-364, at 1,000 b/d; and R-139, at 500 b/d.