Indonesia unveils long-term oil, gas plan

Indonesia unveiled a long-term oil and gas management plan to attract $32 billion in investments for oil and gas facilities in 2010-14.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Dec. 3 -- Indonesia unveiled a long-term oil and gas management plan to attract $32 billion in investments for oil and gas facilities in 2010-14.

About 70% of the spending budget is targeted for investment in gas facilities, including LNG and LPG refineries, receiving terminals, and residential pipeline networks. The remaining 30% is for oil facilities, including refineries and rigs.

In 2010, Indonesia is aiming at $2.94 billion in oil and gas investment, while it expects to increase that total in 2011 to $3.18 billion.

The government sees 2013 as the peak year for investment in oil and gas, with a target of $10.57 billion—more than twice the level of investment in 2012 at $4.32 billion.

Kardaya Warnika, former chairman of regulator BPMigas, said the government would focus on expanding gas in order to reduce the nation’s dependency on oil.

Indonesia’s oil production lags behind domestic demand growth. Imports are costly as the Indonesian government subsidizes sales on the domestic market—a strategy that has stretched its finances to unacceptable levels.

Last month, in an effort to boost oil production by 11%, state-owned PT Pertamina reported that it expected to increase capital spending to $4.15 billion in 2010—a 77% increase from 2009 (OGJ Online, Nov. 13, 2009).

Meanwhile, Kardaya said gas development by 16 new rigs will continue until 2014 with an average investment target of $3.22 billion/year.

“Next year, we will kick off the development of two new gas rigs, namely in Lapangan Rambutan in South Sumatra and Pondok Tengah in West Java, with a total investment of $2.42 billion,” said Kardaya, who added wells drilled by the two new gas rigs are expected to produce up to 1.02 bscfd of gas.

In 2011, Indonesia plans to construct five natural gas plants: Blok A in Nanggroe Aceh Darussalam, Jambi Merang in Jambi, Randublatung in Central Java, Gajah Baru in Natuna, and Kepodang in East Java.

To process the gas from the rigs, Indonesia plans to construct LNG and LPG refineries, with a total investment of $3.65 billion during the 2010-14.

Oil rigs and refineries will also be constructed in 2010-14 at a total investment of $3 billion and $6.52 billion, respectively.

Abdul Qoyum Tjandranegara, former president director of state-owned gas producer PT PGN, criticized the government management plan, saying, “Boosting gas production is good, but it would be a waste if the government exports gas.

“If we maximize the gas for domestic use, particularly for transportation and domestic use, we will not need to subsidize fuel as much as we do now,” said Qoyum, whose remarks underscored concerns of many Indonesians.

In January, Indonesia urged gas producers in the country to maintain production or produce more gas to meet rising demand from domestic and overseas markets.

Previously, Indonesia’s acting coordinating minister for the economy Sri Mulyani Indrawati said the government had put higher priority on gas for the domestic market than on gas for export (OGJ Online, Jan. 25, 2009).

Contact Eric Watkins at hippalus@yahoo.com.

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