It’ll take Indonesia years to reverse oil, gas output slump

SINGAPORE: Indonesia’s oil and gas output is expected to contract for a fourth consecutive year in 2020, as aging fields and delays to new projects keep production levels below government targets, analysts said.

The output decline comes as Jakarta proposes a new law and aims to set up a special state vehicle aimed at reducing red tape and attracting foreign investment into the industry.

Details on the new initiatives remain scant but analysts said it could take years to boost energy exploration and production in

Southeast Asia’s largest economy.

Indonesia’s crude oil output has been declining for years, from a peak of more than

1.5 million barrels per day (bpd) in the mid1990s to below 800,000 bpd now as key fields run dry.

Oil output in 2019 was 3.7% below target while gas output dropped 15.2% below target due to field curtailments, pipe leaks and dozens of unplanned field shutdowns, according to SKK Migas.

“We are forecasting a 6% decline in liquids, and a 2% drop in gas output for 2020,” said Andrew Harwood, Wood Mackenzie’s research director for upstream oil and gas in Asia Pacific.

“Any increase from new projects will be offset by declines at Chevron’s Rokan PSC, Pertamina’s Mahakam block, and Pertamina’s wider operations across Java and Sumatra.”

Pertamina will take over the Rokan block from Chevron next year, but Indonesia’s oil production “will continue to decline until Pertamina drills further on the block”, Rystad Energy analyst Prateek Pandey said.

“Given this lacklustre outlook, it is imperative for Indonesia’s oil and gas production that Pertamina reduces sanctioning hurdles that have long delayed many of its projects, and implements advanced enhanced oil recovery technology on its mature fields,“he said. – Reuters