Indonesia’s net oil production fell below the government’s target in 2022, despite an increase in investment in oil exploration.
By
ADITYA PUTRA PERDANA
·4 minutes read
KOMPAS/RHAMA PURNA JATI
President Joko Widodo gives directions to Pertamina Main Director Nicke Widyawati (second from right) and a number of Indonesia Onward cabinet ministers while visiting the storage tank owned by Pertamina Hulu Rokan (PHR) in Dumai, Riau Province, Thursday (5/1/2023)..
JAKARTA, KOMPAS — Indonesia missed its oil and gas production target in 2022 despite an investment surge in exploration. The output of oil and gas lifting, or ready-to-sell oil and gas, was even lower than the previous year.
A number of efforts had been made to increase the country’s oil lifting capacity, such as by spending investing in drilling and developing new wells.
During the presentation of the 2022 oil and gas production achievement and 2023 target in Jakarta on Wednesday, Dwi Soetjipto, the chairman of the Upstream Oil and Gas Regulatory Special Task Force (SKK Migas), explained that crude oil lifting reached 612,300 barrels per day in 2022, or 87.1 percent of the target set in the 2022 State Budget. Oil and gas lifting had even dropped from 660,300 barrels per day in 2021.
Meanwhile, natural gas distribution in 2022 realized 5,347 million standard cubic feet per day (MMSCFD), or 92.2 percent of the target, falling from 5,505 MMSCFD in 2021. Meanwhile, the reserve replacement ratio (RRR) in 2022 reached 156 percent with cost recovery of US$7.8 billion. State revenue and investment totaled $18.19 billion and $12.3 billion, respectively.
Upstream oil and gas investments in 2022 surpassed the $10.9 billion recorded in 2021. In fact, investment realization in 2022 had increased from $11.7 billion in 2019, before the Covid-19 pandemic.
SKK Migas production deputy Wahju Wibowo said that in mid-2021, when setting the 2022 State Budget target, the projected production for early 2022 was 660,000 barrels per day. However, this target could not be reached because production totaled only 612,000 per day. This meant that in terms of the run rate, there had been a deficit since the beginning of the year.
"[Production] reached 612,000 barrels per day due to several problems, such as production decline in a relatively old field, drilling that fell behind [schedule], and most significantly, unplanned shutdowns," said Wahju.
Upstream oil and gas investments in 2022 surpassed the $10.9 billion recorded in 2021. In fact, investment realization in 2022 had increased from $11.7 billion in 2019, before the Covid-19 pandemic.
According to Wahju, a number of efforts are being made to boost production, such as through filling the gap (FTG), or activities not previously included in work commitments in 2022. In addition, SKK Migas has also audited the performance of a number of contractors on cooperation agreements (KKKS). Thus, a number of problems can be evaluated and resolved in 2023.
Wahju said development drilling was carried out aggressively in 2022 to realize 760 new wells, an increase of 158 percent from the realization in 2021. In 2023, the number of wells would be again increased to 991 new wells, or nearly 1,000. The number of new wells once reached 1,000 in 2014 but the figure declined again due to various factors.
DOKUMENTASI SKK MIGAS
Upstream oil and gas or oil and gas management equipment in the Working Area/Rokan Block, Riau.
Strategic projects
Two of the four national strategic projects in upstream oil and gas in the pipeline are the Indonesian Deepwater Development (IDD) in East Kalimantan and the Abadi Masela project in the deep sea off Maluku.
Regarding the IDD, Dwi said, the transfer of participating interest and management (operatorship) was in progress. He said that both parties, Chevron and the candidates that would take over the operation, had agreed and the deal might be concluded in in the first quarter of 2023.
"Currently, due diligence is still underway. Next week, some more data have to be obtained from Chevron. SKK Migas has to be assured that there are no more problems related to the IDD’s assets, so that an agreement can be reached in the first quarter of 2023," he said.
Regarding the Abadi Masela project, Dwi said negotiations were currently underway between PT Pertamina (Persero) and Shell.
Pertamina intends to take over Shell's 35 percent stake in the Masela block. The remaining 65 percent belongs to Inpex Corporation, as the operator. According to the information Dwi has received, the agreement could be realized soon.
“Indeed, there are some other parties who are interested, and they could definitely continue the operation there later. So, hopefully Pertamina will reach an agreement at this time so that the other [parties] can later join [the consortium]. However, of course it will depend on Pertamina and Inpex, as the operator," said Dwi.
The prospects for the Masela block are good.
Previously, Fahmy Radhi, an energy economics observer and lecturer at the Gadjah Mada University business school in Yogyakarta, said the Masela block had large natural gas reserves. However, a number of problems had disrupted its development.
Fahmy said that if Pertamina finally agreed to take over part of Masela, it could later form a consortium that could include many investors to develop the oil and gas block.
“The prospects for the Masela block are good. However, there are challenges regarding [technological and financial] capabilities. Previously, Inpex and Shell had failed, right. If a consortium is formed later on, it will be stronger," he said. (DIT)
This article was translated by Hendarsyah Tarmizi.
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