INDONESIA - Exploration Background.

Oil exploration in this archipelago began in the past century. Crude oil had been produced since 1893, when the islands were ruled by the Dutch. An independent republic of Indonesia was first proclaimed in 1945 and the war for independence from Dutch rule ended in 1949, when Indonesia finally assumed control over vast resources.

Pertamina, the state concern set up after the war, took over all the fields and in the 1960s began making its own discoveries. It offered many of its marginal fields to foreign companies and some local firms for EOR operations and further development. It also offered large unexplored areas to foreign oil companies.

Caltex was one of the foreign companies which had explored for oil in Central Sumatra before independence. It discovered the Duri giant in 1941 and Minas, a bigger giant, in 1944. Now Caltex accounts for more than half of Indonesia's oil production. Mobil was the first US major to explore for gas in this country and in 1971 discovered a gas super-giant, Arun, in Northern Sumatra which became the source for the world's second largest LNG complex. Two years later Agip found another gas super-giant in the Natuna sea, but the Italian company later relinquished that acreage.

Many major oil and gas finds were made in the 1970s and 1980s by foreign companies. Total found the Bekapai oil and gas field in East Kalimantan in 1972 and in 1974 it found the Handil oil and gas field. Since then it has made impressive discoveries and now it is the fourth largest oil producer in Indonesia (see profiles of fields and operators in next week's Review).

Indonesia enjoyed one of the world's highest success rates in exploration drilling in the 1960s and 1970s, not only in the number of discoveries made but also in the volumes added per wildcat drilled. But the success rates for oil since then have not been as high and exploration slackened, because E&P terms were no longer attractive to foreign companies.

By the beginning of 2001, about 18,700 wells had been drilled in Indonesia in more than 170 valid concessions. About 1,500 surveys had been made. Norway-based Petroleum Geo-Services in 2000 presented a multi-client 3D seismic survey over the southern part of the Kutei Basin in the Mahakam Delta, where oil has been produced since the late 19th century. The survey included the 1,600 sq km Tanjung Aru Block and large parts of Makassar Block B. Interpretation of data over Tanjung Aru showed the presence of several structural traps related to compression anticlines in the upper slope setting, with the largest prospect probably containing in-place reserves of 1.5-2 bn barrels of oil equivalent.