INDONESIA - The Oil/Gas Fields & Operators.

Oil in this archipelago has been produced since 1893, when the islands were ruled by the Dutch. This oil helped turn Shell into a leading conglomerate in the past century. (An independent republic of Indonesia was proclaimed in 1945 and the war for independence ended in 1949).

The following are brief profiles of the main oil and gas fields in Indonesia and their operators.

Pertamina, the state-owned concern established after the war, now accounts for 155,000 b/d of the country's crude oil production. Its target is to raise its crude oil production to 300,000 b/d by 2009. This depends on its joint operation the oil/gas-rich Cepu Block in central-east Java with ExxonMobil (see Gas Market Trends). Its natural gas production has risen by more than 167 MCF/day in the past five years to 967 MCF/d in 2006. Its geothermal output has risen as well (see down10IndnsEnrBasMar5-07).

Having become a limited liability company in April 2003, when its restructuring was completed, Pertamina operates many small and medium fields mainly in Aceh, Jambi and west Java. They include all the fields that were found and operated by the Dutch before independence and those fields which Pertamina has discovered since the 1960s. Before its restructuring phase, it offered many of its marginal fields to foreign and some local companies for EOR and further development under Technical Assistance Contracts (TACs). Now it has several E&P blocks with local and foreign companies.

Pertamina's upstream activities cover exploration and production of oil, gas, and geothermal energy. Its main objective is to discover new oil and gas reserves as a replacement of hydrocarbons produced. The E&P activities are performed through its own operation and JVs. The business partnership forms are JOB-EOR (Joint Operating Body for Enhanced Oil Recovery), JOB-PSC (Joint Operating Body for Production Sharing Contract), TACs, Consortium Co-operation System (CCS), IP (Indonesian Participation), PPI (Pertamina Participating Interest) and project loan. For the geothermal sector, the business partnership model is the Joint Operating Contract (JOC).

Pertamina has a concession block operated by its own unit - Pertamina Upstream - covering several oil and gas operation areas: Nangroe Aceh Darussalam (NAD); the Northern Sumatra Operation Area, with the main office in Rantau; the Central Sumatra Operating Area, with the main office in Jambi; the Southern Sumatra Operation Area, with the main office in Prabumulih; the Western Java Operation Area, with the main office in Cirebon; the Eastern Java Operation Area, with the main office in Cepu; the Kalimantan Operation Area, with the main office in Balikpapan; and the Papua Operation Area, with the main office in Sorong.

Pertamina Upstream has many oil and gas contracts of joint operation arrangements. They consist of partnerships under JOB-EOR contracts, JVs under JOB-TAC contracts, partnerships under TACs, partnership under the CCS, project loans, and partnerships under IP/PPI contracts. It has JOCs for geothermal exertion. To develop its E&P business, Pertamina Upstream has strategic alliances with local and foreign partners.

Pertamina Upstream has prospective business in oil and gas drilling services called Pertamina Drilling Service (PDS), which owns many rig units. In the gas transmission business, Pertamina Upstream has over 4,000 km of gas pipelines.

To be privatised in 2008/99, Pertamina intends to have E&P operations overseas, including Iran and Iraq, and has interests in oilfields in Algeria.

Background: In October 2001, Indonesia's petroleum sector experienced significant reforms with the passage of the new Oil and Gas Law No. 22/2001. The law forced Pertamina to relinquish its role in granting E&P licences and limited the company's monopoly in upstream and downstream activities. It owns Indonesia's existing oil refineries (see down11IndnsRefMar12-07).

Pertamina's regulatory and administrative functions were transferred to a new regulatory body, Badan Perlaksanaan Minyak Gas (BP Migas). Pertamina was formed into a limited liability company, PT Pertamina (Persero), by presidential decree in 2003, although it remains a state-owned entity. PT Pertamina is laying the groundwork for full privatisation to take place at some point in the future.

Indonesia's petroleum sector is dominated by several IOCs. The single largest oil producer is Chevron, which controls Caltex Pacific and Unocal's former Indonesian assets. BP, ConocoPhillips, ExxonMobil, and Total are significant crude oil producers in the country, with China's state-owned companies PetroChina and China National Offshore Oil Corporation (CNOOC) having considerable presence.

BP Migas and the Indonesian government have introduced policies aimed at increasing investment in the country's upstream sector. BP Migas set up various incentive programmes for firms to develop marginal oil resources throughout the country which would not otherwise be attractive to IOCs. In October 2006, the government waived import taxes on capital goods for oil and gas E&P. BP Migas has also held several competitive bidding rounds for new upstream projects throughout Indonesia. During 2006, BP Migas concluded its fifth round of acreage offerings in which it awarded dozens of new E&P licences to companies. During the fifth bidding round, a handful of exploration blocks were awarded to IOCs, such as ExxonMobil and ConocoPhillips, though most of tenders were won by smaller Indonesian firms.

Pertamina is having three main groups for gas, refining and E&P businesses. The gas group underlines its ambitions in the gas sector as Pertamina is promoting a big LNG venture (see Part 3). Routine spending on upstream and downstream sectors for 2003-07 was in late 2002 set at about $400m per sector per annum. Gross profit, before the state's take, was planned to grow to Rp 24 tn ($2.66 bn) over the period from Rp 11.9 tn in 2003. Reserves were forecast to increase to 1.1 bn barrels of oil and 11 TCF of gas. It said these targets will be achieved partly from its overseas operations.

The Donggi gas and LNG export programme is Pertamina's biggest project. This is based on the onshore Donggi gas field, a giant on Central Sulawesi. The field's proven reserves are estimated at 10 TCF. Of these, 6 TCF are in a block held by Pertamina and 4 TCF lie on an adjacent block held by a 50-50 JOB of Pertamina and the private Indonesian firm Medco Energi's unit Exspan, which has found big gas fields in Senoro/Toili 25 km south-east of Donggi.

With these fields being developed jointly, Pertamina and Exspan say combined reserves on their blocks could ultimately reach 22 TCF. A part of these reserves is being developed for an integrated $2.2 bn project to export gas in LNG form, with a two-train plant to have a 6m t/y capacity. This will be Indonesia's fourth LNG venture. The LNG would be exported to a terminal planned by Marathon Oil in Mexico's Baja California for the US West Coast.

The Other Operators: Indonesia's two largest oilfields are Minas and Duri, which are operated by Chevron and located along the eastern coast in Sumatra. However, Chevron's Minas and Duri fields are mature and their production has been in decline.