Indonesia - Oil Policy Position.Producing at capacity, Indonesia's oil output now is 1.2m b/d and its OPEC OPEC: see Organization of Petroleum Exporting Countries.
in full Organization of the Petroleum Exporting Countries
Multinational organization established in 1960 to coordinate the petroleum production and export policies of its quota till end-2002 is 1.125m b/d. In addition, the country is producing about 200,000 b/d of condensates and NGLs. Indonesia, the world's biggest LNG LNG (liquefied natural gas): see under natural gas. exporter, needs over $3.5 bn in annual investment to find and prove 4 bn barrels and keep oil output above 1m b/d beyond 2010.
Jakarta is aiming for an increase in oil and condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. output to 1.7m b/d by 2004. It has stepped up efforts to sign new E&P contracts based on a production sharing (PSC (Public Service Commission) Same as PUC. ) formula. There is an increasing move towards development of marginal fields and extension of existing structures using more efficient drilling and production technologies.
Indonesia has 60 sedimentary basins. Of these 36 are in the west of the country and have been explored, with 14 producing oil and gas at present. Proven oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints.
Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally are estimated at 4.6 bn barrels. Proven reserves of natural gas are put at 72.5 TCF See Trenton Computer Festival. . Sumatra alone accounts for 70% of the reserves and 60% of oil production. A bill to boost E&P investment and end the monopoly of state-owned Pertamina - presented in early 1999, rejected by parliament in the course of that year and revived by a more democratic government in late 1999 - was passed into law in late 2001. A non-profit agency, BPMigas, is yet to be set up to replace Pertamina as the partner in the PSCs. But there are ambiguities in the law.
Foreign firms want government guarantees that BPMigas will honour its financial obligations in PSCs, classify LNG as an upstream business, and clarify domestic oil and gas sales obligations. The law also requires a foreign PSC operator to sell up to 25% of its gas in the domestic market. But it does not spell out the terms of such sales.
With the law allowing Jakarta to classify LNG as a downstream business if it adds value to natural gas or upstream if it is a "continuation" of E&P, the government under President Megawati Sukarnoputri Megawati Sukarnoputri (mĕg'əwä`tē skär'nōp does not want BPMigas to become a party to sales contracts Sales Contract
Contract between a seller and buyer for the sale of goods, services, or both. . Instead, a seller of the state's shares of oil and gas will be designated by the government.
Pertamina, which will lose its upstream monopoly and become a limited liability firm by end-2003, wants to keep control over the LNG business and thus classify it as a downstream activity. It is promoting its own LNG venture in Sulawsi, with may compete with BP's Tangguh project in eastern Indonesia and other such projects in Bontang. It is also resisting proposals to transfer some of its refineries to other state-owned firms.
Foreign companies, including BP, want their share of output to be sold locally to be determined as soon as the PSC is declared commercial. They want these sales to be freely negotiated and at market-related prices. For its part, BP says classifying LNG as a downstream business will add to costs and undermine the country's already weakening position in the export market. BP is insisting on a government guarantee that Tangguh LNG will be an upstream project; otherwise its project may not be commercially viable in view of potential competition from Pertamina's LNG ventures and those of ExxonMobil and other companies.
Among OPEC's members, Indonesia should have been the least dependent on oil and gas revenues which in the first half of 1997 accounted for less than 20% of its total export receipts. But the Asian economic crisis from mid-1997 to 1999 and widespread unrest have raised the share of oil and gas in total income to more than 40%. Oil and gas used to account for 80% of Indonesia's total export revenues in 1982.
Many oilfields would stop production in the coming years. Caltex, by far the biggest oil producer in Indonesia, has seen its output decline to about 650,000 b/d, from 785,000 b/d in 1997. Foreign companies account for 95% of Indonesia's oil production, with Pertamina's output having dropped by 20% in recent years (see a comprehensive 2001 survey of Indonesia, including a who's who Who’s Who
biographical dictionary of notable living people. [Am. Hist.: Hart, 922]
See : Fame , in Vol. 56, Nos. 9-12).
The future of Indonesia, the world's largest archipelago Archipelago (ärkĭpĕl`əgō) [Ital., from Gr.=chief sea], ancient name of the Aegean Sea, later applied to the numerous islands it contains. The word now designates any cluster of islands. and fourth most populated pop·u·late
tr.v. pop·u·lat·ed, pop·u·lat·ing, pop·u·lates
1. To supply with inhabitants, as by colonization; people.
2. nation, will depend on its current decision makers. Chronic civil unrest across Indonesia is severely straining the armed forces, still the strongest segment of society, and corruption remains despite the downfall of Suharto's regime during bloody riots in May 1998. The security situation has deteriorated and tourism has declined sharply since the Bali bombings Bali bombings can refer to either of two separate incidents on the Indonesian island of Bali: