ENERGY NEWS

SUMMARY: Statistics released by the Indonesian Ministry of Energy and Mineral Resources, Pertamina, and private sector companies show that Indonesia’s crude oil and natural gas production declined in 2000 from the previous year. Indonesia produced an average of 1.4 million barrels per day of crude and condensate combined in 2000, while natural gas production for the year was 2.9 trillion cubic feet. Despite a quantitative decline in crude and condensate exports to 612,300 barrels per day, down 21.6 percent from 1999 levels, oil and gas export earnings, buoyed by high petroleum prices, increased to US $14 billion dollars. Oil companies spent US $4.5 billion in Indonesia in 2000, 2.3 percent more than in 1999. Indonesia’s domestic fuel demand is expected to surpass one million barrels per day in 2001. End summary. 

Crude Production Declines

Indonesia produced an average of 1.414 million barrels per day (b/d) in 2000 comprising 1.273 million b/d of crude oil and 141 thousand b/d of condensate in 2000. Crude and condensate production was down nearly 6 percent over the previous year’s level of 1.5 million b/d (1.351 million b/d of crude and 149 thousand b/d of condensate). Monthly statistics confirmed a generally downward trend in 2000 with crude production dropping from 1.305 million b/d in January to 1.255 million b/d in December and condensate production dropping from 156.7 thousand b/d to 148.9 thousand b/d. OPEC’s March 2001 decision to reduce member country quotas will not affect Indonesian production. Effective April 1, Indonesia’s quota was reduced by 52,000 b/d to 1.255 million b/d from a previous quota of 1.307 million b/d. The new production ceiling is Indonesia’s current crude output. 

Six major producers -- Caltex, YPF Maxus, BP, Conoco, ExxonMobil, and Vico -- accounted for the bulk of the 86,000 b/d drop in 2000 from the previous year’s output.  Caltex, Indonesia’s largest producer accounting for 49.9% of Indonesia's total crude production, produced 705,800 b/d in 2000.  This was 5.4 percent lower than 1999 production of 746,000 b/d.  Damage to production facilities and uncertainty about future control of the CPP block were key factors contributing to the decline.  Production of Sumatra Light Crude (Minas) continued to decline and is currently averaging around 400,000 b/d.  Output of the heavy sweet Duri crude is at 245,000 b/d, a decline of about 35,000 b/d from a year ago.  It is estimated fallen production from Caltex alone cost Indonesia US $300 million in lost oil revenues in 2000.  Condensate production from ExxonMobil’s Arun field declined by 33.3 percent to 28,200 b/d.  On the positive side, production from Medco, Indonesia’s largest private oil producer, was up 79 percent to 67,200 b/d from 37,500 b/d in 1999.

 
Table: Oil and Condensate Production by Major  Producers in 2000 (1000 b/d)

Source: Directorate General for Oil and Gas (MIGAS)

Natural Gas Production Declines

In 2000, Indonesia’s natural gas production declined slightly to 2.9 trillion cubic feet (TCF) from 3.07 TCF in 1999 due primarily to a decline in ExxonMobil’s production.  Total Indonesie, which supplies gas to the LNG, LPG and fertilizer plants in East Kalimantan, became Indonesia’s foremost natural gas producer in 2000 replacing ExxonMobil.  Total Indonesie enjoyed a production increase of nearly 23 percent to 841.4 billion cubic feet (BCF) in 2000 from 684.6 BCF in 1999 as the Tunu North and Peciko fields came on stream.  ExxonMobil, a principal supplier of gas to the LNG, LPG and fertilizer plants in Aceh, saw production decline by 43 percent to 451 BCF in 2000 from 794.3 BCF in 1999 and 921.9 BCF in 1998.

Natural gas production from Vico's Badak field in East Kalimantan dropped 5.2 percent to 452.5 BCF.  Vico is a principal supplier of gas to the Bontang LNG plant in East Kalimantan.  Unocal increased gas production from its fields in East Kalimantan, also supplied to Bontang, by 2.1 percent to 166 BCF.  Arco, the largest supplier of domestic gas, reduced gas output slightly from its fields offshore Java and Madura in 2000 after an 80 percent production improvement in 1999.

Table: Natural gas production by major producers

(MMSCF)

Source: MIGAS

Crude Exports Decline

Indonesia’s crude and condensate exports declined sharply in 2000 to 612,300 b/d, 21.6 percent below the 1999 level of 781,900 b/d due mainly to lower production and higher domestic demand.  Nonetheless, gross export earnings of liquids enjoyed a 28.6 percent increase to US $6.3 billion compared to US $4.9 billion in 1999 because of higher crude prices.  Export prices for Indonesian crude averaged US $28.1 per barrel in 2000, 62.4 percent higher than the US $17.3 per barrel price average for 1999.  Official export prices (ICP) for Sumatra Light (Minas) crude averaged US $28.53 per barrel in 2000 but enjoyed a slight premium on the spot market at an average US $28.74 per barrel.

Indonesia Fuel Demand Buoyant
 
Domestic fuel demand is estimated to surpass one million b/d in 2001 after growing sharply in 2000 to 967,500 b/d.  Statistics from the Directorate General of Oil and Gas revealed that domestic fuels demand increased 10.4 percent to 56.1 billion liters in 2000 from 50.8 billion liters in 1999.  Automotive diesel oil (ADO) demand rose 12.1 percent to 22.2 billion liters in 2000 from 19.8 billion liters in 1999.  Officials admitted that heavy price subsidies and illegal exports supported the significant growth in domestic fuel demand.  Most of the smuggling is in ADO, which comprises about 40 percent of total demand.

Note: The FY 2001 budget included a domestic fuel subsidy bill of Rp 41.3 trillion (US $4.1 billion at Rp 10,000/US$).  This assumed an average 20 percent increase in fuel prices on April 1, most or all of which has been postponed.  The budget estimate was also based on an assumption of an average crude oil price of US $24/barrel and an exchange rate of Rp 7800/US$.

Reduced Exploration but Higher Expenditures

According to Pertamina, oil companies’ actual expenditures in 2000 totaled US $4.496 billion, 2.3 percent higher than actual spending for 1999 at US $4.388 billion or about 87 percent of budgeted expenditures for the year.  Oil companies spent US $1.289 billion for exploration and development in 2000, 11 percent below the 1999 level of US $1.449 billion.  Exploration activities dropped in 2000 with only 63 drilling wells completed and 908 development wells drilled, compared to 1999 figures of 81 and 929 wells, respectively.

Table: Actual Petroleum Company Expenditures (million US$)

Table:  Number of Wells Drilled

Oil and Gas Earnings Rose in 2000

According to the Central Bureau of Statistics, Indonesia's oil and gas exports posted a 45.4 percent increase in earnings in 2000 to US $14.24 billion.  Oil and gas exports made up about 23 percent of the country's total export earnings of US $62.02 billion.  High crude prices in 2000 contributed to the steep increase in hydrocarbon export earnings.

Table:  Oil and Gas Contribution to Exports  (in million US$)

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