Indonesia's oil output declines

JAKARTA, Aug. 11 (UPI) -- Indonesia's BPMigas oil and gas regulator says that national fields are in decline.

Apparently confirming that Indonesia's oil production has hit a decline as predicted by "peak oil" proponents, BPMigas spokesman Gde Pradnyana said Indonesia will have to reduce its dependency on oil.

He said the country will take steps to shift to natural gas from oil.

"We're currently just trying to maintain the current oil production so that it will not drop sharply," Gde told The Jakarta Post.

"The discovery of oil fields in the next five to seven years will be difficult, especially those that can produce as much as the Cepu Block. The future projects will be mostly gas operations."

Gde, however, said he remains upbeat however about the country's long-term prospects.

He told the Post that Indonesia has 10 oil and gas projects with a total investment of $4.7 billion, expected to come on-stream through 2014.

"This reflects that the future of Indonesia's oil and gas industry will be dominated by gas," Gde said.

The projects are expected to produce 1.75 million cubic feet of gas per day, 20,000 barrels of oil per day and 26,000 barrels per day of oil condensate, Gde said.

Indonesia, formerly a member of the Organization of Petroleum Exporting Countries, has been struggling with both declining oil output from aging oilfields, some of which date to the late 19th century, and rising demand for natural gas, which is limiting its gas export potential.

Indonesia was until recently Southeast Asia's only member of OPEC, and the oil price rises following the 1973 OPEC boycott provided an export revenue windfall that contributed to sustained high economic growth rates, averaging more than 7 percent from 1968 through 1981.

Indonesia left OPEC three years ago, half a decade after it became a net oil importer.

During World War II, oil production in the Dutch East Indies was considered crucial for the Japanese war effort, which conquered them in early 1942.

In early 2011 the Indonesian government projected that the country's oil production would reach 970,000 barrels of oil per day but cut the target to 945,000 barrels of oil per day because most of the foreign and indigenous major oil companies failed to reach production goals.

BPMigas recently noted that over the past decade Indonesia's proven oil reserves had declined by 2.4 percent per year. While last year Indonesia produced 344 million barrels of oil, new discoveries totaled 140 million barrels.