Indonesia sees higher exploration spend in 2008

Jakarta (ANTARA News) - Indonesia expects contractors to spend up to $2.2 billion on oil exploration next year, up from about $1.8 billion in 2007, an official at energy watchdog BP Migas said on Friday.

Indonesia, Asia-Pacific's only OPEC member, has been offering new exploration rights and financial incentives for its oil fields in a bid to stem a steady decline in production.

Southeast Asia's biggest economy had hoped to achieve some $2.3 billion in exploration spending this year, but has fallen short of that target.

"We can't fulfil this year's exploration spending commitment. This year spending is around $1.8 billion. But next year the spending will rise to $2.2 billion," Achmad Luthfi, deputy chief of BP Migas, told Reuters.

"There are many obstacles, including difficulty in finding rigs, and that has caused some of the exploration activities to be delayed," he said.

Luthfi also said his agency has recommended that U.S. oil major Chevron Corp go ahead with its development plan to produce natural gas from fields in East Kalimantan, on Borneo island.

"We have recommended the development plan of Chevron East Kalimantan fields, but now it is up to the government to approve it," he said.

The first gas output from the fields is expected in 2013, reaching peak production of 800 million cubic feet per day in 2015, he said.

Chevron said previously that it planned to develop several gas fields in East Kalimantan, including Gehem, Gendalo and Bangka, with a total investment of around $6 billion.

Chevron currently produces gas from several other fields in East Kalimantan, but output at those fields is in decline.

Indonesia, the world's second-biggest liquefied natural gas exporter after Qatar, has been struggling to meet export commitments as more gas is diverted to the domestic market.

Luthfi also said his agency may halt plans to develop Santos' Jeruk oil field in East Java if the project is not profitable enough for the government.

"After we saw disappointing estimates of reserves in Jeruk we asked Santos to report details about the situation," he said.

"If this is not profitable for the government then we will put the plan of development on hold. We don't know for how long."

Santos said in a statement last year that the latest tests at the Jeruk-3 appraisal well showed that recoverable oil resources for the offshore field were most likely less than 50 million barrels -- significantly smaller than its previous forecast of 170 million barrels.

Santos said plans for additional appraisal drilling had been put on hold pending further technical and commercial reviews.

Adelaide-based Santos wants to reduce its reliance on production from the ageing Cooper Basin in outback Australia, focusing more closely on Indonesia and the region to grow its uncertain production profile beyond 2007.

Indonesia's crude oil production in November was 823,000 barrels per day (bpd), down from 825,300 bpd in October.