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Indonesia Oil and Gas Report Q1 2012
Business Monitor International, Dec 2011, Pages: 100
Business Monitor International's Indonesia Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's oil and gas industry.
BMI View:
Despite falling oil output triggering Indonesia’s resignation from OPEC, it is gas which poses the real dilemma for the country. Gas Exports have formed the backbone of the economy for many years, but the outlook for this sector is now uncertain. BP may be able to ramp-up production at its Tangguh scheme, but delays in the development of the East Natuna project and the ongoing decline of mature fields makes it difficult for the government to balance growing domestic gas requirements, demands from close neighbours and the needs of long-standing LNG customers such as Japan.
The main trends and developments BMI highlights for Indonesia’s Oil and Gas sector are:
- BMI's forecasts suggest that Indonesia will be pumping around 886,000 barrels per day (b/d) of crude oil and gas liquids by 2016. Oil consumption – estimated at 1.33mn b/d in 2011 – already outstrips Indonesian production (including gas liquids), with the country a net importer of oil. BMI estimates suggest that demand could reach 1.48mn b/d by 2016, substantially above liquids production and obliging the country to increase import levels significantly (592,000b/d). ExxonMobil’s Cepu field was originally expected to reach peak production of 165,000b/d in 2012, but this could now be deferred until 2014.
- In March 2011, the industry regulator called on state oil company Pertamina to focus on the redevelopment of existing assets rather than the acquisition of domestic assets run by foreign firms. The request is in stark contrast to Pertamina’s acquisition strategy and comes at a time of rising Indonesian dependence on oil imports.
- Natural gas production is expected to have reached a near-term peak of around 86.6bn cubic metres (bcm) in 2011. The country’s gas consumption is on the rise and is forecast to reach 52.4bcm by 2016. The country’s gas export potential is put at 46.7bcm in 2011, but will fall back to 33.1bcm in 2016.
- Production from Indonesia's long-delayed East Natuna gas project is unlikely to start before 2022, and bringing the large-scale project onstream could cost up to US$40bn, the upstream operations director at Pertamina told reporters on September 5 2011. The Natuna D-Alpha block is estimated to hold 1,300bcm of recoverable gas reserves, making it the largest single gas field in Asia.
- Indonesia’s crude oil import costs are put at US$12.49bn in 2011 and will rise to US$20.15bn by 2016. The value of gas exports is estimated at US$23.66bn in 2011, easing to US$15.36bn in 2016. The country’s combined crude oil and natural gas revenues are therefore expected to have been US$11.17bn in 2011; however, an import cost of US$4.78bn is expected by 2016.
At time of writing, BMI assumes an OPEC basket oil price for 2011 of US$101.90 per barrel (bbl), falling to US$99.40/bbl in 2012. Global GDP in 2011 is forecast at 3.2%, down from 4.3% in 2010 reflecting slowing growth in China, a faltering recovery in the US and a worsening eurozone debt crisis. For 2012, growth is put at 3.6%.
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