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Chevron to Expand Duri Oil Block Section
Ririn Radiawati Kusuma | December 21, 2010

Chevron is expanding its production capacity. Chevron is expanding its production capacity.
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The Indonesian unit of Chevron Corp. expects to open a new resource block as it strives to boost its oil production next year.

Chevron Pacific Indonesia chairman Abdul Hamid Batubara said that CPI plans to begin work on Area 13 in its North Duri Development on Sumatra island.

“We have proposed this project to BP Migas, the upstream oil and gas regulator. We expect to open a new block there next year,” he said in an exclusive interview.

BP Migas confirmed it had received the proposal and spokesman Elan Biantoro said on Tuesday that the regulator is still discussing the issue.

All oil and gas companies must submit their proposals to the regulator for approval. The proposals normally include exploration plans, investment and expected production capacity.

Elan said the development of Area 13 is forecast to produce 40,000 barrels of oil per day, “but we are still calculating the precise reserves of that oil block.” The area is expected to start producing oil next year.

Hamid said CPI currently produces 380,000 barrels per day, or around 45 percent of Indonesia’s oil production.

The government’s target is 965,000 barrels per day, but shutdowns in several blocks this year saw production slip to 946,000 barrels per day as of December.

A gas pipeline operated by Transportasi Gas Indonesia in Duri, Riau province, sprang a leak in November. The shutdown led to a loss of 500,000 barrels of oil.

Oil and mining analysts have urged the government to offer incentives to companies to boost their investment in Indonesia.

“We are running short of oil block exploration. That has caused us to miss our oil lifting target in the past few years,” said Pri Agung Rakhmanto, an energy analyst at the Reforminer Institute.

According to BP Migas, 219 oil and gas companies have submitted investment plans worth $13.8 billion. Of that amount, 10 percent, or around $1.3 billion, will be set aside for exploration activities.

Chevron said on its Web site that it would spend $26 billion next year.

Around 90 percent of it, or $22.6 billion, will go to upstream spending such as crude oil and natural gas exploration projects.

As part of the standard contract with BP Migas, oil companies split their revenues with the government.

The company receives 15 percent of the revenue while the government keeps the other 85 percent.