Reva Sasistiya

BPMigas Reshuffle Aimed at Lifting Oil Output

The Energy Ministry on Thursday named new leadership at upstream oil and gas regulator BPMigas with an eye toward boosting slumping national oil production, especially from the Cepu block, Indonesia’s largest oil field.

“The replacements are aimed to [help] increase national oil output, mainly in the Cepu block, amid the country’s production decline of 12 percent annually [in recent years],” Energy Minister Darwin Zahedy Saleh said.

Haposan Napitupulu, previously president director of Cepu joint-operator PT Pertamina EP Cepu, became BPMigas’s new deputy chief of planning, replacing Achmad Luthfi.

“I believe he will be able to push higher output at the [Cepu] block,” Darwin said.

Hardiono, the former general deputy of BPMigas, was named as the regulator’s new deputy chairman. Syamsu Rizal will take over his general deputy role.

Securing higher oil output is crucial for the government to generate greater revenue to finance its economic policies, such as fuel and electricity subsidy programs.

To help achieve this target, all eyes are on the Cepu block, where production is stalled at 14,000 barrels per day, well short of an original forecast for peak output of 165,000 bpd in 2012. The peak output forecast has now been pushed back to 2014.

Located on the border of Central and East Java, the Cepu block is estimated to hold 600 million barrels of oil and 1.3 trillion cubic feet of gas. Lead operator Mobil Cepu Ltd., the local unit of the oil major, and Pertamina EP Cepu each hold a 45 percent stake, with the remainder owned by local governments.

Difficulties in securing construction permits, technical problems and the ongoing overhaul of PT Tri Wahana Universal’s refinery have slowed production.

Industry observers have blamed Mobil Cepu for the slow progress, while the central and local governments have also been criticized for doing little to clear obstacles to production.

Previously, as frustrations with slow development grew, Haposan called for a revision of the Cepu agreement to allow Pertamina to become project leader. It is unclear whether he will continue to push this agenda in his new role.

Haposan told the House of Representatives Commission VII, overseeing energy issues, late on Wednesday that Pertamina planned to build a new pipeline from the field to a planned floating storage facility off the coast of Jakarta to increase the block’s output to 60,000 bpd.

The government has set this year’s oil output goal at 965,000 bpd, compared to 960,000 bpd in 2009, but BPMigas has previously warned the target may be hard to achieve .