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RI Oil Production Continues to Shrink, Minister of Energy and Mineral Resources is Outspoken

The government, in this case the Ministry of Energy and Mineral Resources (ESDM), admits that domestic oil production continues to decline. This happens because oil wells in Indonesia are currently entering the obsolete or old phase.

Quoting data from the Ministry of Finance (Kemenkeu), until September 2023 oil production will be 608.6 thousand barrels per day (bpd). Meanwhile, as of October 31 2023, the Ministry of Energy and Mineral Resources recorded that oil production had fallen to 582.69 thousand bpd.

The Minister of Energy and Mineral Resources, Arifin Tasrif, explained the reasons for the continued decline in domestic oil production. This is because oil wells in Indonesia are old, so the ratio of water is greater than oil when produced.

“So it’s true that our wells are old, yes, the wells are indeed old. The longer the oil is pumped, the deeper it gets, and the mixture with water becomes more and more. So what was pumped used to be 10 liters of oil, 9 liters of oil, but now it is “For decades, half a liter of oil has been half a liter of water,” explained Minister Arifin at the Ministry of Energy and Mineral Resources Office, Jakarta, Friday (3/11/2023).

Currently, the government continues to strive to maintain daily domestic oil production by maximizing old wells by deepening drilling. One thing that has been done is to increase production from non-conventional oil wells (MNK), one of which is in Gulamo.

“But for this addition there must be new additions, that is now in Gulamo, that is unconventional or MNK. So far the indications are that there is hope in Gulamo, because drilling has been completed,” said Minister Arifin.

Responding to the decline in Indonesia’s oil production, oil and gas practitioner Hadi Ismoyo believes that it is quite difficult to realize the oil lifting target as set out in the 2023 APBN. Considering that this year’s oil lifting target is at the level of 660 thousand barrels per day (bpd) . “The projections until the end of the year are estimated to be very difficult to achieve the APBN target of 660 thousand bpd,” Hadi told CNBC Indonesia, Friday (3/11/2023).

In fact, according to Hadi, until the end of 2023, it is projected that national oil production will actually be below 620 thousand bpd with an estimate of 609 thousand bpd. Meanwhile, for oil lifting, it is projected that by the end of this year it will only be at the level of 591 thousand bpd.

He knows this, based on reports at the 2023 International Oil and Gas (IOG) Convention which took place in Nusa Dua, Bali some time ago.

He also explained a number of challenges that oil and gas contractors and SKK Migas would face which would become increasingly complicated in the future. Especially if efforts are not immediately made to boost exploration activities, implement Enhanced Oil Recovery (EOR) technology, and Existing Production with Low Decline Management on a massive scale.

According to Hadi, there are at least several things that need attention from all parties, especially SKK Migas and cooperation contract contractors (KKKS) in efforts to increase production. One of them is promoting exploration activities in new basins.

Hadi explained that there are still many potential new basins in Indonesia that have not been explored, for example those in Eastern Indonesia. However, this must also be accompanied by the availability of Human Resources (HR) who are experienced and have an explorationist spirit.

Apart from that, additional technology is needed that is capable of processing big data at great speed. The use of this technology has been successfully implemented by KKKS such as ENI in promoting its operations in Indonesia.

Next, which is no less important, is sufficient capital expenditure (capex) and operational expenditure (opex), to carry out exploration activities. “We most likely already have these components, but we lack people who have an explorationist spirit as well as manageable and measurable risk takers,” he said.

Source: CNBC