Jakarta, Petrominer — Crude oil import has made former acting president director of PT Pertamina, Muhammad Husein, restless. For, oil import has choked the state’s finance. The rapid flow of crude oil into Indonesia is also considered to have made Indonesia’s oil & gas industry to be in a suspended animation.
“Whereas, we need this industry remain growing so as to enhance lifting,” said Husein in an exclusive interview in his office some time ago.
Then, what else is he restless about? Following are excerpts of the interview:
Could you elaborate on your restlessness?
First, we know that our daily consumption of oil fuel is 1.6 million barrel. This figure is inversely proportional to oil production from the upstream that is only half of the amount of consumption.
Furthermore, the capacities of refineries are half of it. The burden of oil fuel subsidy is no less enormous in amount. The burden of subsidy on premium oil fuel is Rp1 trillion per day.
Why are you against crude import?
I am against crude oil import because I question the role of oil & gas contractors of cooperation contract (KKKS) in reaching lifting. We know that currently oil lifting is declining although there has been additional production from Cepu Block.
If we calculate other than from Cepu Block, Indonesia’s oil lifting drops some 100 000 BOPD. Given the additional production from Cepu Block lifting could be 900 000 BOPD. But why is it still 800 000? If the production of Cepu Block is not included national production declines in the first quarter of 2015. As if lifting does not decline, whereas it is covered by Cepu Block. This is a pity, for reducing import by some 100 000 BOPD is very significant.
What is the consequence?
The consequence is that we still import around 100 000 BOPD. It should not be necessary if there is achievement in lifting. It would be better if the 100 000 requirement is taken from domestic production at US$30 per barrel instead of US$40 but imported. Moreover, if own production is the result of employment in Indonesia, there is a growing economy of about US$25 x 10 000 BOPD. The government can also save US$15 as they need not purchase crude at US$40/barrel but only US$25/barrel based on the price of cost recovery.
What do you think is the cause?
We know that oil price declines thereby production activities drop. Malaysia lowers its activities with consumption of only half of its production thereby it is normal if its activities are lowered for the time being. But this must not be done in Indonesia, for Indonesia’s production is two folds of six million. So, once again don’t lower the activities.
What will be the impact on oil fields if activities are lowered?
I’m worried oil & gas technical operation in the field can be disrupted. The fluid that flows may not stop as it will cause stagnation. The wells’ continuity must not be disturbed. Take for example the activities of Caltex’s field whose production declines due to a two-year postponement of activities. After it was acquired by Pertamina, the endeavor to increase production was difficult. This is another disadvantage.
This is also a reminder for KKKS and SKK Migas. One should be careful with efficiency. Of course, from the point of profit if price is low it tends to be uneconomical.
What should be done?
I want all parties to be serious how to reduce oil fuel imports and even to solve the problem. The main thing is to reduce crude imports.
Didn’t the National Energy Council recommended additional crude imports, even in the extreme was to use the technology by filling dry wells with imported crude for reason while it is still in the form of crude?
Now I ask back who is to guarantee that price will stay at the range of US$40 per barrel? What if tomorrow it will keep declining to US$30 per barrel? There is a squandering of difference and don’t forget this is an uneconomical stagnant money. There is a world study institute that states oil price can reach US$30 per barrel. This is very speculative.
Thus, it is uneconomical?
Yes, moreover if it is using the state budget, certainly it is highly risky. On the contrary, the government should be invited to make history by reducing imports. Imports have created mafia that burdens the state budget. Do we want to be known as a country that keeps on importing?
I also want to say that a number of parties no longer wish the country to depend on the oil & gas sector as the supporter of the state’s budget. Their reason is a condition like today will happen. Whereas the government is still determining oil & gas lifting as one of the basic assumptions in compiling the framework of macro economy. The solution is willy-nilly we should have the spirit to increase production. (W18)
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