Oil and gas companies to spend big in 2009

Oil and gas contractors have proposed to the regulator to spend up to US$13.15 billion on investment in exploration and production in 2009.

These investment plans were submitted to BPMigas through the companies' 2009's working and budget programs, BPMigas's chairman R. Priyono told reporters and industry players Tuesday.

About $12.95 billion of the planned investment would be spent on production activities and the remaining $201.57 million on exploration, Priyono said.

Of the $12.95 billion of investment planned for production, $3.73 billion will be allocated to drilling activities in 1,237 wells, $2.85 billion for production facilities, $4.72 for operational production and US$1.64 for administration.

"The proposed budget plans were submitted by 53 out of 64 contractors at the production stage. So, the (investment) figure could actually be higher," Priyono said.

The $201.57 million budget allocated for exploration will be spent mostly on geological and seismic surveys.

"Exploration activities have shown very good results this year. Thus, there will be more drilling and other activities next year," Priyono said looking at next year's business prospects as compared to this year's.

As of the end of October, oil and gas operators have spent $8.65 billion.

Roberto Lorato, President of the Indonesian Petroleum Association (IPA), said that next year's investment target was still logical.

"The plan is quite challenging as the oil price is declining, but I think it is still possible," he said.

BPMigas estimated oil lifting achieved until the end of this year would be 988,060 barrels oil per day (bopd), higher than the initial target of 977,000 bopd.

Priyono said that average oil production in 2008 was 978,000 bopd, adding that production is targeted to average 960,000 bopd next year.

Priyono said the declining oil production of PT Chevron Pacific Indonesia, a local subsidiary of the second largest oil company in the U.S., would lower Indonesia's total oil production next year.

"Chevron's production is declining due to aging fields. As the company output is very big, about 400,000 bopd, the decline is difficult to set off against finding new fields," Priyono said.

Chevron earlier said its Duri and Minas concession in Sumatra might only produce 405,000 bopd this year, down from the 408,000 bopd target set by the government and from the 425,000 bopd pumped last year.

BPMigas said nine oil and gas fields with a total capacity of 5,336 bopd and 521 million cubic feet per day of gas (MMSCFD) would come onstream next year.

taken from: jakarta post

Read More..

Oil dips to near $43 as investors eye OPEC cuts

Oil prices slipped to near $43 a barrel Tuesday in Asia as investors anticipated that OPEC will announce a big production cut next week to stabilize crude prices that have fallen about 70 percent in five months.

Light, sweet crude for January delivery was down 35 cents to $43.36 a barrel on the New York Mercantile Exchange by late afternoon in Singapore. The contract fell overnight $2.90 to settle at $43.71.

Prices fell last week to an intraday low of $40.50, the lowest since December 2004.

"Oil should find support around $40 a barrel and should form a bottom there," said Aaron Smith, who helps manage about $1.7 billion as managing director at Superfund Financial in Singapore.

Smith, who uses technical analysis to help guide his investment decisions, has recently reduced bets that the price of oil will go down, known as shorting.

"We've reduced the size of our short positions in oil dramatically over the last couple months," said Smith, who invests half his fund in commodity futures contracts. "But if it breaches that $40-$41 level, it could really keep moving."

Investors are watching for signs of how much the Organization of Petroleum Exporting Countries may reduce output quotas at the group's meeting next week in Algeria.

OPEC President Chakib Khelil said Saturday the group could announce a "severe" production cut and suggested the cartel could seek to surprise the market with the size of the reduction in a bid to bolster prices.

OPEC, which controls about 40 percent of world crude supplies, announced a production cut of 1.5 million barrels a day in October and 500,000 barrels in September, moves investors brushed off as a global economic slowdown worsened.

OPEC will have to adhere to any promised output cut if it hopes to help reverse the fall in oil prices, said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

"I think OPEC will need to make a cut of at least 2 million barrels a day," Shum said. "I think pricing going down to $40 last week will galvanize OPEC to make a substantial cut and comply better with their targets."

"But you can announce all the cuts you want. Compliance is the key."

Investors were also encouraged by news that President-elect Barack Obama plans to implement a major infrastructure program to help boost employment in the weakening U.S. economy.

"With all the stimulus packages and output cuts by OPEC, we may see the oil price stabilizing," Shum said.

In other Nymex trading, gasoline futures was little changed at 96.25 cents a gallon. Heating oil gained 1.03 cent to $1.5007 a gallon while natural gas for January delivery rose 8.6 cents to 5.65 per 1,000 cubic feet.

In London, January Brent crude fell 34 cents to $43.08 on the ICE Futures exchange.

taken from: the jakarta post

Read More..