Oil and gas firms suffer slew of setbacks in Sumatra
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Once a home for oil and gas companies such as US giant Chevron, the country's largest crude oil-producing area, Sumatra Island, is now suffering problems ranging from licensing to illegal tapping that may turn off potential investors.
In particular, the southern part of Indonesia’s largest island has seen a slew of setbacks for oil and gas contractors.
“All related parties must work together to solve the problems faced by the upstream oil and gas players because this is related to state assets,” Tirat Sambu Ichtijar, southern Sumatra chief for the oil and gas regulator SKKMigas, said over the weekend.
Some 80 oil and gas contractors currently operate in the southern Sumatra, including 43 at the production stage and 37 others still in the exploration phase.
The region alone produces a total of 103,000 barrels of crude oil per day (bpd) and 2.03 million metres standard cubic feet per day (mmscfd) and accounts for 12 per cent of the total oil output of Indonesia.
Oil facilities on Sumatra, however, have been continuously disrupted by rampant cases of illegal tapping, in addition to problems related to land acquisitions and mining licenses faced by petroleum companies.
In the most recent case, state-owned oil and gas company PT Pertamina has been forced to suspend operations at its 260-kilometre Tempino-Plaju pipeline in Sumatra after experiencing losses of 280 billion rupiah (Bt855 million) this year due to what the company described as “well-organised illegal tapping operations”.
The company estimates around 1,000 to 2,500 barrels of crude oil lost per day due to oil theft.
“This situation obviously caused state losses. On the other hand, it also provides uncertainty for the investor,” Lelin Eprianto, Pertamina’s vice president of health, safety, security, and environment, said.
Other oil and gas companies also faced obstacles in their working operations in Sumatra.
China’s PetroChina encountered problems in Jambi when local officials of Tanjung Jabung Timur district sealed 14 of the firm’s oil wells following disagreements over the contractor’s licensing in the region.
Similarly, local company PT Sele Raya could not continue a plan to drill seven wells at its Merangin Dua Block in South Sumatra following land acquisition problems.
