The majority of Indonesias producing Oil fields are located in the central and western sections of the country. Therefore, the focus of new exploration has been on frontier regions, particularly in eastern Indonesia. Sizable, but as of yet unproven, reserves may lie in the numerous, geologically complex, pre-tertiary basins located in eastern Indonesia. These regions are much more remote and the terrain more difficult to explore than areas of western and central Indonesia.
A study released in August 2002 by Indonesias Directorate General of Oil and Gas shows that oil reserves in the Cepu block alone, located in Central/East Java, are close to 600 million barrels, about half of which are considered recoverable. After lengthy negotiations, Pertamina and ExxonMobil signed a contract in September 2005 for the development of these reserves. ExxonMobil had owned the rights to the block before, but had refrained from further development due to the fact that their contract ran out in 2010. Recent changes in Indonesian law allowed for an extension of ExxonMobils concession, which would have exceeded the 20-year sunset provision under previous law. The Cepu block is expected to begin production by 2009, eventually reaching a peak output of 180,000 barrels per day (bbl/d). ExxonMobil and Pertamina will each have a 45 percent stake in the project, with the remaining 10 percent held by the provincial governments of East Java and Central Java.
China National Offshore Oil Corporation (CNOOC) became the largest offshore oil producer in Indonesia in January 2002, after purchasing nearly all of Repsol-YPFs assets in the country for $585 million. Pertamina is a CNOOC partner in each Production Sharing Contract (PSC).
Companies producing from existing fields are attempting to increase recovery rates and to prolong the life of the fields. Caltex, which has the largest operation of any multinational oil company in Indonesia, undertook a steam injection project at the Duri field on Sumatra, but production continues to decline as the fields reserves are depleted. Overall, Caltexs production now stands at around 530,000 bbl/d, down sharply from 660,000 bbl/d in early 2001.
Smaller fields have offset some of the decline in production from the more mature fields. Unocals West Seno field, under development offshore from East Kalimatan, has been producing around 60,000 bbl/d since early 2005, when development was completed. Even with small new discoveries under development, and the major Cepu block fields on the horizon, Indonesias oil production is not likely to rise markedly, due to the continuing decline of mature fields.