INITIAL CEPU OIL FIELD PRODUCTION ESTIMATED AT 15,000 BPD

Jakarta, July 22 (ANTARA) -The Banyu Urip oil field in the Cepu block in Bojonegoro district, East Java, is expected initially to produce 15,000 barrels per day beginning in late August or early September 2009, an oil official said.

Head of the Upstream Oil and Gas Regulating Agency (BP Migas) R Priyono said here on Wednesday the Cepu Block oil field production would be increased in stages to reach 20,000 barrels per day in late 2009.

The Cepu Block's oil production will significantly add to the national oil output so that the oil production target set in the state budget at 960,000 barrels per day would be achieved.

Priyono said from January 1 to July 1, 2009, the country's average condensate and oil output reached only 951,793 barrels per day or about 99.15 percent of the state budget target of 960,000 barrels per day.

He said the lower production in the first semester of 2009 was due to a delay in the production of the Cepu oil field which was initially scheduled to commence in January.

The Tangguh oil field production was also delayed from May to July 2009. Besides there was also an oil theft case in the West Java Block in addition to a huge flood in an oil field managed by PT Chevron Pacific Indonesia.

Produntion activity at the Cepu oil field had been delayed several times because construction of several of its facilities were not completed on time.

Last month, BP Migas Deputy Chief Abdul Muin said the construction of a 32-km pipeline from Palang to the crude oil collecting facility owned by Petrochina at Mudi had been completed.

"Construction of the problematic pipeline has been completed," he said.

Muin said the agency was now waiting for the completion of a mini refinery owned by PT Tri Wahana Universal (TWU) with a capacity of 6,000 barrels per day.

The construction of the refinery had yet to be completed as the contractor still had to wait for equipment from the United States, he said.

The start of the oil field's production estimated at 20,000 barrels per day (bpd) has been delayed several times as constriction of some parts of the project was behind schedule.

Earlier, the government had expected the oil field to start production late last year.

The Cepu Block is expected to see its peak production of 165,000 bpd in 2012 or 2013.

Because of the delay in the start of the oil field's production since January 2009, BP Migas had lost a potential revenue of US$150 million, Muin said.