CAPITAL: Jakarta

MONETARY UNIT: Rupiah

REFINING CAPACITY: 992,745 b/cd

OIL PRODUCTION: 1,315,400 b/d

OIL RESERVES: 4.97 billion bbl

GAS RESERVES: 72.2 tcf

The election of a reform government promised sweeping change for the Indonesian oil industry. A June 1999 parliamentary election ensured that Indonesia would proceed with proposals to revise oil laws to allow foreign firms more flexibility in choosing their contractors. The goal was to prevent government-induced favoritism that spawned corruption. The government also was stripping Pertamina, the state oil and gas company, of its downstream monopoly. The government released an audit which concluded that Pertamina lost up to $4.7 billion over the 2 years ended Mar. 31, 1998, because of corrupt business practices, inefficiency, and incompetence.

The audit said Pertamina sold petroleum products at less than cost, had a bloated bureaucracy, and allowed "politically well connected individuals" to interfere in its business.

Meanwhile the Mines and Energy Ministry decided not to terminate a $335 million contract for McDermott Indonesia to build a gas pipeline linking the West Natuna gas field to Singapore. Unsuccessful bidders had alleged political influence played a role.

A parliamentary commission concluded the contact was tainted by corruption, but the Ministry explained construction was under way and if the contract were canceled, Pertamina would have to pay McDermott compensation.

Another major development was East Timor`s vote to leave Indonesia, which had annexed the former Portuguese colony in 1976. East Timor was expected to endorse a 1989 treaty between Australia and Indonesia that established the 61,000 sq km Timor Sea Zone of Cooperation and agreed to split the hydrocarbon revenues.

Offshore Kalimantan

Unocal Corp. and Exxon Mobil Corp., 50-50 partners, had several discoveries in the Rapak production-sharing contract area off East Kalimantan.

Unocal said Janaka North No. 1 well cut 50 ft of "high-quality reservoir with porosities greater than 35% and low water saturations" and 77 ft of associated thin-bedded reservoir at 7,797-8,600 ft TVD subsea.

Unocal said the well, drilled to 9,625 ft TVD in 4,319 ft of water, was the deepest yet in Indonesia. The Bangka 2 well, about 9 miles north of West Seno field, was drilled to 9,752 ft TD in 3,191 ft of water and cut 367 net ft of liquids-rich gas pay in two Upper Miocene zones. The Bangka 4 step-out was drilled downstructure to 11,656 ft TD and cut 38 ft of net oil and gas pay.

Aton 3 well, 5 miles southeast of Bangka 2, was drilled to 8,465 ft TD in 3,826 ft of water and cut 255 ft of high-quality reservoir and 80 ft of oil and gas pay. The Aton 1 stepout, drilled to 12,465 ft TD, cut 59 ft of net oil and gas pay in two zones. Unocal and Exxon Mobil Makassar received government approval to develop the deepwater West Seno and Merah Besar oil and gas fields off Kalimantan.

Unocal estimated West Seno field could produce 60,000 b/d of oil and 150 MMcfd of gas. Merah Besar estimates weren`t given. Production was due to begin in 2001.

In 1999 the firms drilled a deepwater appraisal well in West Seno field that flowed at a combined rate of 19,344 b/d of oil and 18.6 MMcfd of gas from three intervals totaling 142 ft of pay.

West Seno 4, drilled in 3,101 ft of water, encountered 398 ft of total vertical oil and gas pay at 6,690-9,010 ft TVD.

Other upstream

Kuwait Foreign Petroleum Exploration Co. planned to start production in late 2000 from Oseil field on Seram Island in eastern Indonesia. Kufpec (Indonesia) Ltd. drilled two appraisal wells that flowed 650 b/b and 6,300 b/d of 22°-gravity oil from the complex, highly fractured carbonate reservoir in 1998. The government extended the production sharing agreement for up to 20 years.

The field is 120 miles southwest of Irian Jaya. Kufpec had a 92.5% working interest, having acquired ARCO`s interests. ARCO earlier said the field was the first substantial discovery in pre-Tertiary rocks in eastern Indonesia. The reservoir is in the Upper Triassic-Lower Jurassic Manusela zone at about 6,700 ft.Kufpec said appraisal wells in the field used underbalanced drilling for the first time in Southeast Asia.

Oseil, a 1994 discovery, was only the second development in the Bula basin. Other partners were Sherritt International (Seram) Ltd. 5% and Santos Petroleum (Seram) Ltd. 2.5%.

Conoco Indonesia Inc. had a gas discovery on Block B in the South Natuna Sea.

The Keong 1 well, drilled to 6,300 ft, cut 295 ft of pay. Conoco said no production tests were conducted due to the "excellent quality of the reservoir rock."

The well was 3 miles southeast of Tembang and Buntal gas fields.

An earlier wildcat on the block flowed a combined 5,375 b/d of oil and condensate and 21 MMcfd of gas from three zones in the deeper Gabus. It also confirmed hydrocarbons in zones equivalent to those in adjacent Belanak field.

Gulf Canada Resources Ltd. and Talisman Energy Inc. had a gas discovery in southern Sumatra.

On test, the Suban 2 well flowed at a cumulative rate of 43 MMcfd from two gas-bearing zones. The upper zone flowed 28 MMcfd of gas and 219 b/d of condensate through a 48/64-in. choke with 2,660 psi flowing tubing pressure.

The deeper interval flowed 15 MMcfd of gas and 146 b/d of condensate through a 32/64-in. choke with 3,140 psi flowing tubing pressure.

Caltex Pacific Indonesia started up Piala field in Riau Province, Indonesia, where a single well, drilled to 4,000 ft, was flowing 2,000 b/d of oil. The field had 3.3 million bbl of reserves in the Sihapas formation at 2,800 ft. Santa Fe Energy Resources (Jabung) Ltd. was delineating Gemah field on Jabung block, Sumatra Island. On test, three wells on the block flowed at a combined rate of 39 MMcfd of gas and 5,075 b/d of oil and condensate.

Partners were Santa Fe, Kerr-McGee Sumatra Ltd., and Amerada Hess (Indonesia-Jabung) Ltd., each with 30%, and Pertamina Exploration & Production 10%. Total Indonesia let contracts to build and install offshore platforms and pipelines for its Tunu gas and condensate field development project.

Work included installation of three 20-in. and one 36-in. trunklines, construction of a new Tunu manifold and radio tower platforms, and construction of a 300-tonne scrapper trap platform. Completion was due in late 2000.

Gas exports

Indonesia Petroleum Ltd. of Japan began production at Peciko gas field off East Kalimantan.

It and partner TotalFina SA expected output to build to 22 million cu m/day by early 2000.

Pertamina`s Bontang liquefaction plant was to process the gas. Bontang had capacity of 21.80 million tonnes/year and was to supply 14.55 million tonnes, or 27%, of Japan`s total LNG imports in 2000, Indonesia Petroleum said.

Indonesia Petroleum and TotalFina each held a 50% interest in the Offshore Mahakam Contract Area containing Peciko. Production was expected to build to 64 million cu m/day of gas and 85,000 b/d of crude oil in 2000.

Exxon Mobil Corp. said the proposed $40 billion East Natuna gas fields project in the South China Sea would use an integrated LNG floating barge system to reduce the cost of processing high-C02 gas.

East Natuna partners were Exxon Mobil 76% and Pertamina 24%.Japanese firms Tokyo Electric and Tohuku Corp. planned to reduce their take from Indonesia`s six-train Arun LNG gas complex in northern Sumatra to 1 million tonnes/year from 3.5 million tonnes/year in 2005, when the current contract expires.

Pertamina said the companies were seeking LNG from Malaysia, Australia, and the Middle East rather than remaining dependent on a single source. The Arun complex produced 12.3 million tonnes/year of LNG. ARCO asked companies to submit new bids for the construction of an $4 billion LNG plant.

It originally awarded the contract to Inti Karya Persada Teknik (IKPT) but started a new bidding process following the change of governments.

IKPT, which was controlled by a friend of former Indonesian president Suharto, was eligible to bid again for the work, which was part of the Tangguh project. ARCO said completion still was expected in late 2004.