Abstract

Significant changes in the Worldwide development of the oil industry over the past few years have created the necessity to completely reconsider the overall pattern. Completely new areas of activity have developed as well as renewed interest in existing oil provinces. Among the areas whichfall into these categories are Alaska, The North Sea. West Africa, South East Asia and South America. We will consider here the recent history and likely future development of Indonesia, where a significant proportion of South East Asianactivity is occurring, and South America where a number of recent developments will no doubt lead to changes in the Western hemisphere petroleum energy pattern.

With more than five years required to effectively exploit any new development. it is realistic to assume that programs now underwaywill reflect the overall picture over the next few years. With this in mind, progress over the past few years in these two areas is discussed toreflect the expected developments to the immediate future.

INDONESIA

Prior to World War II, Indonesia was the main oil producing country in South East Asia. After the war, the independent Indonesian Governmentgradually appropriated all of the Shell Holdings, for which they paid compensation. Until the ousting of President Sukarno in 1966, foreign companies were not encouraged to invest in Indonesia; however, the new Government under President Suharto rapidly reversed this policy.

Table 1. shows the recent leasing history in Indonesia and illustrates the dramatic changes since 1966.

All current oil company contracts in Indonesia are based on a production sharing basis rather than profit sharing. The oil companiesare allowed to recover their capital expenditure, investment and operating costs from the oil produced, but on an annual basis this investment recovery cannot exceed between 35–40% of thetotal value of the oil. The remaining production is split 65–35% in favour of the Indonesia Government oil company P.N. Pertamina. Terms have become increasingly tougher for companies entering the Indonesian play, and latecomers such as Shell, White Shield and Pexa Oil have accepted a profit split as high as 70–30 and agreed to offer 5% of their share capital to the Indonesianinvestment market if production is established.

Indonesia's production has increased from approximately 150,000 BOPD in 1951 to 1,000,000BOPD in 1970. This large increase essentially reflects the success of the Caltex operation in Central Sumatra and their prolific Minas field. Caltex currently accounts for 70% of Indonesia's total production.

Oil is produced almost exclusively from Tertiary sediments which are situated in six major basins in Sumatra, Java and Kalimantan(Borneo). The probable offshore extensions to these basins motivated the rush to acquire offshore 3creage when leasing recommenced. Drilling began in 1968 and at present there is a very active drilling program in Indonesian waters.

A number of commercial oil fields have been discovered in the Java Sea. Atlantic Richfield have three economically productive structures, one of which is already being developed by platform drilling.

This content is only available via PDF.
You can access this article if you purchase or spend a download.