Indonesia's Pertamina aims to pump 225,000 b/d of crude from Sumatra in 2022

Indonesia's state-run oil and gas entity Pertamina is keen to revive its upstream production and investment, with the former OPEC member setting ambitious targets to drill multiple new wells and boost crude output from its Sumatra region in 2022 to help address the tight regional supply.

In 2022, the Sumatra region is targeted to produce 225,000 b/d of crude oil, Pertamina President Director Jaffee A Suardin said. "This is not an easy task, but we will do our best to support national energy security," he said.

Pertamina's Sumatra provincial subsidiary PT Pertamina Hulu Rokan, or PHR, kicked off the new year by drilling new wells in three locations, namely the PRD-09 Rantau Field, MNA-P03 Minas Field and KRG-PA1 Limau Field, the company said in a statement.

PHR did not provide data on Sumatra's regional output in 2021, but the 225,000 b/d target would be around a 10% increase from the region's average production rate in 2021, crude trading and marketing sources at Pertamina told S&P Global Platts on Jan. 14.

Sumatra is the backbone and one of the largest contributors of crude oil in Indonesia. Pertamina produced an estimated 410,000 b/d in 2021, down from 408,000 b/d in 2020 and 414,000 b/d in 2019.

Pertamina has yet to announce any official upstream targets for 2022, but crude trading and marketing sources said the state-run company may aim for a preliminary target of 440,000 b/d for its overall crude production this year.

The drilling was carried out in an effort to demonstrate PHR's readiness and commitment to continue to focus on massive and aggressive drilling in 2022 to reach 500 wells, the company statement said.

Popular Indonesian grades

Indonesia has long since surrendered its status as a significant oil producer and a major East Asian crude exporter with its upstream output declining steeply over the past three decades due to lack of investments in new projects and a slowdown in upgrades and maintenance of aging fields.

However, Pertamina can still deliver several medium and heavy sweet crude cargoes per month for Northeast Asian refiners seeking to buy top-up barrels from the Southeast Asian spot market amid tight global supply, the marketer said.

Indonesia stopped exporting condensate, or ultra-light crude, in 2021 as Jakarta aimed to prioritize the use of local upstream output for domestic refineries in an effort to save energy import bills and lower its current account deficit.

Still, the Southeast Asian producer actively offers spot cargoes of medium and heavy sweet grades including Duri, Banyu Urip and Minas that are quite popular among major Northeast Asian refiners, according to feedstock managers at Chinese and South Korean refiners.

Indonesia exported 5.62 million mt of crude oil over January-October 2021, more than double the 2.36 million mt sold over the same period in 2020, latest data from Statistics Indonesia showed. Data for the full calendar year of 2021 is due to be released in February.

Around 60% of Indonesia's new oil field potential is located offshore and requires advanced technology and large capital investment to start production, a Pertamina crude marketer source said.

"The government's ambitious pursuit for new upstream investments together with a revival in participation of foreign partners will put Indonesia on course to end the long downtrend in crude production," the source said.