The output from the Banyu Urip field, part of ExxonMobil's Cepu block in East Java, is crucial to Indonesia's long-term efforts to meet rising domestic demand.
Exxon-Mobil (NYSE:XOM) has ramped up its production at a new Indonesian oil field, with a target to boost its output later this year by more than 200,000 barrels per day, just when the market is already oversupplied, despite the rise in oil prices for the past few weeks.
The output will originate from the Banyu Urip field, which is part of Exxon’s Cebu block in East Java. The move is seen as a long-term plan to tap into the country’s rising domestic demand, especially as other fields begin to age in the Southeast Asian country.
This is in contrast to ConocoPhillips’s, which has just laid off 300 out of 1200 Indonesians from the workforce, citing low oil prices and cost cutting measures. If Exxon is taking a long-term approach by looking at the future energy demand of the country and investing accordingly, which will probably result in a more oversupplied oil market, then why cannot ConocoPhillips?
Currently, the oilfield is producing over 75000 bpd during the end of last month. The oil field was discovered in 2001, and since its 15 years in operation, it has been going strong, though there has been lingering disagreements between the oil major and state company Pertamina, which consequently slowed the process of development.
Indonesia plans to boost its oil output from the current 800,000 bbl/day to around 830,000 bbl/day. Country has been struggling to boost its oil output ever since it has left OPEC, due to investors’ worries over corruption and bureaucracy. Traders say that they expect the first shipment of crude oil from the new oil field to commence around the third quarter, which is going to hurt the oil market even more with oil prices still tumbling downwards despite the rise in price for the past few weeks.
In separate news, Exxon Mobil has announced that the company has begun its bitumen production operation at the Cold Lake Nubile project in northeastern Alberta, Canada. Currently it is producing around 20,000 barrels per day, which is likely to increase up to 40000 barrels per day once the project operates in full stream. The project was planned and executed on behalf of ‘Imperial Oil Limited’, when it was first sanctioned in 2012.
The company is now looking forward to the output from Banyu Urip field, which is crucial to Indonesia's long-term efforts to meet rising domestic demand.
Exxon Mobil’s stock price ended the day at $87.49, a gain of 0.60% from the previous day.
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