JAKARTA, June 11 - Global energy companies are expected to continue to reduce oil and gas production in Indonesia in 2016, the country's upstream energy regulator (SKKMigas) said on Thursday, as Southeast Asia's largest economy increasingly turns to imports to feed escalating fuel demand.
Indonesia was once self-sufficient in oil and gas but has struggled for years to attract investment to halt declining output - difficulties that have been exacerbated by the current low oil price environment that has led several firms to relinquish exploration assets.
Gasoline demand from Indonesia, one of the world's biggest importers of refined products, is expected to increase 38 percent to 6.6 million barrels in the third quarter from a year earlier.
"Generally, we can see production is declining," SKKMigas deputy chairman Zikrullah told parliament referring to output of crude oil and gas from several major firms, noting some exceptions. Output from the Cepu block operated by ExxonMobil may increase up to 41 percent to 165,000 bpd in 2016, he said.
Last month Exxon said it was targeting peak output at Cepu later this year of more than 200,000 bpd. Output from Indonesia's top crude producer Chevron has fallen 24 percent in the past 5 years, Zikrullah said.
Domestic energy production is an important source of government revenue, but is expected to drop by at least a third this year as a fall in production costs has failed to keep pace with a 40 percent drop in oil prices and threatens to limit future output.
The government is targeting 2015 oil output of 825,000 barrels per day.
SKKMigas said in December it expects spending in the upstream sector to reach $22.2 billion in 2015, down from a 2014 target of $25.64 billion.
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