-- Indonesia's new OPEC production quota effective April 1 is 1,255,000 barrel per day.

-- ExxonMobil Corporation announced that it had made a major oil discovery in its Cepu block located in Central and East Java provinces. The reserve is estimated to be well in excess of 250 million barrels.

-- Development of Unocal West Seno and Conoco Belanak offshore oil fields has the potential to increase Indonesia’s oil production by 160,000 b/d, natural gas output by 490 million cubic feet per day (MMCFD) and LPG production by 45,000 b/d within the next two years.

-- Santa Fe Energy Resources (Jabung) Ltd. announced that its most recent well, the North Gemah-1, is the fiftieth successful well of 51 total wells in the South Sumatra Jabung block.

-- Inpex made Indonesia’s first natural gas strike in the Timor Sea with an exploration well that flowed natural gas and condensate at a rate of 25 MMCFD of natural gas and 260 b/d of condensate.

-- Caltex has resumed drilling in the Coastal Plains Pekanbaru block.

-- There is no decision yet on sale of Maxus assets in Indonesia.

-- The Indonesian government raised domestic fuel prices on April 1 for some fuel consumers.

-- Energy Minister Purnomo said he expects Parliament to pass the oil and gas bill by the end of the year.

-- Energy Minister Purnomo installed Pertamina’s new directors in a January 3 ceremony, implementing Presidential decree 169/2000 authorizing a reduction of directorates from six to five.

-- The Ministry of Energy and Mineral Resources has started to assume responsibility from Pertamina for issuing oil and gas exploration licenses.

-- Pertamina will continue with the existing Indonesia Crude Price formula for the April to September timeframe.

-- Pertamina has restarted its 27,000 b/d Balikpapan hydrocracker after shutting it down on January 3 because of a fire. End summary.

Indonesia's new OPEC production quota of 1,255,000 barrel per day (b/d) effective April 1 is its actual crude output capacity for 2001. The new quota, however, is 15,000 b/d lower than Indonesia’s 2000 average production level of 1.27 million b/d. OPEC oil ministers agreed to total production cuts of 1 million b/d with Indonesia allocated a 52,000-b/d quota reduction at a mid-March meeting. In September 2000, Indonesia struggled to meet a previous OPEC-adjusted quota of 1.358 million b/d. The government will continue its plan to develop marginal and old oil fields, which can add to production in three to six months while simultaneously developing new oil fields, which could add to production capacity in another one to two years.

ExxonMobil Corporation announced on April 12 that Mobil Cepu Limited, an affiliated company, had made a major oil discovery in Indonesia. The Banyu Urip No. 3 (BU-3) well verified the existence of a reserve estimated to be well in excess of 250 million barrels in the Mobil Cepu-operated Cepu Technical Assistance Contract (TAC) block in Central and East Java provinces. The well encountered nearly 1,000 feet (305 meters) of gross oil and over 300 feet (91 meters) of gross gas pay, and oil was tested at a rate of nearly 4,500 b/d from Middle Miocene carbonate and sandstone formations. Indonesia state-owned oil company Pertamina has accepted an option to acquire a 10-percent share in the project. Planning for a phased, fast-track development is now under way. Initial production is expected from the Banyu Urip discovery by 2003 through six to ten wells utilizing an early production system in parallel with activities leading to full field development.

Development of two large offshore oil fields has the potential to increase Indonesia’s oil production by 160,000 b/d, natural gas output by 490 million cubic feet per day (MMCFD) and LPG production by 45,000 b/d within the next two years. UNOCAL is developing Indonesia’s first deep-water oil and gas discovery in the West Seno field located in the Makassar straits. Discovered in 1998, the West Seno field would produce 60,000 b/d of oil and 150 MMCFD of natural gas by the fourth quarter of 2002. UNOCAL has invested about US $700 million in exploration drilling. Next to West Seno, Unocal is also developing the Merah Besar field of the Kutai Basin located partly in the Makassar Straits PSC. The Merah Besar structure is estimated to contain about 190 million barrels of oil equivalent.

In the west Natuna Sea, Conoco Indonesia is developing the Belanak oil field in the offshore West Natuna Block B area. Belanak field is expected to produce 100,000 b/d of oil, 340 MMCFD of natural gas and 45,000 b/d of LPG.

Santa Fe Energy Resources (Jabung) Ltd. announced that its most recent well, the North Gemah-1, is the fiftieth successful well of 51 total wells in the Jabung block. The well, drilled to a total depth of 6,801 feet, tested a new geologic structure having a hydrocarbon column in excess of 700 feet. The well flow tested at combined rates of 29 million cubic feet per day (MMCFD) of natural gas and 1,000 barrels per day of condensate from selected zones. Santa Fe Energy Resources (Jabung) Ltd., a Devon Energy subsidiary, operates the Jabung block with a 30 percent working interest. Other partners include Amerada Hess (Indonesia-Jabung) Ltd. with 30 percent, Kerr-McGee Sumatra Ltd with 30 percent and Pertamina EP with 10 percent.

Santa Fe also announced the successful completion of the wildcat KOI-1 well on its Salawati block offshore Irian Jaya. The well was drilled to a depth of 4,523 feet in 105 feet of water. It tested at combined rates in excess of 900 barrels of oil per day and 2.5 MMCF of gas per day from two intervals. This well expands the offshore exploration potential in the area of the existing TBA and TBC discoveries.

Tokyo-based Inpex announced on December 8, 2000 that its Abadi-1 exploration well in the Timor Sea Masela block Sea flowed natural gas and condensate at a rate of 25 million cubic feet per day of natural gas and 260 barrels per day of condensate. This is the first such Indonesian discovery in the Timor Sea. Inpex acquired a 100% stake of the Masela block from Indonesia's state-run Pertamina in November 1998, and started test drilling from October 2000. Inpex said it would continue to evaluate data from the field to determine economic viability of commercial production. (Inpex is also a shareholder in ZOCA 91-12 and 91-01 in the Timor Gap Zone of Cooperation A through an Australian subsidiary.)

Caltex announced its plans to operate three drilling rigs in the Zamrud, Butun, Benua and Beruk fields in the South Sumatra Coastal Plains Pekanbaru (CPP) block in the near future. The move is aimed at optimizing oil production from the block, which currently averages 51,000 b/d. The company noted that, if no effort is made to maintain production, output from a mature field can decline by 18-20 percent per year. Caltex, jointly owned by Chevron and Texaco, has been reluctant to invest in the CPP block during negotiations over the future status of the production sharing contract, which expires in August this year. The press reports that the Indonesian government is on the verge of settling the details of a Joint Operating Agreement in which Pertamina will be CPP’s majority participant and the Riau provincial government will also hold a stake.

There is no official decision yet on the sale of Maxus' oil and gas blocks in Indonesia offered in a tender by the parent company Repsol-YPF. Pertamina, Caltex, and local upstream player Medco are among the companies which have expressed an interest in the Maxus assets. Caltex is the single largest crude producer in Indonesia with a little over 700,000 b/d output and Medco pumps around 70,550 b/d. Maxus is Indonesia's second largest crude producer, currently averaging 130,000 b/d. Maxus produces Cinta from the offshore North West Java block held with BP, and Widuri from its South East Sumatra block. It recently took over Kodeco's West Madura block, which pumps 8,000 b/d of crude. It has equity in four other blocks, which are in the exploration stage.

The Indonesian government raised fuel prices on April 1 -- for some fuel consumers. According to Presidential Decree no. 45/2001, dated March 29, 2001, fuel consumers will pay different prices based on membership in three groups.

-- Group I prices apply to all fuel products consumed by household and small business entities. The prices also apply to gasoline, automotive diesel oil (ADO), industrial diesel oil (IDO), and fuel oil used by local transportation companies and Indonesia’s state electricity company PLN. These prices remain unchanged from October 2000, and represent about 77 percent of Indonesia’s fuel consumption.

-- Group II prices are set at international levels and apply to petroleum production sharing contractors, mining contracts of work (excluding coal), and international shipping lines. Group II fuel consumption is negligible.

-- Group III prices apply to the industrial sector, service sector, and the fishing industry (both fishing vessels and barges or tankers carrying fuel for the fishing industry). Prices are set at 50 percent of the international market price and represent 23 percent of Indonesian fuel consumption.

Pertamina's President subsequently told the press that industrial companies’ diesel oil demand had dropped significantly since the price hikes were imposed. He warned that Pertamina would take stern measures to correct the situation and called on industrial users not to buy subsidized fuel at distributors or public gas stations. (Note: the Indonesian government’s budget set fuel subsidy expenses at Rp 41.3 trillion or about US $4 billion, approximately 18 percent of the central government expenditures. The budget assumed an across-the-board 20-percent domestic fuel price rise on April 1, an exchange rate of Rp 7,800/USD 1, and an average oil price of USD 24/barrel.)

The following table shows the new prices:

Notes:

-- Prices are rupiah per liter at Pertamina pumps including 10% Value Added Tax.

-- 10/1/00 prices applied equally to all consumers.

-- Pertamina will recalculate Group II and III prices on a monthly basis.

The Indonesian Parliament (Dewan Perwakilan Rakyat -- DPR) is considering an oil and gas bill submitted by the government last year. The main provisions of the bill transfer responsibility for administering production sharing contracts (PSC) with private sector petroleum companies from Pertamina to an independent "implementing agency" and opening up the downstream sector, now monopolized by Pertamina, to competition and foreign investment. While the DPR has been occupied by the censure procedure against President Abdurrahman Wahid, Energy Minister Purnomo Yusgiantoro said on April 10 that he expected the bill to be enacted by the end of the year.

Energy Minister Purnomo installed Pertamina’s new directors in a January 3 ceremony, implementing Presidential decree 169/2000 authorizing a reduction of directorates from six to five. The new directors are:

-- Gatot Wiroyudo as upstream business director,

-- Ariffi Nawawi as downstream business director,

-- Ainum Naim as finance director,

-- Effendi Situmorang as corporate development director, and

-- Iin Arifin Takhyan as director for production sharing management.

The Ministry of Energy and Mineral Resources has started to assume responsibility from Pertamina for issuing oil and gas exploration licenses. Under revised procedures, prospective investors will be able to access exploration data at the Management Data Migas (MDM) center. Interested firms will then submit bid proposals -- work program commitment, company profile and commitment warranty, etc. -- directly to the ministry’s Directorate General for Oil and Gas (MIGAS) for evaluation by the government tender team. MIGAS is in the process of offering 20 new petroleum blocks to investors in 2001.

Indonesia Maintaining Current ICP Formula

Pertamina will continue with the existing Indonesia Crude Price formula for the April to September timeframe. The existing ICP formula comprises of assessments made by Platts (40%), Rim (40%) and APPI (20%). This formula has been in effect since October 1999 and has been reviewed every six months. Pertamina had earlier submitted several proposals to alter the existing ICP to the Ministry of Energy and Mineral Resources. In one of the proposals, Pertamina had recommended reducing APPI's proportion to 10% and introducing Petroleum Argus quotes with a 10% weight.

MiGas officials said that Pertamina has restarted its 27,000 b/d Balikpapan hydrocracker after shutting it down on January 3 because of a fire. The Balikpapan refinery has a capacity of 260,000 b/d. The extended outage of the hydrocracker is expected to require Indonesia to import more automotive diesel oil (ADO). So far, Pertamina has imported 4.7 million barrels of ADO in 2001. In 2000, Indonesia imported 45.3 million barrels of ADO, nearly 25 percent more than the 1999 level of 36.3 million barrels.