VZCZCXYZ0004
RR RUEHWEB

DE RUEHJA #0830 1160818
ZNR UUUUU ZZH
R 250818Z APR 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 8826
INFO RHMFIUU/DEPT OF ENERGY WASHDC

UNCLAS JAKARTA 000830 
 
SIPDIS 
 
DEPT FOR EAP/MTS AND EEB/ESC/IEC 
DOE FOR CUTLER/PI-32 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EPET ECON ID
SUBJECT: Upstream Chief Misleads About Oil Production 
 
1.(SBU) Summary: Outgoing Upstream Regulatory Chief Kardaya Warnika 
said publicly on April 24 that Indonesia is on track to meet its 
national petroleum production targets outlined in the most recent 
budget submission to Parliament.  In a closed door meeting the day 
before, however, the heads of the major foreign oil companies in the 
country told Energy Minister Purnomo, Director General of Oil and 
Gas Luluk Sumiarso, and Warnika that their collective production was 
not likely to meet the government goals for the year. A wide range 
of contacts report ministries are under pressure by the president to 
demonstrate the fiscal situation remains under control despite 
soaring food and commodity prices. End summary. 
 
¶2. (SBU) Upstream Regulatory Agency chief Kardaya Warnika, who is 
soon to be replaced due to poor performance, told reporters on April 
24 that Indonesia's crude oil and condensate production averaged 
977,600 barrels per day (bpd) until mid April, which was well above 
the target of 960,000 barrels in the most recent budget submission 
to Parliament.  He claimed daily output in February topped 986,840 
bpd and output reached 1 million bpd on several days throughout the 
first quarter.  In 2007, Indonesian production averaged 954,000 
barrels bpd, according to GOI statistics. 
 
¶3. (SBU) On April 23 Warnika summoned all the foreign operators of 
production sharing contracts (PSCs) to a closed-door meeting that 
same day with Energy and Mineral Resources Minister Purnomo 
Yusgiantoro and Director General of Oil and Gas Luluk Sumiarso, 
according to several foreign energy company executives who attended. 
 Warnika opened the meeting, according to the expatriate managers, 
by announcing that the government needed help from their foreign 
partners to meet their budget targets for oil output.  He said all 
ministries have been tasked with containing the budget pressures 
from skyrocketing food prices and sustained high energy prices.  A 
wide range of our contacts report ministries are under pressure by 
the president to demonstrate the fiscal situation remains under 
control despite soaring food and commodity prices. Warnika reminded 
the group that the new budget calls for daily production to average 
977,000 bpd.  He then showed a slide that purported to show each 
foreign PSC-holder's current production levels, according to an 
expatriate manager who attended.  The manager said the list added up 
almost precisely to 977,000. 
 
¶4. (SBU) The assembled group of managers quickly set about 
dissecting the numbers, despite their concern about doing so in 
front of Minister Purnomo, said our contact.  One foreign PSC 
holder, which was supposed to be producing this year at 12,000 bpd 
according to Warnika's chart, was in reality only producing 1,700 
bpd, according to that company's general manager.  Another was 
supposedly producing at 420,000 bpd, according to Warnika, but that 
firm's president said the actual figure was 404,000 bpd.  In the 
end, the managers told Purnomo that they would do their best to 
reach a collective average of 960,000 bpd, but could make no 
promises.  Many took the opportunity to underscore that their 
contractual obligations, as outlined in their annual budgets and 
works plans, were below the numbers needed to achieve even the more 
modest level of 960,000 bpd.  Despite the firm assurances to the 
contrary, Warnika left the meeting and promptly informed reporters 
about successful efforts of the Upstream Regulatory Agency to meet 
its budget numbers. 
HUME