Haze cuts Indonesia's oil production as pollution affects workers

By FITRI WULANDARI on 10/27/2015

JAKARTA, Indonesia (Bloomberg) -- Indonesia’s forest fires are cutting the country’s crude oil production and briefly shut a BP Plc gas plant this month, in the first signs the haze pollution is affecting industry.

Haze from the fires on Sumatra island means oil fields have to undergo more frequent maintenance, and staff are unable to work properly because of the poor air quality, Elan Biantoro, a spokesman at upstream oil and gas regulator SKK Migas, said on Tuesday. Crude oil output has fallen below 800,000 bpd, compared with an average of 800,500 bpd in September, though Biantoro couldn’t say how much the drop was.

“It shows that production is disrupted because we normally pump more than 800,000 bpd,” he said.

Smoke from burning land for plantations in Sumatra and Borneo has spread across Southeast Asia for over a month, causing respiratory illnesses in Indonesia and leading President Joko Widodo to cut short a trip to the U.S. this week. Exacerbated by dry weather from the El Nino phenomenon, this year’s haze is among the worst on record.

Hundreds of oil wells in Sumatra’s Riau province, including those run by Chevron Corp., had to be shut down due to haze last year, showing extended pollution could worsen the impact this time. Chevron, Indonesia’s biggest oil producer, operates the Duri and Minas fields in Sumatra. Indonesia may take as long as a decade to permanently curb the land-burning, according to Jonatan Anderias Lassa, a research fellow at Nanyang Technological University in Singapore.

The haze also disrupted operations of the Tangguh liquefied natural gas plant in Papua this month, Biantoro said. Tangguh’s Train 1 was shut from Oct. 16-18 to clean filters, with normal operations having resumed and no disruption to the shipping schedule, said Dharmawan Samsu, Indonesia country head for BP.

Oil production in Indonesia, which plans to rejoin OPEC, may average 810,000 to 815,000 bpd for this year as the Banyu Urip field in Cepu will ramp up to full production in mid-November, Biantoro said. That would still be lower than a state 2015 budget target for 825,000 bpd, he said.

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