Indonesia became a net importer of petroleum during 2006 as many of its fields aged, but new fields are being developed which will restore the country’s image as a major oil producer. Note that Indonesia is Asia’s only member of the Organization of Oil Exporting Countries (OPEC).

The Oyong field went into production recently, allowing operator BP Plc to ship its first cargo of 200,000 barrels from the field early in October.

More important is the Cepu block on the border of East Java and Central Java. Pertamina, a shareholder in the block with operator ExxonMobil, said recently that it had raised its estimates of the reserves at the main Banyu Urip field to 350 million barrels, up from earlier estimates of 250 million barrels.

The whole Cepu block includes seven other fields which together with Banyu Urip are estimated by the government to have potential total reserves of 600 million barrels.

The $2.6 billion project, together with other fields including a new Pertamina operation at Bekasi on the outskirts of Jakarta, provides confidence that Indonesia will once again become a significant contributor to global oil supplies.

At the same time, Indonesia is working on boosting its refinery capacity. This includes plans for a new refinery at Anyer in the Banten province in association with Iranian interests.

Liquefied Natural Gas (LNG) is of even greater importance in Indonesia’s long-term energy suit. Although the country had been the world’s largest exporter of LNG, it now trails behind Qatar since a number of fields - including the Arun gas field in Aceh – have begun to run out of supplies.

While some fields are being phased out, others are being developed. The largest is the Tangguh field in Papua, where BP Plc. heads a consortium that expects to start production at the end of 2008. Tangguh, a $5 billion project, will have an initial production capacity of 7.6 million metric tons of LNG a year.

At the same time, Indonesia has told traditional buyers of its LNG that it will no longer be able to supply large quantities of the fuel after 2010, when increasing amounts will be dedicated to the domestic market to supply energy for manufacturing activities.

As part of the plans to accelerate industrial development, five pipelines are to be built in Java, the country’s major industrial area, while a $1.2 billion pipeline is already planned to ship gas from East Kalimantan to Semarang in Central Java.

For investors seeking exposure to the oil and gas industry in Indonesia, there are a number of companies listed on the Indonesian Stock Exchange. Medco is a large oil producer, Apexindo constructs oil rigs, while Perusahan Gas Negara is a state owned company which is building pipelines to distribute gas to industrial customers in Indonesia.