Indonesia’s declining oil production means it can no longer meet its OPEC quota, and for several months of last year it became a net importer of oil. The country's crude oil and condensate production currently stands at about 1.056 million barrels per day (bpd), lower than the target of 1.125 million bpd assumed by the government.

In April, an Indonesian government panel suggested Indonesia could become an observer at OPEC, which would remove its voting rights but also mean it would not have to pay the financial costs of membership.

But the government gas decided that the country still had potential oil reserves that could boost its production in the future.

Jakarta estimates crude production will fall 6% in 2005, from last year’s 968,200bpd, but it aims to raise output by around 25 per cent to 1.18 million bpd by 2008.

Energy minister Purnomo Yusgiantoro has said Indonesia’s proven and probable oil reserves were 10.82 billion barrels.

The government is hoping to significantly boost the country’s oil output through speeding up development of large fields such as Exxon Mobil-operated Cepu and Jeruk.

On Friday, Jeruk partner Cue Energy Resources announced that the Jeruk-2 ST4 hole had reached 5230, closing in on its target depth of 5570 metres measured depth.

“During the past week a drill stem test was conducted over the open-hole interval from 5088 to 5230 metres measured depth,” Santos said.

“The test was flowed for approximately 16 hours and was then shut in to obtain pressure build-up data. During the test the well flowed a mixture of oil and water at a combined rate of up to 1300 barrels per day.”

Participants in Jeruk and the Sampang PSC are: Santos (Sampang) Pty Ltd 45% (operator), Cue Sampang Pty Ltd 15% and Singapore Petroleum Sampang Pte Ltd 40%

The Indonesian government is also offering 11 petroleum exploration blocks for bidding. Santos is among 20 companies that have submitted bids for currently on offer, Xinhua news service reports.

To attract more investors, the government has scrapped value-added tax and import duty on all capital goods to be used during exploration and exploitation periods.

"We will evaluate (the bids) and announce the winners early next month," Novian Thaib, director of Exploration and Production of the Ministry of Energy and Mineral Resources, was quoted Thursday by The Jakarta Post as saying.