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he above-titled article was published in The Jakarta Post on May 9. In the article, it is quoted that the failure to find a winning bidder for all of the eight oil and gas blocks put up for tender last year stemmed from “weak oil prices” and “the terms and conditions that are offered by the government”.

Several parties have suggested that if investors are to be enticed, the terms of contracts have to be changed. There is very little that can be done about the prices.

It is well known that Indonesia has a huge potential for resources in all categories, which include oil, gas, geothermal, coal-bed methane, minerals etc.

But “potential” is exactly what it is, and it will remain only potential until the potential becomes attractive for local and international investors.

The lack of information about where these resources are and about their actual potential, is what is holding investors back.

It is not so much the low cost of oil and minerals, although that does play a part.

When potential investors know that they have to carry out exploration at their own cost with a high-risk factor, of course they are going to shy away from investing into the unknown, especially in today’s market.

Every investor in every asset class pursues the elusive holy grail of buy low and sell high.

Of course, this is difficult to do but there remains an opportunity at every cycle low.

In many parts of the world the advantage of pursuing profits in the oil industry at this time is that costs are dramatically lower, lease rates, exploration costs, drilling costs and asset acquisition costs are lower, although it appears this is not the case in Indonesia, i.e., very little appears to be attractive for those investing in natural resources in Indonesia.

The key to success is to not to buy assets cheaply, but to buy valuable assets at favorable prices. To do this, the investor should be able to access comprehensive databanks that will entice them to consider investment when commodity prices are low.

We are also seeing the same scenario happening in the geothermal sector with the following headline “Indonesia’s Energy Ministry is planning to auction 21 geothermal working to investors 2016-2017, with 8 areas in open auctions”, it appears that there is very little appetite from the investors.

It is very hard to see how the government will meet its “goal” of achieving 25 percent of the total power output being derived from geothermal energy by 2025 unless reliable data is available for the investor to even consider tendering.

It is understood that a geothermal exploration fund is available and has been available since 2011, for various reasons that I understand it has not been used until now, for various reasons that I do not understand it looks unlikely that this fund will be used unless regulations are changed to meet the requirements of the potential investors.

On Aug. 10-12, the 4th Indonesian International Geothermal Convention and Exhibition will be held in Jakarta.

The title of the convention is “Innovative Breakthrough to Achieve 7,000 MW Geothermal Development by 2025”.

This is an excellent title and concept, although it is believed that unless innovative ideas are accepted and some regulations are changed the goals will not be met. It’s easier said than done.

We are seeing that the oil and gas as well as the geothermal sectors are unable to entice local and international investors, we also know that investors have very little appetite for other natural resource sectors in Indonesia, why is this?

Many people know the answer to this, but are decision-makers listening to these people? There is a common link to this, it is not the investors!

What is clear is that the pace of investment is not keeping up with the pace of need. To increase the pace of investment the magnitude of the risk must go down.

We need to de-risk the exploration phase, provide meaningful information and welcome the investors, not make investment unattractive.

We can achieve this by limiting expensive methods (seismic and drilling) to high-potential areas only.

When you explore, you do not know what you are going to find, this is why we call it “exploration” and not “definition”.

Therefore, the logical and correct strategy is to reduce the cost of the head scratching and arm-waving stage (exploration) and get to the finding (definition) stage as cost-effectively, and as quickly as possible.

Therefore, if the government wants to entice investors to bid on tenders, they must provide a catalyst for the explorer and investor to bring their capital.

They need a catalyst, which increases the comfort level in terms of risk mitigation.

The catalyst should be in the form of confidence building data and positive geoscience indications. Technology is part of the answer for successful exploration to find resources; which will accelerate the progress with lower costs and less risk.

By pre-staging conventional exploration with unconventional tools, one focuses precious exploration finances on high-probability targets, which in turn will achieve higher returns on investment.

Traditional exploration methods fall short in this respect. Innovative exploration tools need to be used in conjunction with traditional tools to make the traditional tools effective.

A well-known saying in Indonesia is as follows: “If you can make it difficult, why make it easy”. Someone somewhere needs to recognize why investors are reluctant to invest in the resource industry, why some of the big-name companies are selling their assets and leaving Indonesia and how investment here can be made easier.

It is true that some regulations are being changed, but at a pace that is not fast enough for Indonesia to meet its full potential and provide the most benefit for the people of Indonesia.

We should be seeing news articles that are titled: “Oil and gas block tenders successful”.
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The writer, a hydrographic surveyor by background, has been involved in various exploration projects in Indonesia for the past 22 years.