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Govt proposes new partnership schemes to revive oil and gas industry
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Coordinating Economic Minister Darmin Nasution hits a gong to mark the opening of the Indonesia Petroleum Association (IPA) convention and exhibition in Jakarta, on May 25, as IPA president Christina Verchere (left) and Energy and Mineral Resources Minister Sudirman Said look on. (JP/Dhoni Setiawan)
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span style="line-height: 1.6em;">The government has taken various actions to try and reinvigorate the country's oil and gas production and attract investment from new and existing players, even though progress on the ground purportedly remains challenging, hence a sustainable partnership is necessary to address the issue, a senior official says.
Energy and Mineral Resources Minister Sudirman Said admitted that several initiatives and incentives provided by the government had yet been sufficient to tackle the ample problems within the sector.
"The government's dilemma is to provide tax incentives but at the same time to not burden state revenue," Sudirman said in a conference on "Inter-sectoral Reforms Key to Energy Sustainability" at the 40th Indonesian Petroleum Association (IPA) convention and exhibition in Jakarta on Thursday.
During the plenary session, Sudirman suggested a new partnership scheme for energy sustainability to oil and gas investors. The principles of a sustainable partnership, among others, he explained was an innovative new scheme in the production sharing contracts (PSC) between the government and the oil and gas companies, sharing mutual economic value and opening the possibility of a longer period of PSCs.
"[The proposed schemes] are also to be based on the spirit of strengthening national capacity on technology, human capital and supporting industries," he went on.
Amid protracted downward pressure in global oil prices, Sudirman said his ministry had done its utmost to mitigate the impacts.
According to the ministry's data, oil reserves in the country stood at 3.6 billion barrel in 2015, with a reserve replacement ratio (RRR) of 55 percent. Oil production, experiencing further decline, only reached 786,000 barrels per day, while gas production reached an equivalent 1.1 million barrels per day.
The drop in production rendered contributions from oil and gas revenue only reach 77 percent of its target, or 10 percent of total state revenue.
"We also experienced a significant drop in oil and gas investment, from US$22 billion in 2014 to US$18 billion in 2015," he said
National Exploration Committee chairman Andang Bachtiar recommended deregulation in fiscal regulation, new fiscal terms and a new strategy for the expiring blocks to encourage exploration in the oil and gas industry. (dmr)
