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Upstream oil and gas investment likely to fall short of target again
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Pertamina Hulu Energi West Madura Offshore (PHE WMO) workers are moved in a personnel basket from a ship to the company’s oil rig off the coast of Madura Island in East Java. (JP/Wahyoe Boediwardhana)
T
here has been no sign of recovery in the country’s upstream oil and gas sector as investors are still reluctant to pour money into exploration and exploitation activities amid a downward trend in global oil prices.
According to the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas), investment in the sector in the first half of this year only reached US$3.99 billion, 28.84 percent of the full-year target of $13.8 billion.
Of the total figure, contractors spent $3.96 billion on exploitation, while a mere $30 million was spent on exploration.
“This is certainly something that we did not wish to happen, because low investment will lead to lower spending. It means that various supporting industries, including fabrication companies and equipment suppliers, will also be affected,” SKKMigas head Amien Sunaryadi said Thursday in Jakarta.
Amien said the low investment figure was mostly triggered by low oil prices.
The price of global benchmark Brent crude fell by 15.6 percent to $47.92 per barrel in the first half, while benchmark West Texas Intermediate (WTI) crude dropped by 12 percent to $46.04 per barrel.
However, the government was still able to book an income of $6.48 billion from upstream oil and gas in the first half, or 59.4 percent of its total target this year.
Within the same period, it needed to reimburse contractors’ operating costs of $4.87 billion, 46.4 percent of targeted cost recovery in the 2017 state budget. (bbn)
