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RI urgently needs to boost oil, gas investment amid ambitious 2030 targets
Indonesia is racing against time to improve its investment climate to drive exploration projects and meet its oil and gas production targets, but observers believe the country lacks a sense of urgency.
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The undated photo shows an oil and gas rig at the offshore Kepodang Field in the Muriah Block operated by Saka Energi Muriah Limited. (SKK Migas/SKK Migas.)
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ndonesia needs a greater sense of urgency and sustainable supportive legislation, experts say, to boost investment and meet its ambitious oil and gas production targets by 2030, as competition with other countries gets even tougher.
The country aims to boost its oil and gas production to 1 million barrels of oil per day (bopd) and 12 billion standard cubic feet per day (bscfd) of gas in 2030 in an effort to reduce imports and meet the country’s increasing energy demand.
If the target is met, the upstream oil and gas sector will achieve the largest production volume of oil and gas on record in Indonesia.
Institute for Energy Economics and Financial Analysis (IEEFA) analyst Putra Adhiguna said investors were examining more closely how well Indonesia fared compared with their existing global portfolios, partly due to uncertainty in the long-term demand for oil and gas as countries aim to transition to new and renewable energy.
“Indonesia’s oil and gas legislation has been a ‘work in progress' for nearly a decade. More urgency is needed because it is difficult to make a convincing argument on policy stability when [important] regulations have yet to be drafted,” he told The Jakarta Post on Monday, referring to the revision of Law No 22/2001 on oil and gas, which was expected to provide a steady legal basis for several provisions, such as production sharing schemes (PSCs).
“We’ve observed many changing rules over the years, which indicates policy inconsistency and instability. This is a critical problem [...] as it makes it difficult for investors to measure their investment risks,” Putra said.
Indonesia’s investments in the oil and gas sector nosedived from US$20.72 billion in 2014 to $17.38 billion in 2015.
