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Oil, gas sector urgently needs aggressive reform as targets missed
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The Oyong oil and gas rig in the Sampang Block, located in the Madura Strait, off the coast of East Java. Medco took over the block from Ophir Energy in 2019 after Medco acquired Ophir. (SKK Migas/SKK Migas)
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ndonesia has once again missed its oil and gas production targets amid mounting pressure from a more competitive investment climate, signaling an urgent need for aggressive policy reform in the mining sector.
The policy reform, as Upstream Oil and Gas Regulatory Task Force (SKK Migas) hopes, will enable a significant improvement in the industry’s investment climate.
SKK Migas planning deputy Benny Lubiantara said that the looming global recession and ongoing energy transition process had led to a greater need for significant change in how the government attracts investors to Indonesia.
“SKK Migas continues to push oil and gas contractors [KKKS] to massively and aggressively improve their investments and working programs,” he told a press briefing on Monday, without elaborating further.
Investments in oil and gas by the third quarter of this year reached US$7.7 billion. The figure only amounted to about 60 percent of this year’s $13.2 billion target, despite marking the largest upstream investment on average in the last seven years.
SKK Migas head Dwi Soetjipto explained that rising oil prices, which he predicted would be short-lived, would not positively impact investment in the oil and gas industry because more companies were investing in renewable energy while aiming to reduce debt and share dividends.
“The challenge is how [SKK Migas] transforms the oil and gas investment climate in Indonesia,” Dwi said.
