Upstream Oil and Gas Regulatory Task Force (SKK Migas) chairman Dwi Soetjipto described the 21 percent growth in investment as “significant” when compared with the global oil and gas investment increase of only 5.4 percent.

By the end of 2023 investment is expected to reach $15.5 billion, a 28 percent increase compared with the realized investment in 2022 of $12.1 billion. If achieved, this year's investment will be the highest accomplishment in the last five years.

“This is a positive trend for the upstream oil and gas investment climate in Indonesia,” Dwi told a press conference on the mid-year performance of the upstream oil and gas industry on Tuesday.

Dwi stated that the increase in investment was proof that the government’s efforts to improve the investment climate in the upstream oil and gas industry had borne fruit. However, he recognized that investors still expected further improvements, especially in the legal aspects.

From the operational side, Dwi acknowledged the increase in upstream oil and gas investment was still hindered by well drilling issues, safety stand down, rig availability and workforce availability. Nonetheless, the global upward trend in upstream oil and gas investment is expected to continue driving investment growth in Indonesia.

“Increased investment is crucial to boost exploration and ensure that production does not decline,” Dwi added.

On the same occasion, SKK Migas deputy chairman Nanang Abdul Manaf revealed that during the first half of 2023, the upstream oil and gas industry achieved a reserves replacement ratio (RRR) of 52.9 percent with an addition of reserves amounting to 340 million barrels of oil equivalent (mmboe). This is above the target RRR of 19 percent, and it is expected to reach 138.3 percent by the end of the year

Nanang further added that the upstream oil and gas industry contributed $6.8 billion or about Rp 100 trillion to state revenues in the first half.

Meanwhile, SKK Migas deputy for exploration, development and work area management Benny Lubiantara explained that exploration discoveries in 2023 resulted in total resources of 216 mmboe.

“Out of 11 exploration wells, six wells have been completed, six wells are discoveries, one well is yet to be tested, and four wells are still ongoing,” said Benny.

SKK Migas deputy for exploitation Wahju Wibowo added that the task force targeted 11 upstream oil and gas projects to be onstream in 2023. These projects are expected to increase production capacity by 19,077 barrels of oil per day (bopd) and 454 million standard cubic feet per day (mmscfd).

Wahju noted that most of these projects will be onstream in the third and fourth quarters of 2023, with a total capital expenditure of $709.2 million.

Speaking about strategic projects, Wahju explained that Tangguh Train 3 will see its first drop of LNG before Aug. 17. The transfer of participating interests in the Indonesia Deepwater Development (IDD) and the Abadi Masela projects would be completed this month, and the IDD is expected to be onstream in 2027 and the Masela project in 2029.

SKK Migas secretary Shinta Damayanti, meanwhile, announced the task force’s plan to organize the Fourth International Convention on Indonesian Upstream Oil and Gas 2023 from Sept. 20 to 22 in Bali with the theme of “Advancing Security through Sustainable Oil and Gas Exploration and Development.”

“This event is expected to serve as a platform for all stakeholders to collectively unlock policies and enablers to enhance exploration and production activities, promote investment growth and ultimately improve energy resilience for economic growth,” said Shinta.

This article is written in partnership with Tenggara Strategics

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