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IPA Convex discusses future of energy sector with changes in regulations

Front Row (The Jakarta Post)
Jakarta
Mon, May 20, 2024 Published on May. 17, 2024 Published on 2024-05-17T16:11:16+07:00

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IPA Convex discusses future of energy sector with changes in regulations

T

he oil and gas industry remains an integral part of Indonesia in order to meet the need of energy security for the country. However, the sustainability of the upstream energy sector needs to be improved by reducing emissions resulting from production operations. One of the keys to keeping the oil and gas sector growing is policies that support the investment climate.

Yuzaini Md Yusof, president of the Indonesian Petroleum Association (IPA), expressed his appreciation for the efforts of the government through various improvements in terms of regulations during the IPA Convention and Exhibition 2024 at ICE BSD on May 14. However, business actors, he said, asked the government not to stop innovating in policy matters amid the continuous changes, according to global developments and needs.

"Countries such as Bangladesh, Vietnam, Thailand, Malaysia have moved, Indonesia has indeed made progress in the past five years but they are much more advanced, I think we have to look at other countries for this improvement," said Yuzaini.

He did reveal that business actors are very interested in continuing their investment, however, they are currently faced with regulatory issues that have to be resolved by the government, especially because the contracts of management of many oil and gas blocks are about to expire.

"Some players want to extend their contracts, sometimes the regulations don't support it, discussions must be accelerated so they can amend the existing regulations, how to improve the terms and conditions for production sharing contracts [PSCs] whose contracts are about to expire," he said.

Kathy Wu, regional president of BP Gas & Low Energy Asia Pacific, explained that Indonesia is believed to still have great potential for oil and gas resources, which is why BP is still continuing to invest and it is hoped that the government will support it through regulatory improvements.

"Looking ahead, the development of the Tangguh LNG project will be more challenging, including market conditions. Challenges at Tangguh will also occur at other sites in Indonesia. This challenge requires more [government] collaboration," she said.

Apart from that, the most crucial thing is the implementation of CCS/CCUS. The government has indeed issued several regulations. However, it should also rigorously encourage the immediate implementation of regulations.

Carole Gall, president of ExxonMobil Indonesia, said that currently there are two tasks for companies in the upstream oil and gas sector, namely continuing to produce while reducing emissions. Both must go hand in hand. This is a challenge that can only be overcome with support from the government.

"In Banyu Urip, we were able to increase production without increasing emissions. Exxon has been successful in producing without flare emissions since 2021," said Carole.

Moreover, Musri, a member of the National Energy Council, said that currently the government is striving to achieve its energy mix target, which has just been revised to 17 to 19 percent. The new revised target for the new and renewable energy (EBT) mix is a decrease from the previous target of 23 percent through the renewal of the National Energy Policy (KEN). The change was also revised with the strategic environmental changes in line with climate change commitments and accommodates energy transition efforts toward carbon neutrality by 2060.

"We are also collaborating and negotiating with the Finance Ministry to make it easier for oil and gas players to invest," said Dadan Kusdiana, acting director general of oil and gas at the Energy and Mineral Resources Ministry. He revealed that the government has initiated various policies to facilitate exploration and investment in production.

Based on government data from 2021 to 2024, the oil and gas block contracts that have been signed should signal optimism in the near future. The highest number was in 2023, with 13 oil and gas block contracts signed, growing significantly compared with 2022, with only five contracts signed.

Some of the policy improvements initiated by the government include contract flexibility, policies for new oil and gas blocks, improvements in terms of access to data, various legal incentives and the issuance of CCS/CCUS rules.

Dwi Soetjipto, head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), stated that government support is indeed the main factor in the development of the oil and gas industry. For better assistance, he also asked contractors to actively discuss with SKK Migas if they faced obstacles in investing.

"Come to SKK Migas to discuss resource monetization. I want the SKK Migas team to take the role of helping contractors," stated Dwi.

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