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Regulators call for efficiency measures for oil, gas companies
SKK Migas plans to introduce cluster system to boost efficiency.
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Ready to roll: Energy and Mineral Resources Minister Ignasius Jonan (center) gestures while acting oil and gas director general Joko Siswanto (left), Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) chairman Dwi Sutjipto (second right), Indonesian Petroleum Association (IPA) vice presidents, Louise M McKenzie (second left) and Bij Agarwal look on during the opening of IPA Convention and Exhibition in Jakarta on Tuesday. The event will run on Sept. 4-6.
(Antara/Nova Wahyudi)
T
he government and the Upstream Oil and Gas Regulatory Task Force (SKKMigas) are urging oil and gas contractors to push for efficiency measures and reduce the cost of production and exploration amid declining global oil prices.
SKKMigas head Dwi Soetjipto said on Wednesday that the regulator was designing an area-based clustering system for all oil and gas producers so they can collaborate in reducing their cost burden.
“The system will consist of about seven clusters so that all companies [that operate in the same area] can synergize and make their businesses more efficient,” Dwi said during the opening ceremony of the 2019 Indonesia Petroleum Association Convention and Exhibition (IPA Convex) at the Jakarta Convention Center.
The clusters would span from the western part to the eastern part of the country for upstream, midstream and downstream industries that operate in the same block or area to synergize their operations, he added.
Oil prices have fallen around 20 percent since a 2019 peak reached in April, hit by concerns that the United States-China trade war will dent oil demand, Reuters reported. The current Indonesian Crude Price is reflective of the global trend, sitting at US$62.88 per barrel, below the government’s projection of $70 per barrel in the 2019 state budget.
The decline in the oil price has discouraged oil and gas businesses from investing in exploration.
Dwi said the cluster system could create a cost-sharing mechanism between different contract holders or companies in, for instance, building supporting infrastructure such as oil refineries or gas pipelines in a block.
