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Jakarta Post

Money short, auctions delayed in virus-stricken petroleum industry

  • Norman Harsono
    Norman Harsono

    The Jakarta Post

Jakarta   /   Thu, August 6, 2020   /   01:01 pm
Money short, auctions delayed in virus-stricken petroleum industry Energy and Mineral Resources Ministry secretary general Ego Syahrial speaks at the ministry's headquarters in Jakarta on March 10. (Energy and Mineral Resources Ministry/Energy and Mineral Resources Ministry)

The domestic oil and gas industry is reeling under the pressures of the global pandemic as investment falls short and block auctions are delayed.

Realized investment in 2020 hit US$5.56 billion in June, or 38 percent of the most recent year-end target of $14.5 billion, said the Energy and Mineral Resources (ESDM) Ministry's acting oil and gas director general, Ego Syahrial, on Wednesday. 

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“That is still very far [from the target],” he told reporters at a press briefing.

The realized investment consists of $4.85 billion in the upstream industry and $710 million in the downstream industry.

Ego also said the ministry would delay all oil and gas block auctions until the fourth quarter “with the hope that oil prices will be back to normal by then.”

The government initially planned to auction 10 blocks this year but oil and gas companies stepped back after oil prices collapsed, forcing the companies to cut capital spending by around 30 percent, he explained.

Brent, a global oil price benchmark, dipped to a low of $19.33 per barrel in mid-May but had recovered to $44 per barrel as of Wednesday. Analysts expect prices to remain below $50 per barrel this year.

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“I’m optimistic we can sign three to five of the directly offered blocks by the end of the year,” said Ego.

The 10 blocks, half of which are under direct-offer schemes and half of which are under open-bidding schemes, have an estimated potential of 5,006 billion cubic feet (bcf) of gas and 3,436 million barrels of oil (mmbo).