JAKARTA (TheInsiderStories) – Moody’s Investors Service says that
Indonesia will require oil and gas investments of more than US$150 billion
from now through 2025 to arrest falling upstream production, develop its
gas import infrastructure, and expand its refining capacity to meet its growing level of petroleum demand.
“We also believe that an increasing proportion of investments will likely
fall to Pertamina (Persero) (P.T.) (Baa2 stable) — the state-owned oil and gas producer — and domestic producers as foreign investments moderate amid an evolving regulatory environment,” says Rachel Chua, a Moody’s Assistant Vice President and Analyst on Monday (01/10).
“Around 80% or $120 billion of the investments will need to be spent on
upstream exploration and production, and the remaining $30 billion on the
downstream oil and gas segment,” says Chua.
“Absent a surge in investments, Moody’s expects Indonesia’s total oil and gas production to fall almost 20% by 2022 from 2017”.
Upstream investments in Indonesia’s hydrocarbon space have halved over
the past four years as companies slowed growth plans to grapple with the
lower oil price environment.
Furthermore, Indonesia (Baa2 stable) will become a net gas importer after
2022 because of growing domestic demand and slowing production. The
country’s total demand and supply situation will largely balance in 2022, but after that, it will need to supplement its domestic gas supply with
liquified natural gas imports.
Indonesia will also remain dependent on crude and refined fuel imports, importing around 35%-40% of its crude-oil requirements through 2022, in
line with 2017 levels.
Declining domestic crude production will be largely countered by the
redirection of export barrels into the domestic market under a new
Owing to limited domestic refining capacity, petroleum imports will likely account for over 55% of petroleum demand by 2022, up from 40% now.
Moody’s further sees Pertamina’s role — as the government’s designated
oil and gas holding company and the executor of its hydrocarbon agenda — as vital for the sector.
Accordingly, the government will continue to design its policies such
that the fuel subsidy borne by Pertamina is partly compensated by
advantageous upstream policies, including the award of major oil and gas
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