JAKARTA (TheInsiderStories) - Coordinating Minister for Economic Affairs Darmin Nasution says the government will review oil and gas industry policies aiming at reviving the oil and gas industry after hit by low crude oil price. In 2015, Indonesia booked US$12.9 billion in oil and gas revenues, lower than revenues from the sector in previous years.
He however did not specify the timeline for issuing new policies on the sector.
Darmin said deregulation and infrastructure development as the backbone of the economy is needed to mitigate the impact of the global economic slowdown. The capital-intensive industry has played a major role in Indonesia’s economy.
Energy and Mineral Resources Minister Sudirman Said added, the Upstream Oil and Gas Regulatory Special Task Force ( SKK Migas ) is in the process of streamlining current regulations, while at the same time preparing a friendlier portion split in production sharing contracts.
At the same time, the ministry’s director general of oil and gas, IGN Wiratmaja Puja, explained that other incentives the government would offer were the extension of exploration periods, flexibility of exploration transfer and substitution, and incentives for exploration in deep water and remote areas.
All incentives are expected to be completed in the third quarter of 2016, he said. In addition, the ministry would continue streamlining industry regulations, after reducing the previous 104 regulations to 42 regulations.
The government has taken various actions to try and reinvigorate the country’s oil and gas production and attract investment from new and existing players, even though progress on the ground purportedly remains challenging, hence a sustainable partnership is necessary to address the issue.
According to the ministry’s data, oil reserves in the country stood at 3.6 billion barrel in 2015, with a reserve replacement ratio of 55 percent. Oil production, experiencing further decline, only reached 786,000 barrels per day, while gas production reached an equivalent 1.1 million barrels per day.
The drop in production rendered contributions from oil and gas revenue only reach 77 percent of its target, or 10 percent of total state revenue. The significant impact also saw at the investment dropped from $22 billion in 2014 to $18 billion in 2015. (*)