Crude oil prices hit US$60 a barrel for the first time in 2021 supported by President of United States (US) Joe Biden’ tough-sounding words on Iran - Photo: Special

JAKARTA (TheInsiderStories) – Indonesian government prepared various incentives for mining, oil and gas players to support the downstream projects and to boost the national productions. The country is targeting to produces one million barrels per day (bpd) of oil and gas and around 12 billion cubic feet of gas per day or 3.2 million barrels of oil equivalent per day by 2030.

While, the country aimed to drive the value added of coal through the coal gasification scheme to become Dimethyl Ether (DME). According to the special staff at the energy and mineral resources (EMR) ministry, Irwandy Arief, explained that one of the incentive is the provision of royalties of up to zero percent for coal processed.

Then, the special coal price formula for the gasification projects and the validity period of the Mining Business License in an accordance with the economic age of the project. For example, an extension of 10 years from the life of the projects, he adds. The three incentives are currently being discussed by the directorate general of mineral and coal and the ministry of finance, he adds.

Others is in the form of a tax holiday or corporate income tax, the exemption of value added tax (VA) for coal processing services to syngas by zero percent. In addition, the exemption from local content engineering procurement construction VAT, the benchmark price for gasification products, the transfer of part of the Liquefied Natural Gas (LPG) subsidy to DME, and the certainty of off-takers or buyers for the downstream products.

While, director general for oil and gas, Tutuka Ariadji, said the government in studying to give a number of incentives for oil and gas producer like VAT for LNG projects up to 1 percent. The government also considered to reducers the corporate income tax to make the investment climates better.

Then, he continued, there was an incentive to postpone the postoperative backup fee and will strive an appropriate production split during the pandemic. Through the various incentives, he was optimistic that the investment climate could improve from now was still around 60 percent of this year targets.

Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKKMigas), Dwi Soetjipto, stated that if the oil and gas production targets of 3.2 million barrels of oil equivalent per day in 2030 is achieved, the national upstream oil and gas sector will record a record the largest oil and gas production in Indonesia’ history.

For background, since 2003, Indonesia has become a net importer of oil. Based on SKKMigas reports, the national oil lifting as of August 31, 2020 was recorded at 706.9 thousand bpd. This figure exceeds 100.3 percent of the 2020 Revised State Budget’ targets of 705 thousand bpd.

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