The Indonesian government through the ministry of finance prepares a number of incentives to boost an investment in the oil and gas sector as well as to lift the production - Photo by Finance Ministry Office

JAKARTA (TheInsiderStories) – The Indonesian government prepares a number of incentives to boost an investment in the oil and gas sector as well as to lift the production. As known, the government is targeting to productes 1 million barrels per day (bpd) oil and gas around 12 billion cubic feet of gas per day or 3.2 million barrels of oil equivalent per day (MBOPD)  by 2030.

Finance Minister Sri Mulyani, said on Wednesday (02/12), from the fiscal side, the government will formulate at least four incentives to improve the investment climate in the oil and gas sector. First, Omnibus Law on Job Creation to address bureaucratic and regulatory issues in Indonesia.

Second, a flexibility of the Production Sharing Contract (PSC) for oil and gas sectors. The energy and mineral resources (EMR) ministry has launched two contract options, cost recovery or gross split. Third, in term of fiscal incentives, such as a reduction in income tax hich will be lowered from 25 percent to 20 percent in the next two years.

“We also provide support through an exemptions, from airport import duties and various other facilities in special economic zones,” said the minister.

Fourth, the Minister of Finance Regulation number 140 which will deregulate to support the upstream industrial business, she adds. Indrawati explained, the regulation focuses on several main regulations regarding the use of state property, including aligning authority and responsibility also re-sharing between the ministry of finance and the ministry of energy and mineral resources (EMR).

In addition, simplifying the bureaucracy to support the optimization of upstream oil and gas by giving the EMR ministry a bigger role to the implementing the policy.

While, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKKMigas), Dwi Soetjipto said 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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