Home News Indonesia’s Oil and Gas Exploration Still Competitive, says IPA

Indonesia’s Oil and Gas Exploration Still Competitive, says IPA

The average price of Indonesian Crude Price (ICP) has increased to US$63.26 a barrel from $59.82 per barrel in the previous month, said the energy and mineral resources ministry - Photo: Special

JAKARTA (TheInsiderStories) – Indonesia Petroleum Association (IPA) is optimistic that the government can increase the interest and enthusiasm of global oil and gas investors to carry out exploration and exploitation in the country.

IPA’ President Tumbur Parlindungan acknowledged that national oil and gas reserves proved to be still relatively large in the Southeast Asia region, even in Asia. According to him, with the presence of oil and gas reserves, exploration activities need to be carried out to support existing production.

“Unfortunately, in the last 15 years, exploration activities have been quite minimal in Indonesia. In fact, many other countries whose oil and gas reserves under Indonesia are improving to present upstream oil and gas investments,” he said in a written statement last week.

This should be of concern to all stakeholders, considering that the portion of the oil and gas in national energy needs is still highest when compared to coal, or new renewable energy. Based on the National Energy General Plan (NEGP), the fossil energy mix target in 2025 will reach 47 percent, while in 2050 it will reach 43.5 percent.

According to NEGP, national oil production is projected at 567,000 barrel oil per day (BOPD) in 2025, while in 2050 it is 698,000 BOPD. Meanwhile, the national crude oil refinery needs in 2025 will reach 2.19 million BOPD and increase to 4.61 million BOPD in 2050.

Assuming that national oil production is absorbed 100 percent for domestic needs, then national crude oil imports in 2025 will range from 1,67 million BOPD and 3.92 million BOPD in 2050.

Speaking of the latest conditions, especially related to oil and gas reserves, there was an increase in reserves in natural gas, while a decline in oil. Based on Special Task Force for Upstream Oil and Gas Bussines data, last year oil reserves amounted to 226.62 million stock tank barrels (MMSTB) or shrank by 334.05 MMSTB compared to 2017.

Natural gas reserves of 3,387.81 billion standard cubic feet (BSCF) in 2018 or skyrocketed from the previous year’s reserves of 578.47 BSCF. Efforts to encourage additional reserves or oil production, it seems necessary to see what Malaysia is doing.

Referring to the International Energy Agency (IEA), Malaysia has managed to keep its oil production trend around 700,000 BOPD during the period 2000-2018. Reportedly, Malaysian oil production amounted to 755,700 BOPD in 2000, while in 2018 it was 736,280 BOPD. Achievement of oil production below 700,000 BOPD only occurred in the period 2011 – 2014.

Regarding Malaysia’s oil reserves, there was a decline of 20 percent in the period 2000 – 2016 or from 4.5 billion barrels to 3.6 billion barrels. Meanwhile, Indonesia experienced a significant decline in oil reserves from 5.1 billion barrels in 2001, to around 3.3 billion barrels at the end of 2016.

“The steps taken by other countries include improving the fiscal regime. So, investors have many options to invest. “Indonesia is considered less attractive and while other countries are more attractive, of course, they enter there,” Parlindungan said.

Going forward, Indonesia is expected to continue to improve the quality of investment in upstream oil and gas so that more global investors come to the country to explore or develop national oil and gas blocks. Especially with experience, that we have been able to attract global investors, namely the era of the Bontang LNG project, the Rokan Block and the Mahakam Block, he adds.

He is optimistic that the future of the national upstream oil and gas industry will be bright with the support of all parties. Efforts to cut policies that are not pro-business to promote the findings of the national oil and gas area can be a way for investors to enter.

Currently, the amount of the definite work commitment and the definite commitment achieved in the cooperation contract is reported at US$1.14 billion for several exploration activities such as 47 G&G studies, 79 Exploration Wells, 38 Seismic Surveys, and 4 other Surveys during the period 2018–2026 in 24 Working Areas.

The government is also following up on the findings of the exploration oil and gas field. this was recorded in the reserve replacement ratio which reached 105 percent (2018) in 45 POD/POFD approvals with reserves of 831.5 million barrels of oil equivalent.

Its expected that by 2019 this can be achieved in excess of 100. By April 2019 9 POD have been approved with reserves of 115 million barrels of oil equivalent.

The government hopes that the field development can be more passionate with the many incentives offered in the Gross Split package, starting from the field location, reservoir depth and condition, infrastructure availability, other material content, oil density, and others.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com