Even though the oil price shows an increasing trend, the challenges for the oil and gas industry in Indonesia are still formidable. Political and policy uncertainty in Indonesia is seen as a formidable challenge for the industry to improve its situation after experiencing low oil prices.
"The biggest challenge facing the industry is political and policy uncertainty. The slow reform of oil and gas governance poses a risk to the oil and gas industry in Indonesia in the future, ”said William Simadiputra, an analyst at DBS Group Research.
William added that the oil and gas industry in Indonesia still has high resilience when oil prices are low. Oil and gas Cooperation Contractors (KKKS) are implementing an efficiency strategy that is expected to reduce production costs, which currently reach the US $ 25 per barrel.
"If oil prices return to normal, the companies that will immediately enjoy the results will be those engaged in exploration and exploitation," William said.
On the Bloomberg website, Friday afternoon, the price of Brent oil was traded at 51.69 US dollars per barrel and for WTI at 50.85 US dollars per barrel. This price is much better than the price at the beginning of this year which is less than 30 US dollars per barrel.
According to a lecturer at Trisakti University, Jakarta, Pri Agung Rakhmanto, so far fundamental factors are still dominant in the movement of world oil prices. The fundamental factor is excess supply in times of low demand. Meanwhile, the non-fundamental factor that caused the oil price to be higher was the political turmoil in Eastern Europe, namely the Ukraine crisis.
”Fundamentally (oil prices) will be relatively stagnant. The average oil price movement is in the range of US $ 50 to the US $ 55 per barrel, "said Pri Agung.
Regarding the plan to reduce gas prices for industry, entrepreneurs hope that the price reduction can be realized in January 2017. The government needs to make regulations related to the efficiency of the gas business, especially gas distribution and commercial margins.
President Joko Widodo
President Joko Widodo requested that the new industrial gas price formula be ready by November 2016.
"Business actors who use gas still hope that the decline in industrial gas prices can be realized because it has become part of the government's economic package," said Chairman of the Indonesian Employers' Association (Apindo) Hariyadi Sukamdani.
The Head of Apindo for Energy and Resources, Sammy Hamzah, questioned the efficiency associated with investing in pipeline gas networks or distribution. There are allegations that the gas pipeline investment is large, but its utilization is low. As a result, the cost of selling gas is borne by the users, namely the industrial gas users. For that, according to Sammy, the government needs to limit the commercial margin for gas distribution.
"Do not let the margins taken by the company be so high that it burdens consumers.
Kompas, Page-17, Saturday, Oct 22, 2016
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