Despite once being a major oil and gas producer, Indonesia is projected to rely on imports to meet domestic demand by 2050 amid growing un-attractiveness in the sector.
Indonesia’s domestic oil production has gradually dwindled from 1.2 million barrels per day in the early 2000s to the current 800,000 barrels per day forcing it to import 60 percent of its oil needs of 1.6 million barrels each day Such a dependence on imports will be too costly for Indonesia in the long run, Jakarta-based energy think tank ReforMiner Institute has warned.
In its simulation revealed Monday the institute predicts Indonesia will need to allocate between US$41.23 billion and $58.6 billion in foreign exchange in 2025 to buy foreign oil if global oil prices continue to hover at around $50 to $70 a barrel within the 2017-2025 period.
The figure might range between $67.2 billion and $94.1 billion in 2025 if state-owned energy giant Pertamina fails to complete its refinery development projects. The y government allocated $15.9 billion in foreign exchange for oil last year.
Acknowledging the persistently low oil production, the government has launched the General Planning for National Energy. (RUEN) for the 2025-2050 period in a bid to maintain production at around 699,000 barrels of oil per day (bopd) by 2050. The measures will include boosting enhanced oil recovery (EOR) activities at existing fields and conducting exploration activities to find new oil and gas sources.
However, investors have seemingly lost their appetite for injecting cash into 1ndonesia’s oil and gas sector, as investment for exploration activities gradually declined to $800 million in 2016 from $1.3 billion in 2012, according to data from the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas).
ReforMiner executive director Komaidi Notonegoro said it would be hard for the government to depend on EOR and exploration activities, especially at a time of deterioration in the industry, as investors would be reluctant to spend much.On the other hand, it was also competing tightly with its peers in Asia Pacific.
“If We have to rely on imports, We Will compete with our neighbors for oil supplies, including from the Middle East. Therefore, We shouldn’t have to rely on imports,” Komaidi said. Responding to this issue, National Energy Board (DEN) member Andang Bachtiar acknowledged the need to reform the investment climate in the industry to improve its competitiveness, which in turn would help meet each target set in the RUEN.
He pointed out that the Energy and Mineral Resources Ministry’s plan to issue a ministerial decree that may require new contracts for existing fields to include proposals for EOR activities to curb lndonesia’s production decline. “All targets in the RUEN are practical and realistic as long as the government is Willing to change,” Andang said.
Jakarta Post, Page-13, Tuesday, June 13, 2017
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