lndonesia’s oil and gas sector was once like a pretty girl who attracted everyone’s eye with her activities. That was how IGN Wiratmaja Puja, the then-oil and gas director general at the Energy and Mineral Resources Ministry, described the sector during a focus group discussion with various oil and gas stakeholders in June.
“Many then spread rumors about her, blamed her or even tried to control her. It was inevitable,” he continued, adding that day by day the “pretty girl” became more unattractive as shown by declining investment and plunging state revenues from the sector in recent years.
At the discussion, Wiratmaja vowed to issue various ministerial decrees some of which had taken more than a year that were expected to help boost the investment climate in the sector, a promise, however, he will be unable to make good on, as he was sacked by Energy and Mineral Resources Minister lgnasius Jonan on Wednesday
The minister has appointed Ego Syahrial, who previously headed the ministry’s geology agency as the new oil and gas director general, with high hopes that the latter can further boost enhanced oil recovery (EOR) to offset the declining domestic oil production.
“We also hope his experience as a geologist Will encourage innovations in oil and gas exploration." Jonan said.
During his term, Wiratmaja was in charge of preparing various ministerial regulations, including ones related to abandonment and site restoration (ASR), incentives for drilling an offshore well in ultra-deep, more than 1,500 meters in depth, waters, and EOR activities.
By issuing the decree on EOR activities, the government expects it can start boosting oil production in certain fields using such methods by 2021 or 2022, resulting in an additional 228,000 bpd of oil. The government has estimated that 2.5 billion barrels of oil in reserves can be recovered through EOR activities by 2050.
Furthermore, within the past few months the ministry has also been formulating a government regulation (PP) on tax treatment for gross split sliding scale agreements for upstream oil and gas contractors. None of those planned regulations has yet been completed, despite a further drop in oil and gas investment in recent years. According to the Upstream Oil and Gas Regulatory Special Task Force (SKK Migas), investment in the upstream oil and gas sector plunged to US$11.15 billion from $21.88 billion in the period Of 2012 to 2016.
In the first half of this year, investment in the sector amounted to only $3.99 billion, or 28.84 percent of the full-year target of $13.8 billion. Of the total figure, contractors spent $3.96 billion for exploitation while a mere $30 million was disbursed for exploration.
Because of a lack of new discoveries, the country’s proven oil reserves dropped to 2,959 million stock tank barrels (mmstb) at the end of last year from around 5,000 mmstb in the early 2000s. As a result, Indonesia’s oil production had dwindled to 808,800 barrels of oil per day (bopd) as of June from 1.2 million bopd in the early 2000s, forcing the country to import 60 percent of its current oil needs of 1.6 million bopd.
“If we maintain production rate at 800,000 bopd with the current oil reserves, we might not be able to produce oil after 12 years,” Deputy Minister Arcandra Tahar said.
Sammy Hamzah, the Indonesian Employers Association (Apindo) head of energy and mineral resources division, said it must have been difficult for Wiratmaja to do his job smoothly as he had to go through several transitions of power within the past year, from Sudirman Said to Arcandra, Luhut Pandjaitan and eventually Jonan.
“Now, we just hope that Pak Ego can immediately go through the internal consolidation process and start ‘running’,” Sammy said, expressing his hope that the once “pretty girl” could soon regain her looks
Jakarta Post, Page-13, Friday, August 4, 2017
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