Upstream Oil And Gas Industry Needs Sideship To Achieve Energy Resilience

JAKARTA - Country Head of Indonesia Rystad Energy Sofwan Hadi said support from various parties for potential natural gas resources is urgent so that Indonesia does not lose momentum in achieving national energy security.

To note, the discovery of large natural gas resources (giant disclosure) in South Andaman and the North Gang shows that Indonesia has almost half of the natural gas reserves in Southeast Asia. This discovery increases the interest of global investors to make Indonesia one of the investment destinations.

"The condition is that there is an opportunity, the potential is very large, but how this project can run so that it can convince global investors. That must be a priority at this time," said Sofwan in a written statement, quoted from Antara, Tuesday, August 20.

One of the most urgent supports is to create the right fiscal policy, including incentives and tax regimes that can ensure the economy of the oil and gas project in the future as well as the flexibility of Cooperation Contractors (KKKS) regarding the choice of production sharing contract (PSC) gross split or return to cost recovery.

"This can be a good choice for KKKS because the characteristics of each working area are different and require a different PSC. In addition, time-based incentives can also encourage the acceleration of project monetization," said Sofwan.

Another urgent support is setting domestic gas prices and infrastructure to ensure gas distribution.

According to Sofwan, if domestic gas prices cannot close transport costs, what happens will affect investor interest in developing these projects.

"What stakeholders need to remember is that the existence of the oil and gas industry still has a very important role to play in maintaining energy resilience and independence so that partiality is the key and urgent to achieve this," he said.

Meanwhile, Head of the Program and Communication Division of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Hudi D. Suryodipuro said that SKK Migas continues to encourage monetization of projects that have been and will run soon to be realized.

"SKK Migas and all KKKS continue to work together to develop oil and gas potential in Indonesia to strengthen the role of the upstream oil and gas industry as one of the pillars of energy security," said Hudi.

SKK Migas recorded an increase in oil and gas production realization until August 15, 2024, reaching 1,873,000 barrels of oil equivalent per day (BOEPD), an increase of about 3.4 percent compared to the realization in the same period in 2023 of 1,811 thousand BOEPD.

On a monthly basis, until mid-August 2024 oil and gas production reached 1,860 thousand BOEPD, an increase of about 3.5 percent compared to the same monthly data (1,797 thousand BOEPD).

SKK Migas expressed optimism that the upstream oil and gas projects completed in 2024 will significantly increase oil and gas production.

"In addition to finding new sources, we also continue to optimize the sources that have been operating," said Hudi.

One of the contributors to the addition of oil production, namely the Banyu Urip Infill Classic (BUIC) project in the Cepu Block which reaches 13,300 barrels of oil per day (BOPD) from seven wells that are drilled until 2025. Another contributor is the optimal absorption of gas lines since July 2024 and lifting (gas lines) on July 24, 2024, which penetrates 5,919 million standard cubic feet of gas per day (MMSCFD), above the APBN target of 5,785 MMSCFD.

For this reason, SKK Migas is also optimistic that the various achievements of the upstream oil and gas industry will be an important step to achieve the goal of national energy security.

"This achievement confirms the commitment of upstream oil and gas industry players, including all KKKS in realizing national energy resilience as a gift for the 79th Anniversary of the Independence of the Republic of Indonesia," said Hudi.