SKK Migas Ensures Oil And Gas Commercialization Is Prioritized For Domestic Needs

SKK Migas (doc. Antara).

JAKARTA The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) continues to strive to increase the commercialization of oil and natural gas. Moreover, the findings of the natural gas giant some time ago.

Head of the Oil and Gas Commercialization Division of SKK Migas, Rayendra Sidik, said that until now national oil and gas production is prioritized to meet domestic needs.

"This can be seen from the Government's policy which requires oil producers to first offer their oil production results to Pertamina," he said in his official statement, Friday, March 29, 2024.

Rayendra revealed that in the Minister of Energy and Mineral Resources Regulation 18/2021 concerning the Priority of Utilization of Oil for Fulfillment of Domestic Needs, producers are required to offer first to Pertamina or the business entity holding the domestic oil processing business license.

"So, oils are mandatory to be offered to Pertamina. If it can't be done for one reason or another, such as price or technical agreements, namely the refinery cannot receive, then the oil is exported," he said.

Furthermore, Rayendra said that there are only two types of oil that are directly exported and there are also not many in number. It is certain that the type of oil that has very high sulfur cannot be processed at a refinery facility in the country.

Not only oil, but natural gas is also mostly produced to meet domestic needs. Based on SKK Migas data, from 5,528.61 BBTUD, the realization of natural gas distribution is 23.35 percent exported in the form of LNG and exported through pipes of 8.7 percent.

The rest is intended to meet domestic needs. The percentage of gas for industry is 26.85 percent, fertilizer is 12.48 percent, electricity is 12.6 percent, domestic LNG is 9.91 percent, oil lifting needs are 4.26 percent, LPG is 1.46 percent, gas network is 0.28 percent, and BBG is 0.11 percent.

Rayendra gave an example for LNG production, for example, in addition to those that have contracted, the remaining LNG production will certainly be offered to domestic consumers.

"Like this year, at the beginning we projected that no LNG would be uncommitted cargo. However, in the middle of the road because one or another there were around 3-4 LNG uncommitted cargoes. We immediately offered it to the country first. Pupuk, electricity industry, and others. It turned out that nothing was absorbed, then we immediately sold it to the spot," he said.

Rayendra said that the process of commercializing natural gas has a bigger challenge than petroleum, namely market absorption and infrastructure.

"So, specifically for natural gas, after production it must be distributed immediately so that before it is produced, the market must be ready. To distribute it, infrastructure is needed so that it can be distributed directly to consumers," he said.

Therefore, it is necessary to develop pipeline infrastructure for gas. Currently, several gas pipeline networks are not connected, namely Cirebon-Semarang, Dumai-Sei Mangke and heading to Batam.

Rayendra added that homework for gas commercialization is the construction of the LNG Plant.

"This is because of the discovery of a lot of gas in eastern Indonesia, while the demand is high in the western region of Indonesia. So, LNG Plant is needed to be able to fulfill this request," he continued.

Rayendra continued that efforts to create a domestic natural gas market are also a challenge in itself. You see, the use of natural gas for domestic purposes over the past 10 years has not increased significantly.

Meanwhile, the Head of the SKK Migas Program and Communication Division, Hudi Suryodipuro, said that the commercialization of oil and natural gas must be carried out in a transparent and careful manner. This is because the upstream oil and gas sector has an important role in economic growth and development of the country.

"It should be realized that not all groups understand how the oil and gas commercialization process is so that there is a wrong perception."

"If there are findings, it does not automatically provide big material benefits. It is not that easy. There are processes and procedures that must be followed before the discovery can be produced and commercialized," he said.