JAKARTA - SKK Migas conveyed that the production target of 1 million barrels of oil per day (BOPD) and 12 billion cubic feet of gas per day (BSCFD) in 2030 will have a positive impact on the development of the upstream oil and gas industry in Indonesia.
One of them is the improvement of the fiscal system and taxation provided by the government which has an impact on increasing the value of Indonesia's upstream oil and gas investment competitiveness from 4.75 in 2020 to 5.30 in early 2024, according to the Standard & Poor's International Rating Institute (S&P).
Head of the Program and Communication Division of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Hudi D. Suryodipuro in his statement in Jakarta, Thursday, June 13, said the increase had a significant impact on the upstream oil and gas investment landscape, which has experienced rapid growth in recent years.
"Data in 2023 shows an increase in investment reaching 13.7 billion US dollars, an increase of 13 percent from 2022. This figure not only exceeds the long-term SKK Migas plan target of 5 percent, but also exceeds the global investment trend," said Hudi, quoted by Antara.
As for 2024, the investment plan is set at 16.1 billion US dollars indicating an 18 percent increase in realization in 2023. This is in line with the increasing activity of sustainable work programs in the upstream oil and gas sector.
"With the increase in investment in upstream oil and gas, work programs such as drilling, workovers, and well service have also increased since 2021," said Hudi.
The increase in investment has also had a positive impact on exploration activities. The investment value of upstream oil and gas exploration rose from USD 0.54 billion in 2020 to USD 0.93 billion in 2023. The increase contributed to the discovery of gas sources such as in the North Gang and Screen, which were among the world's five largest discoveries in 2023.
"With the findings of the large reserves (giant disclosure) in 2023 and also in 2024 at the Tangkulo-1 well in the South Andaman WK (Work Area) of 2 TCF, SKK Migas is committed to encouraging the acceleration of the on stream process of these findings, ensuring that they can immediately contribute to national oil and gas production as quickly as possible," he said.
To maintain this positive momentum, SKK Migas continues to evaluate long-term plans and carry out various efforts to accelerate the process.
"SKK Migas prioritizes evaluation and improvement of long-term planning strategies to ensure that organizational goals are in line with local and global dynamic conditions," said Hudi.
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Furthermore, he also emphasized that SKK Migas needs to be adaptive to these dynamic conditions. He assessed that the upstream oil and gas industry is still facing various complex challenges that hinder the efficiency and development of the sector in implementing the fulfillment of the target of 1 million BOPD and 12 BSCFD gas in 2030.
"The process of environmental approval such as UKL/UPL and amdal as well as sustainable agricultural land licensing (LP2B) still takes quite a long time. Other challenges, including licensing for suitability of marine use activities (KKPRL), KKPRL rates that apply to recede, and limited supply of tubing. Gas infrastructure that has not been fully connected has caused gas excess supply to not be properly distributed," he said.
Furthermore, social and environmental issues such as additions to upstream oil and gas areas and requests for compensation for land in forest areas are also obstacles. In addition, illegal drilling activities cause significant loss of production potential so that control and application of criminal penalties for the deterrent effect are needed.
"We hope that all upstream oil and gas industry stakeholders in Indonesia can work together to overcome these challenges to increase efficiency, ensure sustainability, and support the development of this industry in the future," said Hudi.
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