Oil Prices Soar, Upstream Oil And Gas Deposits To Countries Reaches Rp78.2 Trillion

Illustration. (Photo: Unsplash)

JAKARTA - In the midst of a pandemic and economic conditions that have not improved as well as declining investment, the upstream oil and gas sector can contribute to a country that is higher than the target, which is US$5.5 billion or equivalent to Rp78.2 trillion.

The revenue is equivalent to 76.2 percent of the revenue target set in the 2021 state budget (APBN) of 7.28 billion US dollars.

Secretary of SKK Migas, Taslim Yunus, said the large amount of state revenue from the upstream oil and gas sector until May 2021 could not be separated from the surge in world crude oil prices.

"We are grateful because the current oil price is increasing, currently around 73 dollars per barrel, and the Indonesian Crude Price (ICP) is around 68 dollars per barrel," he said in his official statement, quoted Thursday, June 17.

To maintain maximum state revenue, said Taslim, SKK Migas requested that Cooperation Contract Contractors (KKKS) immediately increase investment, taking advantage of rising oil prices like today. In addition, SKK Migas also hopes that upstream oil and gas incentives will be given soon so that the good momentum to increase this investment can be maximized.

"We hope that this high price can encourage KKKS to increase their investment activities, including by immediately realizing projects that were previously abandoned because they have an economic price of 50 or 60 dollars per barrel," he said.

Taslim hopes that the increase in minimal activities will be reflected in the Work, Program, and Budget (WP&B) discussions that will soon be carried out by SKK Migas and KKKS in July to September 2021.

"The Head has given directions, we will immediately send a circular to KKKS so that they immediately increase their investment in 2022. We are grateful that activities can be increased starting in 2021," he explained.

According to Taslim, in order for this momentum to produce a maximum increase in investment, his party hopes that the request for upstream oil and gas incentives is also approved by the government. So that this good momentum will be maximized.

Furthermore, said Taslim, this request is still needed even though oil prices increase, because more incentives are needed for efforts to improve the oil and gas investment climate that is more attractive and competitive.

As of May 2021, oil lifting was 662.6 thousand bopd or 94 percent of the APBN target, while gas lifting was 5,379 MMSCFD or 95.4 percent of the APBN target.

Therefore, said Taslim, a large additional investment is needed to encourage investment to increase and make lifting at least the same as in 2021. Moreover, the COVID-19 pandemic that hit the world in 2020 reduced the realization of investment in the upstream oil and gas sector worldwide, by around 30 percent.

Furthermore, Taslim said the challenges of upstream oil and gas investment are increasing due to the global campaign to shift investment to the renewable energy sector. Similar challenges also occur in Indonesia. As of May 2021, the realization of investment reached US$3.93 billion, or around 31.7 percent of the target.

"With the improvement in oil prices, we hope that the situation will improve because, in terms of potential, Indonesia is still promising. As evidence, we are still witnessing quite encouraging findings at the Maha well drilling in Makassar waters, as well as finding additional reserves in the Banyu Urip Field which are double than expected before. Hopefully, this joint effort can increase production activities in the country," he said.