Domestic Banking Reluctant To Finance, Head Of SKK Migas Suggests Revenue To Be The Capital For Exploration

Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Djoko Siswanto. (Photo: Doc. Antara)

JAKARTA - Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Djoko Siswanto proposed that revenue from the upstream oil and gas sector be channeled for exploration activities.

According to him, currently there are no domestic banks willing to distribute financing for upstream oil and gas exploration activities. In fact, he said, exploration activities are an important process in increasing lifting achievements. Moreover, currently many old wells continue to decline over time.

"No domestic bank wants to finance exploration because the risk is big," said Djoko in a Hearing Meeting (RDP) with Commission XII of the DPR, Wednesday, November 12.

Djoko said that the concern of this financing institution was justified because previously the exploration success ratio was only 1:10. However, it is now experiencing an increase of 10:3.

"Now it's 30 percent. If we drill 10 wells, God willing, there will be 3 disclosures, but the obstacle is the budget," he continued.

The use of upstream oil and gas revenues was previously carried out by the UK until they managed to find gas fields in the North Sea and now the country is running 24 hours from exploratory gas.

"One time all revenues from upstream oil and gas are used for exploration, so a large gas field in North Sea is found. So, England is too much in gas and the country is now 24 hours from the gas," said Djoko.

Not only the UK, Malaysia has also done the same thing. The upstream oil and gas policy in Malaysia requires oil and gas contractors to allocate production profits for exploration activities.

"In Petronas (Malaysia), the PSC is partly returned for exploration activities," said Djoko.