Overcoming The Rising Oil Price, Here Are Some Solutions Prepared By The Ministry Of Energy And Mineral Resources In The Upstream Sector

JAKARTA - The government is looking for a way out to respond to the significant spike in global oil prices following the unrelieved political tensions between Russia and Ukraine. This step was taken as an effort to anticipate the impact on changes in commodity prices for fuel oil (BBM) in Indonesia.

Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif revealed that the realization of the Indonesian Crude Price (ICP) had exceeded the limit set by the State Revenue and Expenditure Budget (APBN) for Fiscal Year 2022, amounting to US$63 per barrel.

"The political (war) situation has caused global oil to rise. The average ICP realization up to March 2022 has reached US$98.4 per barrel," said Arifin at the ESDM Minister's Working Meeting with Commission VII DPR RI in Jakarta, Wednesday, April 13. 

According to Arifin, this figure is far from the state budget assumptions. Imagine Aramco's contract price for LPG (Aramco's Contract Price/CPA) reached 839 US dollars per metric ton from the initial assumption of only 569 US dollars per metric ton.

Seeing the condition of the movement of world oil, said Arifin, the Ministry of Energy and Mineral Resources has drawn up solutions and strategies, both short and long term, so as not to affect the Indonesian economy as a whole.

As for the upstream oil and gas side, the government in the short term will immediately implement a drilling program in a timely manner and within budget (790 development wells, 581 rework, and 29,582) well maintenance.

Then carry out intensification of activities that have a direct impact on increasing production (reactivation of idle wells, maintaining production reliability - target of increasing 24,043 BOPD). Up to resetting the facility maintenance schedule (target gain of 1,550 BOPD), and lowering the unplanned shutdown rate from 0.68 percent to 0.5 percent.

Meanwhile, several medium and long-term strategies on the upstream side are optimizing production/existing assets, accelerating the transformation of contingent resources into production, accelerating the implementation of chemical Enhanced Oil Recovery (EOR) projects, encouraging aggressive exploration for major discoveries, accelerating bidding of work areas, to bidding of New Joint Operations (KSO).

"We are also making improvements to the clauses of the Work Agreement between the Government and the private sector," concluded Arifin.