Observers Say These 5 Things Make Shell, Chevron To ConocoPhillips Withdraw Oil And Gas Investment From Indonesia

Illustration. (Photo: Doc. Antara)

JAKARTA - Energy Watch Executive Director and Energy Observer Mamit Setiawan revealed five things that caused big players in the foreign upstream oil and gas sector to leave their projects in Indonesia.

Some of the foreign companies in question are Shell, Chevron, to ConocoPhillips. One by one they plan to withdraw their investment from Indonesia.

First, said Mamit, there is no legal certainty that can protect investors. According to him, Indonesia has a lot of great potential but is not supported by legal certainty. He highlighted the revision of the Oil and Gas Law which has not yet been completed.

"In fact, investors really need legal certainty considering the upstream oil and gas industry is high risk and high cost. So, they can feel secure to invest in Indonesia. Don't let the minister or government change later, change policies. Respect for contracts is the main thing," said Mamit to VOI, Friday, March 11.

Second, he views Indonesia's fiscal policy as less attractive than neighboring countries such as Malaysia, Vietnam and Thailand.

"In fact, attractive policies are needed for investors considering the upstream oil and gas industry takes a long time to reach the production stage," added Mamit.

Third, social and political issues in Indonesia. This is very important in maintaining security for the upstream oil and gas industry.

"The many disturbances in society and the region make it difficult for investors to invest in Indonesia," he added.

Fourth, ease of licensing. The length of licensing to invest in upstream oil and gas makes investors feel that they are wasting time and money because the permits can cross ministries and agencies.

Fifth, the condition of Indonesia's oil and gas fields, which have matured and have entered a natural decline phase, has become less attractive to investors.

"Even if there is still great potential, it is in Eastern Indonesia and in the ocean area, so it requires greater costs," concluded Mamit.