Demand Grows, But The Finance Sector Stops Funding For New Oil And Gas Projects

Minister of Energy and Mineral Resources Arifin Tasrif. (Mery Handayani/VOI)

BALI - Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif revealed that the energy transition push to meet the greener target made the financial sector stop funding new oil and gas (oil and gas) projects. This condition creates a lack of investment in the oil and gas sector.

"(The financial sector) provides more funding for renewable development. This has led to a lack of investment in oil and gas exploitation," he said in the 3rd International Convention on Indonesian Upstream Oil and Gas (IOG) 2022 series in Nusa Dua, Bali, quoted Thursday, November 24.

Responding to the energy transition push, Arifin said a number of oil and gas companies had also diversified operations. One of them is by investing in non-core fields. Examples include the development of renewable energy, electricity, and batteries.

Even so, said Arifin, until now the oil and gas sector is still growing amid the onslaught of new and renewable energy (EBT).

"Despite these challenges, demand for oil and gas is still growing, especially in developing areas such as India, Africa, and Asia where economic growth, urbanization, industrialization, and vehicles will spike significantly," he said.

Arifin admits that fossil energy does contribute the largest emissions. Based on a report by the 2022 Emissions Disposal by the United Nations (UNEP) Environmental Program, the total emissions in 2021 are 52.8 GTCO2.

Of these, the emissions generated from fossil energy including oil and gas are 37.9 GTCO2, equivalent to almost 72 percent.

Therefore, it is not surprising that the oil and gas industry faces challenges and will later be abandoned because the world is increasingly transforming towards a clean energy transition to reduce CO2 emissions.

"Oil and gas companies need to overcome this transition by taking significant steps to reduce greenhouse gas emissions in their operations to support a clean zero world," said Arifin.