TEMPO.CO, Jakarta - Rionald Silaban, the Finance Ministry's macroeconomic and international finances expert, said the oil and gas sector is no longer a reliable source of state revenues. Its revenue contribution has declined significantly from Rp198 trillion in 2012 to just Rp78 trillion in 2015.

Speaking at a discussion held by Tempo at the Aryaduta Hotel in Jakarta on Wednesday, January 31, Rionald said that the sector's contribution is down over the lack of exploration activities.

Indonesia's aging wells are the only main sources of oil and gas revenues. These have depleting reserves; delivering little output for a great production cost.

The Upstream Oil and Gas Special Task Force's (SKK Migas) Taslim Yunus said the government needs to change the rules on investment fees to attract investors. Taslim said that exploration activities are down as there are fewer and fewer investors in the upstream industry. In 2016, he said, upstream investment went down from US$15.9 billion to US$12.01 billion.

The declining investment is also indicated by the lack of exploration, which is not attracting investors due to regulations that are burdensome to COE contractors. One of the rules is exploration costs that cannot be consolidated into exploitation expense.

"We suggest making a rule to consolidate exploration and exploitation costs," he said.

According to Taslim, Indonesia will need 3.5 million barrels of oil equivalent (BOE) by 2025. Right now, the state's producing capacity is around 2 million BOE. "With the lack of exploration and drilling activities, out production capacity will continue to plunge," he said.

Meanwhile, imports can help reduce the multiple impacts of upstream investments. Taslim said that investing Rp1 billion can return Rp1.6-billion worth of economic output. Additionally, there will be an additional Rp700 million for the GDP and 20 percent for household economies.

VINDRY FLORENTIN