Indonesia Needs US$187bn Upstream Investment to Boost Oil, Gas Production

Translator

Ririe Ranggasari

Editor

Laila Afifa

21 December 2021 19:21 WIB

TEMPO.CO, Jakarta - Energy Minister Arifin Tasrif estimates it would require US$187 billion of investment in the upstream oil and gas in order to achieve the target of increasing production in 2030.

The figure is around IDR 2,700 trillion, assuming an exchange rate of IDR 14,379 per US dollar.

"The target of increasing national oil and gas production in 2030 is impossible to achieve without an increase in investment," he said in a release, Monday, December 20.

He said that the average investment required every year is US$18 billion. With the level of investment achievement ranging from US$10 billion to US$11 billion, there is still a huge gap.

Related to this, Arifin said that the government will continue supporting the upstream oil and gas development by simplifying licensing process as well as providing fiscal and non-fiscal incentives.

The government has also allowed investors to freely choose the type of production sharing contract (PSC) they believe have the best economic value, whether it's cost recovery or gross split.

"The government has also eliminated the signature bonus fee, so investors can include the fee as part of operating costs, allowing them to cut the investment requirement," Arifin said.

Another policy is the DMO price, which is expected to motivate investors in in the upstream oil and gas industry.

He hopes that with these supports, SKK Migas can optimize it in field works, using the best and extraordinary efforts to achieve the production target in 2030.

Read: Oil and Gas Reserves Potential in Eastern Indonesia Reaches 9.8bn Barrels

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