SKK Migas, the government's special taskforce for upstream oil and gas business activities in Indonesia, said direct investment in the country's upstream oil and gas sector reached USD $1.8 billion by the end of February 2018 (equivalent to around 13.84 percent of SKK Migas' full-year 2018 investment target in the country's oil and gas sector).
Wisnu Prabowo, Head of Communication at SKK Migas, said investment realization at the start of the year tends to be rather subdued, each year, as most companies are still in the "planning stage". Prabowo sees no sudden new obstacles to the investment climate in Indonesia's oil and gas industry and therefore is optimistic that investment in this sector will grow in the next couple of quarters.
In fact, the recovering crude oil prices - currently ranging between USD $65 - $70 per barrel - should be an important incentive for companies to invest in oil and gas. The higher oil price has already translated into rising investment in oil and gas exploration in Indonesia. The portion of investment in exploration toward total investment in Indonesia's oil and gas sector has grown markedly. In the first two months of 2018, investment in exploration contributed 10.75 percent to total oil and gas investment in the aforementioned period. In the preceding six years, this percentage ranged between 2 - 8 percent.
Prabowo added that the total USD $1.8 billion of investment in Indonesia's oil and gas sector in the first two months of 2018 consisted of:
(1) investment in exploration - USD $197 million
(2) investment in development - USD $204 million
(3) investment in production - USD $1.25 billion
(4) administration costs - USD $177 million
Arcandra Tahar, Deputy Energy and Mineral Resources Minister, said it is of vital importance for Indonesia to seek new oil fields through exploration or apply new technology to boost production at existing fields because the country's proven oil reserves are presently estimated at around 3.3 billion barrels, implying that - with the present rate of production - Indonesia's oil reserves will be finished within 12 years.
Regarding Indonesia's gas production, Tahar said the nation's gas reserves are enough to be exploited for the next 25 to 50 years.
Indonesia's crude oil production fell 2.82 percent (y/y) to 779,000 barrels per day (bpd) in the period up to 24 March 2018. Tahar said that the country's oil production is expected to decline further to 700,000 bpd in 2019.
Investment in Indonesia's Oil & Gas Sector:
(in USD billion)
¹ period 1 January 2018 - 28 February 2018
Source: Bisnis Indonesia