Boosting Oil Production Amid Global Uncertainty

Energy serves as a catalyst for investment and new industries, fostering job creation and inclusive economic growth. In the midst of ongoing geopolitical tensions in Europe due to the Ukraine-Russia conflict and conflicts in the Middle East, global economic uncertainty prevails.

The recent escalation between Hamas and Israel has further dimmed the prospects in the Middle East, contributing to a resurgence in crude oil prices. Brent crude oil prices surged over 5% on Monday (October 9, 2023), reaching $89 per barrel before stabilizing at $87.27.

Indonesia, despite being a net oil importer, sees an opportunity to ramp up its production. With the current geopolitical climate impacting global oil supplies, there is room for Indonesia to increase its output.

As outlined in the 2023 State Budget (APBN), the government has set a target oil lifting of 660,000 barrels per day, and gas production at 6,160 million standard cubic feet per day (MMSCFD). However, as of the first half of 2023, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) reports that oil lifting reached 93% of the target, standing at 615,500 barrels per day. Gas production also achieved 86% of the target, reaching 5,308 MMSCFD.

SKK Migas, responsible for oil and gas management, is committed to boosting oil and gas production. Despite historical challenges in meeting production targets, they express optimism for the current year. “We are confident that these targets can be achieved due to three major projects set to maximize production,” stated Deputy Exploitation at SKK Migas, Wahju Wibowo.

Key projects contributing to this optimism include the national strategic project Jambaran Tiung Biru (JTB), the Tangguh gas field, and increased gas production by the Husky-CNOOC Madura Limited (HCML) partnership.

SKK Migas has also established a roadmap for oil and gas production until 2030, aiming for 1 million barrels per day of oil and 12 billion cubic feet per day (BSCFD) of gas by 2030. The required investment for achieving these targets is estimated at around USD 20 billion per year.

Dwi Soetjipto, Head of SKK Migas, emphasizes the need for aggressive contractor activities and massive investments to reach the 2030 targets. The launch of Indonesia Oil and Gas 4.0 (IOG 4.0) in 2020 aligns with this strategic plan.

Acknowledging the pivotal role of the oil and gas sector, Maritime and Investment Coordinating Minister Luhut Binsar Pandjaitan emphasizes the importance of collaboration, cooperation, and innovation to support sustained investment in Indonesia’s upstream oil and gas sector. In the near future, the government plans to release a new regulation, addressing the acceleration of permits for upstream oil and gas industries to streamline and simplify the process, enhancing competitiveness and investment certainty.

Stay tuned for updates on Indonesia’s efforts to strengthen its position in the global energy landscape.