Closing 2025 and Moving Towards 2026: Indonesia's Oil and Gas Sector Outlook Ensures Energy Security
The year 2025 will be a crucial period that will provide an objective picture of the dynamics of the national energy situation amid strenuous efforts to achieve Indonesia's oil and gas production targets. Based on data from SKK Migas, by December 2025, the realization of national oil lifting is recorded at 605 thousand barrels per day, or 100% of the target set in the State Budget (APBN). However, this achievement is not a sign that we can be complacent. In fact, there is still a wide gap between domestic oil and gas production and consumption. This gap can be seen, among other things, from the average daily consumption of fuel oil, which reaches 232,417 kiloliters, while domestic oil production is only able to supply 81,083 kiloliters per day.
This deficit is rooted in the fundamental condition of oil fields in Indonesia, which are dominated by mature fields that have entered an advanced stage of operation. Dependence on old wells also creates vulnerability for the stability of domestic energy supply because well production is highly sensitive to even the slightest operational disruption. As a concrete example, planned well maintenance or planned shutdowns at the Banyu Urip Field a week ago had a significant impact on national oil and gas lifting figures. In fact, without the discovery of large new oil and gas reserves, national production will continue to decline naturally by around 16% - 20% per year.
When it comes to discovering new oil and gas reserves to increase national oil and gas production as targeted by the government, the task is closely related to upstream oil and gas investment as the main pillar required. As of October 2025, the realization of national upstream oil and gas investment has only reached US$ 11.2 billion of the target set for 2025 of US$ 16.1 billion. However, looking at the details of the investment composition, the realization of investment for new exploration has reached US$ 500 million from the target of US$ 1.5 billion. This result suggests that exploration accounts for only a small portion of the existing investment. In fact, the discovery of new oil reserves through aggressive and massive exploration activities is the only fundamental solution to reduce dependence on oil and gas imports and ensure national energy sovereignty in the long term.
Entering 2026, policies in the upstream oil and gas sector must also focus more on activating idle fields or fields that have been successfully discovered but have not been developed to increase oil and gas production quickly and efficiently. Activating idle fields is considered more strategic than activating idle wells or wells that are no longer in operation. Idle fields typically have a close relationship with technical and economic factors. Through a more flexible cooperation scheme between the government and cooperation contract contractors (KKKS) and the provision of special incentives, it is believed that the government will be able to encourage industry players to resume the development of fields and assets that have not been developed. The activation of idle fields is expected to contribute to an increase in oil and gas production in a relatively short time, compared to exploration, which takes a long time and carries a high risk of failure. In addition, the upstream oil and gas industry agenda in Indonesia in 2026 will also be marked by the application of the latest technology in oil and gas drilling projects using the multi-stage fracturing (MSF) method. This latest innovation is carried out by extracting hydrocarbon potential that exists in rock formations that were previously challenging to access through conventional methods.
However, the success of the entire plan for becoming energy self-sufficient relies heavily on aligning policies and making the licensing process easier to create a better environment. Plans to auction 75 new working areas (WK) by 2028 continue to be intensified to attract global investors to explore dozens of oil and gas basins that have not yet been explored.
By combining a number of strategic steps in the management of the upstream oil and gas sector in Indonesia, it is hoped that the opportunities for the government and all industry players to increase national oil and gas production will be even greater, reducing imports, strengthening energy security, and, at the same time, driving other economic sectors to create the targeted economic growth. (*)
