Oil and Gas Exploration: A Pillar of National Energy Security Supporting Renewable Energy
The global commitment to a cleaner energy future and the goal of achieving net-zero emissions are also part of Indonesia's long-term vision. The oil and gas (O&G) sector plays a vital role in achieving this target. Not only does it serve as the leading energy provider today, but it also forms the foundation for ensuring a safe energy transition.
Ongoing geopolitical instability, such as the tensions between Iran and Israel, highlights the vulnerability of the global energy system to external factors. The potential closure of the Strait of Hormuz, a critical passageway for around 20% of the world's oil and LNG, could trigger price spikes and supply disruptions. This situation underscores the high risks associated with dependence on imported energy for national stability. Therefore, strengthening domestic energy production through oil and gas exploration becomes a strategic move to enhance Indonesia's energy security.
Indonesia still holds vast untapped oil and gas potential. The country has only explored about 16% of its 128 oil and gas basins. To address this, the government aims to open 60 new oil and gas working areas (WAs) by 2028, with a primary focus on natural gas, which is considered a cleaner energy source compared to oil and coal. As of mid-2025, only three new WAs have been signed, still far from the target.
At the same time, Indonesia continues to accelerate the adoption of new and renewable energy (NRE) sources such as solar, hydro, and wind. However, we must recognize that more than 60% of the country's current energy needs are still met by oil and gas, especially in the transportation, industrial, and large-scale power generation sectors. NRE development still faces challenges, including limited infrastructure, reliance on weather conditions, and high investment needs, which make its economic value less attractive to investors. Consequently, NRE cannot yet fully replace the role of oil and gas in the near term.
Given these factors, it is essential to view NRE and oil and gas as complementary components of the national energy system, rather than opposing forces. Oil and gas provide short- to medium-term energy supply stability and reliability, while NRE lays the groundwork for a long-term, low-carbon energy system. During this transition period, both must progress in tandem to ensure energy supply continuity, support economic growth, and achieve national energy self-sufficiency.
To support carbon emission reduction, Indonesia is also actively developing Carbon Capture and Storage (CCS) technology as a tangible step toward decarbonizing the oil and gas sector. The considerable underground carbon storage potential, especially in depleted oil and gas fields, gives Indonesia a significant opportunity to become a CCS hub in Southeast Asia. The government is also preparing regulatory frameworks and fiscal incentives to support CCS implementation, as well as building international partnerships to develop this technology efficiently and sustainably.
Supporting all of these efforts requires policy reform as a key enabler. Critical improvements include legal certainty, streamlined permitting processes, and consistent fiscal policies to attract more upstream oil and gas investment.
Indonesia is strategically positioned to develop a resilient, affordable, and low-emission energy system due to its abundant natural resources, investment-friendly policies, and synergy between oil and gas and renewable energy. The upstream oil and gas sector not only remains the backbone of today's energy supply but also serves as a crucial bridge toward a self-reliant and sustainable national energy future. In the future, strong collaboration between the government and industry players, both domestic and international, will be a key driver in realizing Indonesia's energy transition agenda.
