Addressing the Major Challenges to Pursue the 2025 Oil and Gas Production Target

Fossil energy supplies, particularly oil and gas, remain the backbone of Indonesia’s national energy needs. The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) has set an ambitious oil and gas production (lifting) target of 1.61 million barrels of oil equivalent per day (BOEPD) by 2025. This includes 605,000 barrels of oil per day (BOPD) and 1.01 million BOEPD from gas, as outlined in the state budget (APBN).

Challenges Ahead
Despite optimism, several key challenges must be addressed to achieve this target:

  1. Limited Investment
    The global decline in oil prices over the past few years has dampened investor interest. This, combined with a regulatory framework that is often considered inflexible, presents significant obstacles to attracting exploration and field development investments.
  2. Increasing Complexity at Exploration Sites
    Easily accessible oil and gas resources are depleting, necessitating exploration in more complex and less-explored areas. While discoveries like the new reserves in South Sumatra by PT Pertamina Hulu Rokan are promising, large-scale exploration remains essential.
  3. Technological Management
    Many oil and gas fields in Indonesia are aging, with declining production rates. Advanced technologies like Enhanced Oil Recovery (EOR) and Improved Oil Recovery (IOR) are critical to maximizing the potential of these fields. However, implementing such technologies requires substantial investment and specialized expertise.

Innovative Solutions

To overcome these challenges, SKK Migas and stakeholders have prepared several strategic initiatives:

  1. International Collaboration
    Recent agreements, such as the Memorandum of Understanding (MoU) with Canada’s FalconRidge Oil Ltd, highlight the potential of international cooperation. Technologies like Terra Slicing Technology are expected to boost production in low-producing or idle wells.
  2. Optimizing Aging Fields
    Massive drilling programs, idle field reactivation, and the application of EOR and IOR technologies are prioritized strategies. These efforts aim to significantly enhance national oil and gas production.
  3. Incentive-Based Approach
    SKK Migas applies an incentive-based approach to encourage Production Sharing Contractors (PSCs) to fulfill their exploration commitments. Flexible revenue-sharing schemes, such as gross split and cost recovery, are implemented to create a more competitive and attractive investment climate.
  4. Knowledge Transfer and Local Workforce Development
    Beyond technological advancements, partnerships with international entities are leveraged to enhance the skills of the local workforce through training and workshops. This initiative aims to build national independence in managing the oil and gas sector.

As part of the President’s Astacita Program, the upstream oil and gas sector not only aims to meet production targets but also to strengthen national energy security. Through policy reforms, increased exploration, and strategic collaborations, the oil and gas industry continues to play a vital role in Indonesia’s sustainable development.

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