Indonesia’s struggle to boost its oil and gas lifting

It is challenging for Indonesia to meet its oil and gas lifting target, and even more challenging to boost it up. In 2019, based on data from The Upstream Oil and Gas Special Task Force (SKK Migas), Indonesia’s oil and gas lifting is below its targets which are 746,000 barrel oil per day (BOPD) and 5,934 million standard cubic feet per day of gas (MMSCFD), while the targets are 775,000 BOPD and 7,000 MMSCFD, respectively.

The Chairman of SKK Migas, Dwi Soetjipto, explained that there are many obstacles that hinder the PSC Contractors to raise their oil and gas lifting and these can be technical problems, commercial, and even accidental. Even so, he added, the upstream oil and gas activities in the last year shows a rise compared to the figures for 2018. “The workover activities grew 130%, well service 38%, development well drilling 115%, exploration well drilling 90%, seismic 2D 492%, and the highest is seismic 3D at 575%,” he said.

Therefore, the oil and gas investment in 2019 was slightly better than 2018. The investment grew from USD 10,27 billion in 2017 to USD 11 billion in 2018 and reached USD 11,49 billion in the last year. However, it is lower than its target of USD 14 billion.

In addition, the local content percentage in oil and gas procurement has reached 60% or around USD 3,2 billion from the total of USD 5,93 billion.

Dwi added, Indonesia still has a chance to boost up its oil and gas lifting. There are only 20 basins of 128 oil and gas basins in Indonesia that have been produced while there are 35 basins that have been explored. These basins are Indonesia’s chance to increase its oil and gas reserves.

For 2020, Dwi stated, the oil and gas liftings are targeted by the State Budget for 755,000 BOPD and 6,670 MMSCFD. While the investment is estimated at around USD 13.8 billion. For the activities, there will be 837 wells for workover, 28.163 well services, 395 development wells, and 61 exploration wells. “We have launched the Integrated Operation Center (IOC) to monitor oil and gas activities. So, if there is any disruption to our effort in regard to reaching the targets, we could avoid it,” Dwi explained.

Djoko Siswanto, the acting Oil and Gas Director General of The Energy and Mineral Resources Ministry, stated that the government will give incentives to the oil and gas producers in order to accelerate their field development. It is one of the government’s efforts to hike up the national oil and gas lifting.

“There are 42 POD’s (plan of development) that have not been executed yet. We are push the companies to execute these POD’s as soon as possible. We will give any kind of the incentive that is needed by the company,” he stated. Djoko also asked the oil and gas producers to implement the technology of Enhanced Oil Recovery (EOR).

According to SKK Migas’s data, Indonesia’s oil production once reached 911,000 BOPD in 2010. But the oil production is plummeting to 817,000 BOPD in 2013 and has ended up at only 778,000 BOPD in 2018. The plummeting trend also happened to Indonesia’s gas production that once reached 7,758 MMSCFD in 2010 and fell to 7,396 MMSCFD in 2013 and became 6,378 MMSCFD in 2018. Despite the decreasing trend, the Government of Indonesia through the SKK Migas has a goal to boost up its oil production to reach 1 million BOPD in 2030. (*)

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