The Ministry of Energy and Mineral Resources (ESDM) is working to sustain oil and gas production despite facing several challenges.
Dadan Kusdiana, Acting Director General of Oil and Gas at ESDM, highlighted significant opportunities for boosting oil production. One key development is the increase in petroleum output from offshore Buton Regency, Southeast Sulawesi, which is expected to yield 1 million barrels of oil.
“The ESDM Ministry has approved the Buton Area Joint Study involving Pertamina, Petrochina, and Petronas,” Dadan announced in Jakarta on Tuesday, July 23, 2024. Efforts are underway to speed up the completion of this joint study, so the area can be developed and offered immediately.
Another strategy is to improve recovery rates by partnering with Chinese oil and gas companies. During ESDM Minister Arifin Tasrif’s recent visit to China, companies like CNPC, CNOOC, and Sinopec showed interest in enhancing oil and gas recovery in Indonesia. “Sinopec, for instance, has deployed a specialist team. Of the 16 areas offered by Pertamina Hulu Energi (PHE), five—Rantau, Tanjung, Pamusian, Jirak, and Zulu—have been selected,” Dadan said.
On the policy front, a new decree from the Minister of Energy and Mineral Resources outlines guidelines for managing uncultivated sections of potential working areas to optimize production. Oil and Gas Cooperation Contract Contractors (KKKS) must now either exploit or return areas of potential that are not currently being used.
“There are at least four optimization efforts planned for these idle areas,” said Ariana Soemanto, Director of Upstream Oil and Gas Business Development at ESDM. These efforts include managing idle sections of oil and gas working areas that have been unproductive for two consecutive years or have development plans not executed within that timeframe.
Additional measures include:
Proposals from KKKS to further manage potential working areas according to legal standards.
Returning unused sections of potential working areas to the Ministry of Energy and Mineral Resources.
These actions align with recommendations from the Upstream Oil and Gas Regulatory Task Force (SKK Migas) and the Aceh Oil and Gas Management Agency (BPMA).
In the past three years, several policies have been introduced to make the oil and gas sector more appealing:
Enhanced auction and contract provisions, including contractor splits up to 50%, minimum signature bonuses, direct bidding auctions, lower bank guarantees, and different contract types.
The exploration privilege policy, allowing contractors to move exploration activities to open areas outside their current blocks.
The upstream oil and gas incentive policy under Decree No. 199/2021, which improves contractor economics through better splits, investment credits, accelerated depreciation, and other financial parameters.