Indonesia is set to streamline regulations to promote oil and gas exploration, as the new government seeks to rejuvenate its domestic industry and enhance energy security. Newly inaugurated President Prabowo Subianto emphasized the need for energy self-sufficiency in his inaugural speech. “We must have energy self-sufficiency, and we are capable of being self-sufficient,” he stated, as reported by Reuters.
Indonesia was a member of the Organization of the Petroleum Exporting Countries (OPEC) from 1962 until 2009. It rejoined the organization in early 2016 but suspended its membership later that year when OPEC agreed to joint oil production cuts as part of the OPEC+ deal, which included countries like Russia and Kazakhstan. In recent years, Indonesia has seen a decline in crude oil production even as demand has risen in the world’s fourth most populous nation, following India, China, and the United States.
Once a net oil exporter, Indonesia’s status has shifted due to natural depletion of resources and insufficient new exploration. Consequently, its hydrocarbon output has dropped significantly. According to the U.S. International Trade Administration, Indonesia’s oil production has decreased at an average annual rate of 11%.
In the 1990s, Indonesia’s oil production peaked at about 1.6 million barrels per day (bpd), but it has since plummeted to below 600,000 bpd.
To encourage oil and gas production, Indonesia plans to simplify the permitting process, which currently requires approvals from over a dozen agencies, many of which have conflicting priorities. “Oil and gas contractors should focus on finding new reserves instead of dealing with permits; the process takes too much time,” said Komaidi Notonegoro, an energy analyst at the ReforMiner Institute.
Earlier this year, Indonesia launched its first tender for 2024, offering five onshore and offshore oil and gas blocks in an effort to reverse the long-term production decline.
In a recent move, Indonesia requested U.S. oil giant ExxonMobil to increase its crude oil production in the country to 150,000 bpd by 2026, up from the current level of 125,000 bpd.
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