IPA: breakthrough needed to boost investment in upstream sector
Thursday, July 4 2019 - 09:41 AM WIB
The Indonesian Petroleum Association (IPA) has expressed concerns over declining of investment in the upstream oil and gas industry over the past few years. Therefore, breakthrough efforts are needed to bring back investors to the sector.
Over the past five years, investment in the upstream oil and gas industry has fallen from US$20.38 billion in 2013 to only US$11.995 billion.
During the same period, the realized Work Plan and Budget (WP&B) of the production sharing contractors reached only on average of 76 percent.
The IPA executives and oil and gas industry observes blamed both external and internal factors behind the declining of investment.
President of the Indonesian Petroleum Association Tumbur Parlindungan said fossil energy remains important for Indonesia in achieving and maintaining its energy security.
Given this importance, efforts to increase the oil and gas explorations becomes important steps to be undertaken. The government, he said, needs to improve investment climate in the hope that more global oil and gas investors will invest in the sector.
Tumbur made the statement during a discussion with the press entitled ‘Exploration without Oil and Gas Investment?’ on Wednesday (03/07). He said the most important for investors is the sanctity of contract.
“Contract sanctity is the most important thing because investment in oil and gas industry is a long term investment. Investors cannot make evaluation if their contract can change every time,” Tumblur noted.
Based on the National Energy General Guideline (RUEN) 2015, Indonesia’s need for crude oil will continue to increase to 2.196 million barrels of oil per da in 2025, from around 1.5 million bopd at present, and projected to further increase to 4.619 million bopd in 205.
At present, nearly half of the domestic oil consumption is imported. Therefore, breakthrough efforts are needed to boost domestic oil and gas production.
Tumblur said based on the RUEN, around 60-70 percent of the national energy mixed would still be dominated by fossil energy, although the portion of renewable energy would slowly increase to 23 percent by 2025 from just over 10 percent at present.
The media discussion was held ahead of the IPA Convex and Exhibition scheduled to be held in September this year.
Editing by Roffie Kurniawan