PRESS RELEASE: IPA: The urgency of building competitiveness to attract oil and gas investment in Indonesia

Jakarta, August 2005 ? The upstream oil and gas industry in Indonesia is at a crossroads and it must meet the challenges of a competitive global market and prosper, or face decline, said Chris Newton, President of the Indonesian Petroleum Association (IPA).

?We have come a long way in meeting the industry?s challenges but now we need to take further steps if we are to compete in the global market and restore the industry?s economic contribution to where it can and should be,? said Mr Newton.

Indonesia needs to rejuvenate its investment climate to make the country a competitive and attractive destination for the investors if it is to achieve the oil production target of 1.3 million barrel per day (bpd) in 2009, he said, adding that a better investment climate will increase the overall confidence level that allows a company to invest hard earned and limited capital into new or existing business opportunities.

?Confidence is recognized as a relative term relating from a sense of well-being from past experience, macro economic stability, political, security stability, regulatory predictability and the level of uncertainty in achieving a desirable economic outcome,? said Mr Newton.

Oil production in Indonesia peaked 10 years ago when it reached 1.6 million bpd but is now in decline to about 1.070 million bpd. In the meantime, the consumption of petroleum products also grew at the same level of 1.070 million bpd. Exploration success is the best hope industry stakeholders have to arrest the production decline. Without further exploration success and investment in production optimization, production from existing discoveries will decline by 50% in the next decade.

?Government and oil company geologists remain passionate about the remaining untapped hydrocarbon potential in Indonesia. Existing investors have the resources - funds, skills and passion to invest. With some further improvements to the business environment there is no reason why these resources should not be deployed and Indonesia could once again be attracting a disproportionate share of global upstream capital allocation,? added Mr Newton.

IPA?s message to the government of Indonesia has been to look after existing investors and make them as the Indonesia?s ?Oil Ambassadors? as their success will attract other global investment communities, while departing investors send very damaging signals.

About the 30th IPA Convention and Exhibition 2005
Themed ?The Urgency of Building Competitiveness to Attract Oil and Gas Investment in Indonesia?, the 30th IPA Convention and Exhibition 2005 will run for three days commencing 30 August and it will involve various activities, including technical paper presentations, exhibits, field trips to social events and short courses.

The President of the Republic of Indonesia, Susilo Bambang Yudhoyono is scheduled to open this biggest oil and gas industry annual event followed by an address by the Minister of Energy and Mineral Resources and keynote speech by Mr. David O?Reilly, Chairman and CEO of Chevron, Mr. Larry Lucky of PriceWaterhouse Cooper and Mr. Jim Slutz of US Department of Energy.

?So far the Committee has received confirmation from 1697 participants from Indonesia and abroad. The participants are including all major players in the Indonesian oil and gas industry,? said Edi Bambang Setyobudi, General Chairman of the 30th Annual IPA Convention and Exhibition.

In line with the event theme, topic of discussions and forum will revolve around measures required to rejuvenate investment climate in Indonesia in order to attract more investors in the oil and gas industry in particular.

The IPA Annual Convention and Exhibition have been the industry?s biggest annual event in Indonesia since it was first introduced in 1972. The exhibition was first included as part of the Convention in the 23rd Convention in 1994.

Founded on March 24, 1971, the IPA (Indonesian Petroleum Association) is a not-for-profit organization that embraces both upstream (exploration and production) and downstream (refining and distribution) aspects of oil and gas industry in Indonesia. The association aims at creating an environment for its members to discuss common concerns, exchange ideas and work towards common goals for the industry. IPA also acts as a partner to relevant government institutions and provides the industry?s views on how to encourage a favorable environment for investment and competition. (end of release)

For more information, please contact:
Ananda Idris
Communication Committee Chairman
Indonesian Petroleum Association
Tel: +62 (21) 523-1944

Edi Bambang Setyobudi
General Chairman
The 30th IPA Annual Convention and Exhibition 2005
Tel: +62 (21) 8399-1601

Novitri Lilaksari (Cici)
Publicity Chairman
The 30th IPA Annual Convention and Exhibition 2005
Tel: +62 (21) 7854-8811

Aditya Mandala
Publicity Vice Chairman
The 30th IPA Annual Convention and Exhibition 2005
Tel: +62 (21) 8399-1050