Upstream investment seen down next year

Upstream oil and gas investment around the world including in Indonesia is expected to decline next year as companies recalculate exploration and field development projects amid the current drop in oil price, according to Lukman Mahfoedz, a board member of the Indonesian Petroleum Association (IPA).

Lukman, who is also President Director of IDX-listed energy company PT Medco Energi Internasional Tbk, said Tuesday that oil and gas investment in Indonesia this year is expected to be lower than the initial target of US$32 billion.

For next year, oil and gas investment is projected to fall by 20 percent to around $25 billion as companies suspend exploration and development projects pending a recovery in oil price to atleast US$70 per barrel, explained the former IPA chairman.

He added that the 40 percent drop in oil price during the past four months alone has hit hard oil and gas companies particularly those relying on oil production.

Further delay in exploration projects will hamper the country?s efforts to find new oil reserves to help avoid future energy crisis. (*)