Muhamad Al Azhari
Upstream oil and gas regulator BPMigas has projected investment in the sector to rise 50 percent this year to $20.9 billion as the government pushes producers to ramp up their output.
Indonesia, a former OPEC member, has seen its oil and gas output dwindle to less than 1 million barrels per day since 2007 because of aging production facilities and dwindling reserves.
Production fell to 954,000 bpd in 2007 from 1 million bpd in 2006. It rose slightly in 2008 to 977,000 bpd but fell to 949,000 bpd in 2009, 945,000 bpd in 2010 and 902,000 bpd in 2011.
“Investment is key in the development of the upstream oil and gas [sector],” BPMigas chairman Raden Priyono said in a statement on Wednesday.
He said that the country’s current reserves were attractive enough that producers would continue putting money into the sector.
Investment in oil and gas falls under four categories: exploration, research and development, administration and production.
The government has publicly stated its goal of restoring production back to more than 1 million bpd in 2015 and 2016.
According to BPMigas, the country will endure two more years of declines in 2012 and 2013, with production estimated at 894,000 bpd and 891,000 bpd.
Priyono said that BPMigas had coordinated with the Finance Ministry in regards to any possible “incentives” that could be offered to draw investors’ interest.
Indonesia’s economic stability makes the country’s reserves a good bet for investors, Priyono said.
In the 20-year period from 1991, Indonesia’s oil reserves have been in a steady decline, having fallen by 1.9 billion barrels, a the fastest rate among Asian nations, according to British oil giant BP’s annual report on oil and gas released last week.
Last year Indonesia had 4 billion barrels of proven oil reserves, down from 5.9 billion barrels in 1991. By comparison, reserves in China and India dropped by 800 million barrels and 400 million barrels in the same period, respectively, although oil consumption in both countries is higher than in Indonesia.
Analysts and industry executives have long criticized the government for failing to boost oil exploration as most of the country’s oil fields mature.
Indonesia lost its OPEC member status in 2008.
APertamina worker climbing on a gauge at a crude oil well on Bunyu Island in East Kalimantan. The government is pushing private firms to return Indonesia’s output to the 1 million barrel per day level. Reuters Photo/Beawiharta