Indonesian Oil and Gas Investment Rises But Oil Production Falls

April 24, 2024, 12.27 AM | Reporter: Diki Mardiansyah

ILUSTRASI. SKK Migas is confident that the upstream oil and gas investment target of US$ 17.7 billion this year can be achieved.

OIL AND GAS - JAKARTA. The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) is confident that this year's upstream oil and gas investment target of US$ 17.7 billion can be achieved.

Despite an increase in investment realization, oil production realization has not followed suit. SKK Migas reports that oil lifting throughout 2023 was only around 605,500 barrels per day (bpd).

Hudi Suryodipuro, Head of the Program and Communication Division at SKK Migas, believes that the target will be achieved with several drivers, particularly increases in drilling activities such as workover and well service.

"We are confident [it can be achieved], as these activities require significant investment," Hudi told KONTAN on Tuesday (23/4).

In detail, this year's investment target grew by 29% from the realization of upstream oil and gas capital investment throughout 2023, which reached US$ 13.7 billion.

Oil and Gas Observer & Practitioner Tumbur Parlindungan said that the current increase in investment may only yield results in the coming years. For example, exploration investments made this year, if successful, will only result in production increases 3-5 years down the line.

According to Tumbur, substantial investment is indeed needed, especially for exploration and production facilities. The increase in production will only be felt a few years later.

"The upstream oil and gas investment target for this year should be achievable due to high oil prices, and everyone will strive to invest in upstream oil and gas to take advantage of high commodity prices," Tumbur told KONTAN on Tuesday (23/4).

Meanwhile, Moshe Rizal, Chairman of the Investment Committee of the Association of Oil and Gas Companies (Aspermigas), said that investment has been on the rise since last year, sourced both domestically (Pertamina) and abroad. Pertamina accounts for 60% of oil and gas production in Indonesia. Pertamina has responsibility for oil and gas production, while the majority of Pertamina's fields are old and extensions of previous companies.

"It is only natural that investment increases to maintain old fields because the cost is higher than for new fields," Rizal told KONTAN on Tuesday (23/4).