The special session commenced with an overview of the talent base in Indonesia, noting that 95% of positions in the industry were filled by Indonesians. This positive situation has happened over several decades, involving the intake of graduates, training and in many cases filling of strategic positions in upstream companies by nationals. It was noted that in the period of decline that was occurring, efficiencies are key, and this applies to people as well. Activities are, however, declining and this has led to significant layoffs of staff, particularly amongst upstream project teams. This has been inevitable, despite the best efforts of the industry.
The 2nd session was opened by Mariatul Aini from the Ministry of Finance, who stressed that if the country wants to attract investment, infrastructure is key and the Ministry is making efforts to fund and develop infrastructure around the country, particularly in remote areas, so that the oil and gas industry can utilize these facilities in the search for more reserves. The Ministry is also pushing to simplify bureaucracy and regulations to encourage investment. She also stressed that the economic indicators in the country are good at present, with inflation at 3-4% per annum and the ease of business index showing Indonesia jumping 15 places to 91 out of 170 countries worldwide.
The session was opened by highlighting that it was known that reforms are required and that the Gross Split scheme has been introduced to re-attract investment but that it remained to be seen if contractors would respond positively.
The focus discussion session examined the ways in which energy reform in Mexico has succeeded in attracting USD 70 Billion in new investment into the energy sector in Mexico since the reforms were introduced in 2013. This occurred as a result of a move from a nationalistic, inclusive business environment to a more open, market-oriented oil and gas sector. Nicole Palau outlined in her presentation how energy reformation had included not just the oil and gas sector but the entire energy value chain, from government to operators, investors and service companies. Since reform in 2013, 46 companies had invested in Mexico as opposed to the previous structure where two state owned enterprises were doing everything relating to hydrocarbons and electricity, including Pemex. This period of reform has been carried out to change the paradigm and focus on the benefits for Mexico in the long term, to improve energy security and create a long-term vision for the industry in Mexico.
The plenary session consisted of comprehensive question and answer session covering many of the key issues and solutions to re-attract investment to Indonesia during the global capital efficiency drive. H.E. Ignatius Jonan, Minister of ESDM, emphasized the long-term nature of the industry and recognized that industry requires a return on investment in this challenging environment. He has instructed SKK Migas to speed up business processes but noted that it is also important for the industry to be competitive, adding that if domestic production costs are higher than international prices, then Indonesia will continue to import.
“It is an honor to be here at the 41st Indonesian Petroleum Association Convention and Exhibition, and to be addressing all of you today. Thank you for joining us over the next three days.
The Indonesian Petroleum Association (IPA) will hold the 41st IPA Convention and Exhibition on May 17-19, 2017 at the Jakarta Convention Center.
News from Members
In the last three months period, PT Apexindo Pratama Duta Tbk (Apexindo), one of the IPA Associate Members, has received three recognition awards for their performance in drilling rig operations which have been conducted in several working areas in Indonesia, namely: the BTE-1 well and Kepodang project of KEJT-C3 and KEJT-C4 offshore wells of Petronas Indonesia, Apexindo Rig 2 on the RGT drilling project onshore at Central Java for Pertamina Hulu Energi Randugunting and the Apexindo Rig 4 for drilling of geothermal wells in North Sulawesi for Pertamina Geothermal Energy.
[JAKARTA] In order to clarify the roles of the IPA and government partners to promote the upstream oil and gas industry in Indonesia, the Indonesian Petroleum Association (IPA) visited the CNN editorial Indonesia, in Jakarta, Thursday (26/1). The visit, which was led by the IPA Executive Director, Marjolijn Wajong, aimed to encourage a better understanding of the cost recovery mechanism in the upstream oil and gas activities in Indonesia.
[JAKARTA] The Government of Indonesia through the Ministry of Energy and Mineral Resources (EMR) has formally issued the new regulations regarding the Gross Split Scheme. This new regulation set out in the Minister of Energy and Mineral Resources Regulation No. 8 Year 2017 concerning the Gross Split Production Sharing Contract is going to be firstly applied to the Offshore North West Java (ONWJ) working area which is managed by PT Pertamina Hulu Energi.