After years of declining oil production, Indonesia once again aims to reach 1 million barrels of oil per day (BOPD) of production in 2030. A new giant oil and gas discovery is needed to realize this target.
Earlier this week, Minister of Energy and Natural Resources Arifin Tasrif presented the projected oil and gas production for the next five years to The House of Representatives. Based on his presentation, oil production will keep declining to a level of 716,000 bopd in 2021. Then, it is projected to gradually rise to 727,000 bopd in 2022 and to 743,000 bopd in 2023-2024. Ande-Ande Lumut and the Indonesia Deepwater Development Project are scheduled to begin production in 2023 and 2024 respectively, and add more oil production.
Oil production will then continue to rise, once again reaching more than 800,000 bopd starting in 2026. In 2027, oil production is projected to reach 843,000 bopd as the Abadi Project commences production. The Government will continue to push oil production to reach 1 million bopd in 2030. Even so, currently there are no oil projects that are scheduled to begin operations during the period 2028-2030.
Arifin said that Indonesia needs a new discovery to push oil production to reach 1 million bopd. “Therefore it is important how we can accelerate the development of our oil and gas basins,” he said. According to data from the Upstream Oil and Gas Special Task Force (SKK Migas), Indonesia still has 35 basins that still need to be developed and another 73 basins that have not been explored yet.
Another strategy is that the government will reactivate matured wells by using enhanced oil recovery (EOR) technology. But, he added, it takes a long time to gain additional oil production from EOR activities because it is carried out in stages, starting from laboratory research.
To attract more investment, General Secretary of Energy and Mineral Resources Ministry Ego Syahrial explained, the government has cut down 60 permits that were previously needed to develop oil and gas projects. The government hope that these measures will mean that Indonesia will be as competitive as other South East Asia (SEA) countries such as Malaysia, Thailand, and Vietnam, and other countries in the world.
“It is not only about reducing permits, the government is also simplifying some Ministerial Regulation and SKK Migas Regulations. We will continue to reduce and simplify permits and regulations this year,” he said.
SKK Migas has launched a One Door Service Policy (ODSP) website. The ODSP will allow oil and gas companies to apply for various licenses from a single platform, subsequently cutting down bureaucratic processes. It is important because oil and gas projects need various licenses from several ministries.
“SKK Migas will be actively supporting oil and gas companies, so we are sure there will not be any obstacles, and the licensing process can finish faster,” The Head of SKK Migas, Dwi Soetjipto, said he will accelerate licensing process from 15 days to 3 days to make sure that oil and gas projects can commence as planned.
On the other side, Pri Agung Rakhmanto, an energy expert, stated that it is difficult to push Indonesia oil production to reach 1 million bopd if the government does not make any improvements. “If our oil and gas management is as usual, it's impossible to raise our oil production to 1 million bopd,” he said.
Technically, Pri Agung added, government should push contractors to do more exploration activities to boost oil and gas production to 1 million bopd. EOR and marginal field optimization are also considered good strategies to increase production.
“But the implementation of these strategies is going to need a big investment. It is totally different from today’s trend where around 60-70% of investment is for operations,” he said.
Indonesia's target to reach 1 million barrels of oil production per day is in contrast with General Planning for National Energy (RUEN). In RUEN, oil production is estimated to become only 676,500 bopd in 2030, starting at 520,300 bopd in this year. Fortunately, Indonesia oil production last year is better than the projections in RUEN which are 746,000 bopd versus 580,100 bopd. In 2020, oil production is estimated to rise to 755,000 bopd, better than the figure stated in RUEN of 520,300 bopd.