Indonesia will launch a second auction of oil and gas blocks this year as it seeks to cash in on high energy prices and boost output after decades of decline due to a lack of exploration and investment, officials said on Wednesday.
Southeast Asia’s biggest economy is committed to reaching a lifting target of 1 million barrels per day (bpd) in 2030, Energy Minister Arifin Tasrif told an industry conference in Jakarta.
The once-OPEC member reached peak crude oil production in 1995, producing more than 1.6 million bpd. But output has declined steadily ever since due to a lack of exploration, an absence of discovery of large reserves, and shifting investment into renewable energy.
Oil lifting in the January-June period was 614,500 bpd, upstream regulator SKK Migas said.
“Indonesian oil and gas upstream investment potential is still huge,” Arifin told conference participants. “We have 70 potential unexplored basins to offer to investors.”
He said the government would offer eight oil and gas blocks in the upcoming auction, including the West Kampar block off Sumatra, which holds a potential 130 million barrels of oil. He did not specify when the auction would take place.
The last auction was in July, when investors clamoured to bid for six blocks.
Industry members at the conference said Indonesia needs to remove red tape and improve coordination between government bodies to encourage investment.
Gary Selbie, an executive at Harbour Energy Indonesia, said that while the energy ministry and SKK Migas had been supportive, long delays at other ministries were among the “biggest frustrations”.
He added that investors will also need “massive fiscal incentives in the next two to three years” to achieve the 2030 lifting target.
Energy Minister Arifin said the government is revising its oil and gas law to offer better fiscal terms and improve contract certainty.
(Reuters – Writing by Fransiska Nangoy; Editing by Kanupriya Kapoor)