Page 24 - Oil&Gas-AustralAsia-2015-Issue-3
P. 24
I INDONESIA
Overhaul needed to lift
declining Indonesian
output
By Marie RYAN challenge state-owned giant Pertam- industry policy will only happen if the
ina by growing its upstream assets to President’s anti-corruption campaign
Industry analysts BMI Research have produce 30,000 of oil equivalent per is able to take on the vested interests in
warned Indonesia’s upstream sector day (boed) this year, has encountered the oil industry, which currently is only
will remain challenging for both new this challenging operating environment having limited success,” the report said.
entrants and existing players, as crude with red tape and labour restrictions So far the piecemeal reform offerings
oil producers continue to see a decline making it difficult to reach production are not enough to attract new invest-
in output over the next decade and face targets or attract new investment. ment and a major reform with a drastic
operational risks with a difficult regu- The recent corruption scandal involving reduction in bureaucracy is needed to
lation system and a shortage of skilled the chairman of the nation’s upstream boost investor confidence.
labour. regulator SKKMigas after the Indone- BMI downgraded its previous forecast
“These inherent challenges have seen sian courts disbanded BPMigas out of a of an increase in oil production based
Indonesia drop to sixth overall out of growing movement of resource nation- on the Banyu Urip field ramping up
the top ten oil producing countries alism, have also added to feelings of un- production in 2015-16 to a reduction
in Asia, dropping below the coun- certainty, pushing investors to question of output from 2017 due to a weak oil
try’s previous regional average in the the viability of their operations. price and a lack of upstream reforms to
Operational Risk index,” BMI said in its Indonesia’s President Joko Widodo in attract investment.
report. a bid to clean up the persistent corrup- Indonesia’s oil and gas industry also
BMI Research noted the country’s tion plaguing the oil and gas industry faces issues of human capital with many
crude oil production has been in steady appointed former top official with skilled professionals preferring to work
decline for the past 19 years, leading to the Corruption Eradication Commis- overseas. Saki Energy found managing
Indonesia’s departure from OPEC seven sion (KPK) Amien Sunaryadi to lead growth difficult as it was unable to find
years ago. SKKMigas in 2014. the necessary skilled labour resources
Limited oil reserves together with an BMI Research suggested any significant to develop projects.
onerous regulatory system and legal improvement in the sector will have “While greater educational and training
uncertainty have made investors weary, to come in the form of a reduction in opportunities and better monetary
further exacerbating the decline in oil red tape, which has been a major cause benefits would increase the pool of
production and decreased reserves. of project delays, stating a concerted skilled labour, these changes are likely
“As Indonesia’s mature oil producing effort to reduce red tape in licensing to be drawn out over many years. The
fields are starved of investment, the and production would help to shore up labour woes of the sector coupled with
country’s oil production has declined the long-term appeal of the country’s onerous regulation has placed Indone-
every year over 2008-2014,” the report upstream sector. sia in a below-average position in our
said. “However, the regulator’s power in this Operational Risk regional rankings,”
Late entrant to Indonesia’s oil and gas aspect is limited and a broad shift in BMI Research said.§
sector Saka Energy, who is aiming to
A A22 OIL & GAS ustral SIA JULY/AUGUST 2015 www.oilandgasaustralasia.com
Overhaul needed to lift
declining Indonesian
output
By Marie RYAN challenge state-owned giant Pertam- industry policy will only happen if the
ina by growing its upstream assets to President’s anti-corruption campaign
Industry analysts BMI Research have produce 30,000 of oil equivalent per is able to take on the vested interests in
warned Indonesia’s upstream sector day (boed) this year, has encountered the oil industry, which currently is only
will remain challenging for both new this challenging operating environment having limited success,” the report said.
entrants and existing players, as crude with red tape and labour restrictions So far the piecemeal reform offerings
oil producers continue to see a decline making it difficult to reach production are not enough to attract new invest-
in output over the next decade and face targets or attract new investment. ment and a major reform with a drastic
operational risks with a difficult regu- The recent corruption scandal involving reduction in bureaucracy is needed to
lation system and a shortage of skilled the chairman of the nation’s upstream boost investor confidence.
labour. regulator SKKMigas after the Indone- BMI downgraded its previous forecast
“These inherent challenges have seen sian courts disbanded BPMigas out of a of an increase in oil production based
Indonesia drop to sixth overall out of growing movement of resource nation- on the Banyu Urip field ramping up
the top ten oil producing countries alism, have also added to feelings of un- production in 2015-16 to a reduction
in Asia, dropping below the coun- certainty, pushing investors to question of output from 2017 due to a weak oil
try’s previous regional average in the the viability of their operations. price and a lack of upstream reforms to
Operational Risk index,” BMI said in its Indonesia’s President Joko Widodo in attract investment.
report. a bid to clean up the persistent corrup- Indonesia’s oil and gas industry also
BMI Research noted the country’s tion plaguing the oil and gas industry faces issues of human capital with many
crude oil production has been in steady appointed former top official with skilled professionals preferring to work
decline for the past 19 years, leading to the Corruption Eradication Commis- overseas. Saki Energy found managing
Indonesia’s departure from OPEC seven sion (KPK) Amien Sunaryadi to lead growth difficult as it was unable to find
years ago. SKKMigas in 2014. the necessary skilled labour resources
Limited oil reserves together with an BMI Research suggested any significant to develop projects.
onerous regulatory system and legal improvement in the sector will have “While greater educational and training
uncertainty have made investors weary, to come in the form of a reduction in opportunities and better monetary
further exacerbating the decline in oil red tape, which has been a major cause benefits would increase the pool of
production and decreased reserves. of project delays, stating a concerted skilled labour, these changes are likely
“As Indonesia’s mature oil producing effort to reduce red tape in licensing to be drawn out over many years. The
fields are starved of investment, the and production would help to shore up labour woes of the sector coupled with
country’s oil production has declined the long-term appeal of the country’s onerous regulation has placed Indone-
every year over 2008-2014,” the report upstream sector. sia in a below-average position in our
said. “However, the regulator’s power in this Operational Risk regional rankings,”
Late entrant to Indonesia’s oil and gas aspect is limited and a broad shift in BMI Research said.§
sector Saka Energy, who is aiming to
A A22 OIL & GAS ustral SIA JULY/AUGUST 2015 www.oilandgasaustralasia.com
