Indonesia Secures US$111 Million Contract on Oil and Gas Investment

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Jakarta (Greeners) – Indonesia secured US$ 111.08 million of investment at the 42nd Indonesian Petroleum Association, said a senior official in Jakarta, on Friday (4/5).

Head of Oil and Gas Commercialization Division, Oil and Gas Special Working Task (SKK Migas), Waras Budi Santosa said the contracts will ensure the demands of natural gas for industries, including fertilizer, oil refineries, electrification, and natural gas network for the next two and ten years.

To attract more investors, government has cut down its regulation in oil and gas industries. Out of 373 permits, government has cut down to 186 permits. In addition, gas producers are also being facilitated to sell their product to end users.

“No more point to point but it is multi destination. So, one contract not only for one factory or industry but can be used for four factories in the areas. With deregulation, it is expected that the process for new field, from planning to on-stream will only need five years, faster that average eight years,” said Santosa.

READ ALSO: Indonesia Cuts 186 Complicated Oil and Gas Regulations To Attract Investors

Director Executive of Reforminer Institute, Komaidi Notonegoro said oil and gas industry serves as double impact generator of Indonesia’s economics. The effect, Notonegoro said, can be increased if the government is willing to reduce state benefit from oil and gas industry to subsidy.

“It is preferably that oil and gas is no longer the source of revenue but Indonesia’s economics energy by reducing profit sharing for government to impact industrial growth,” he said.

Meanwhile, Achmad Safiun, Chair of Forum for Gas Natural Users Industry said that high price of natural gas in the country left national industry less competitive compare to international industry, meanwhile, the price abroad is declining.

“In other countries, gas price can decrease to 60 percent in the past few years, meanwhile Indonesia has never experienced any decline [for the price],” said Safiun.

READ ALSO: President Jokowi Instructs To Cut Red Tape To Attract Oil and Gas Investors

As high price of natural gas, then the industry can no longer suppress production cost and eventually lead to lack of interests from investors. Hence, it will reduce the contribution and slowing employment rate.

Jobi Triananda Hasjim, Director of PT Perusahaan Gas Negara (PGN) said that long gas distribution chain is the main reason for high price on domestic gas price. One of the efforts to tackle the price issue, said Hasjim, is to improve gas infrastructure and cut distribution process from upstream to end users.

“Most of the time, the distance between the industry as end user and the supply is far resulting to the cost of energy is expensive. If we can bring the industry closer to upstream then the cost will be cheaper,” he said.

On corporate level, he said that to improve oil and gas management is establishing a holding company, especially in gas sector. With Pertagas included in PGN, then it can increase distribution of capacity and national gas industry business. “At the end, gas will be reaching to more people,” he said.

Reports by Dewi Purningsih