Case : How to Maximize Our Gas Resources?

What a misperception saying that Indonesia is a rich oil and gas country! Indonesia's
proven gas reserves are only 1.6% of the world's total gas reserves. Indonesias gas
production level is also only 2,4% of the worlds. Whereas natural gas is targeted
to be 22% of the main energy source by 2025, how come it happens then? With
current national gas production levels, if no additional or new reserve finds, the gas
will be exhausted within 40 years. For that Indonesia must take various steps to
achieve efficient and productive gas sector. There are exactly three main problems.
First is a rate of decline in gas production caused by 90% of the national oil
production portion comes from the depleted old fields that have a rate of production
decline of up to 24% every year. Second is the produced volume isnt well offset
by additional volume of new reserves from the exploration side. Third is theres no
adequate investment in new exploration and development in gas sector. So weve
got all points of exploration problems, which is related to investment. For example,
the technical configuration of the refinery at the time of construction that is no
longer in accordance with the condition of Indonesia and suitable to meet current
needs. In order to boost competitiveness and profitability, these refineries need to
be updated significantly. These activities require a large cost and high risk level, so
it takes investment from both private and government. There are at least three
problems and solutions in Indonesia that need to be addressed so that investors want
to invest. First, the government should simplify the licensing because related to the
timeliness and cost of licensing and regulation in the oil and gas sector needs to be
clarified again in order for investors to get certainty. The government needs to make
regulations on granting incentives to new exploration and development projects in
the oil and gas sector. For example, Malaysia has successfully implemented a risk-
sharing contract that is able to attract companies to join in the development of
energy reserves. Second, the bureaucracy must be more professional and fast in
accordance with the demands of the business world. Thus the company will be more
interested to invest in Indonesia. Third, social and security issues become important
to be addressed. Society needs to be educated about Indonesia's current energy
condition which is still less effective utilization. Security must be increased again
to stay away from other problems such as illegal taping risks, theft of pipes and
cables, etc. In addition to these three problems, Indonesia also has to build
infrastructure related to gas in order to fulfil domestic gas demand. If all of the
above problems can be addressed, Indonesia's gas sector resources can be improved.
Exploration and investment in the oil and gas sector will likely add new sources of
oil and gas in various regions of Indonesia. This will increase the production of
domestic natural gas that can be used for various things, especially electricity
generation.
Keywords: bureaucracy, exploration, license, infrastructure, risk-sharing