A LOCAL PLAYER PERSPECTIVE ON INDONESIAN OIL INDUSTRY - ISSUES AND CHALLENGES

摘要

Currently, the oil industry is experiencing a boom due to high oil prices. Although this situation is not sustainable, there is no sign of slow down in demand. It was indicated that the oil price will remain well over $20.00/bbl. Recent reports indicate that oil and gas demand has risen from 47 mmbd in 1970 to 82 mmbd today sign of slowdown. Non OPEC production is expected to decline because due to limited resources, while reserves in some regions may have been exaggerated by both companies and countries. While demand has been growing at an annual rate of 1.5% over the last 5 years, production capacity has grown at only 0.2%. It's likely to be needed to enable OPEC to meet future demand, around $400 billion for oil and $200 billion for gas. Indonesia as a member of OPEC is also encouraged to increase their production especially since Indonesia has already been a net importer. A change in incentive policy related to oil and gas investment is required since there are some exodus foreign investment from Indonesia especially for US and Europe investors. On the other side, China has entered Indonesia and may effect the reduced invest of the western oil investor. From the local player's perspective, the situation created a high competition. Indonesian government needs to consider how to provide incentives to local players in competing with other country in energy business considering that in future, Government needs local oil companies to secure oil supply for the domestic demand. In building competitiveness to attract oil & gas investment in Indonesia, Government should restructure the current PSC by providing some incentive for to utilizing local resources even though the government take would potentially be reduced.