Upstream Oil and Gas Investment Reaches Only 22 Percent in First Semester

Low oil prices have caused oil and gas businesses to hesitate in investing their funds in this high-risk sector in Indonesia. Furthermore, the implementation of the gross split revenue-sharing scheme, replacing the previous cost recovery system, has also hampered investment in Indonesia's oil and gas sector.

Data from the Ministry of Energy and Mineral Resources shows that oil and gas investment up to the first half of 2017 only reached US$4.8 billion, or 21.6 percent of the target for the whole of 2017, which was US$22.2 billion. The gross split revenue-sharing scheme offered by the government is considered unattractive to multinational oil exploration companies. They are demanding more incentives to ensure the economic viability of their exploration activities.

Other data shows that government tenders for oil and gas blocks have attracted little interest from investors. In 2015, 14 oil and gas blocks were offered for tender, but none attracted any investor interest. Similarly, the results in 2016 were also nil. (See Databoks: [Link to article])