2017, Upstream Oil and Gas Investment Realization Below Target

Indonesia's upstream oil and gas investment in 2017 reached only US$9.33 billion, equivalent to Rp 126 trillion. This comprised US$9.18 billion for exploitation Working Areas (WK) and US$180 million for exploration WK. Last year's upstream oil and gas investment realization reached only 75% of the target and was the lowest in the last three years.

This year, the government targets oil and gas investment of US$17.04 billion, consisting of US$14.45 billion (Rp 198 trillion) for upstream and US$2.59 billion for downstream. The 2018 upstream oil and gas investment target is 55% higher than the 2017 realization and 18% above last year's target. This year will also prove whether the shift from the previous Production Sharing Contract (PSC)/cost recovery scheme to the gross split contract scheme can boost oil and gas investment in Indonesia.

Domestic upstream oil and gas investment has declined consecutively for three years since 2015. The fall in global crude oil prices to below US$30/barrel has caused oil and gas sector investors to hold back on expansion, as investment in this sector requires substantial funds and a long payback period.