Indonesia’s new government plans to revitalize oil and gas production through regulatory cuts, reactivating idle wells, and boosting output from existing assets, aiming to reverse a long-term production decline.
President Prabowo Subianto seeks to build on previous initiatives to exploit significant gas discoveries in South Andaman and increase biofuel usage, according to a Reuters report.
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Once a member of OPEC, Indonesia’s oil production has fallen to under 600,000 barrels per day (bpd) this year, down from approximately 1.6 million bpd in the 1990s due to aging oil fields and sluggish investment.
Meanwhile, oil consumption has more than doubled to 1.5 million bpd, leading to annual imports averaging $28 billion over the past decade.
Prabowo emphasized the need for energy self-sufficiency in his inauguration speech, citing rising geopolitical tensions.
Previous administrations have attempted to reverse production declines but faced challenges from bureaucratic red tape and competition for investment from renewable sources.
Indonesia has reported significant gas discoveries and aims to accelerate development to meet rising domestic and international demand for liquefied natural gas (LNG).
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Energy Minister Bahlil Lahadalia announced plans to streamline the exploration process by reducing required permits from 320 to 140, with further cuts expected.
Energy analyst Komaidi Notonegoro highlighted that oil and gas contractors must navigate permits from 19 competing agencies, arguing that they should focus on discovering new reserves instead of dealing with bureaucratic hurdles.
The government intends to reactivate nearly 5,000 idle wells, targeting an increase in oil production by about 200,000 bpd through optimization and technology, though no specific timeline has been provided. Enhanced oil recovery (EOR) projects are also being promoted, with ExxonMobil and Pertamina in early EOR stages.
To reduce liquefied petroleum gas (LPG) imports, the administration aims to double domestic cooking fuel production from 1.7 million tons annually, as Indonesia currently imports around 70% of its LPG.
Prabowo also plans to boost biodiesel and bioethanol use, targeting a rise in palm oil-based fuel in diesel to 50%, while identifying cassava and corn as potential biofuel feedstocks.