The third and final day concluded the discussions that happened over the three-day event. There was a great reminder of the changing dynamics both globally and in Indonesia, including the recognition that Indonesia's oil production is in decline and that real actions must be done to tackle this issue should Indonesia want to realize its oil and gas potential.
During the morning special session, titled "New Oil and Gas Law: Vision and Expectation", the panelists agreed that there needs to be a regulatory framework that has a long-term vision in mind and strikes the right balance between national interest and that of the investors.
There was great debate on how future laws needs to be structured for the oil and gas industry in Indonesia, or whether there needs to be a new law at all. Whatever the outcome, Craig McMahon of Wood Mackenzie cautioned that Indonesia should consider seriously the implications of the possible decisions that would be made.
Given the current situation, the potential and the challenges, the law should promote investments and exploration and increase clarity and confidence among investors. "Investors look for stability more than anything else," he emphasized.
With new laws being drafted in the parliament, the oil and gas industry now awaits to find out what's in store for them. Member of Commission VII, House of Representatives Satya W. Yudha, explained the process of drafting the law and the considerations that have been taken into account. He said, "We want to ensure that we have a strong foundation for the law. That is why we insist in having a strong academic script that will serve as the basis for the law which we hope will be finalized within the next year."
McMahon added, "With such high risks involved in the process, the government needs to provide a signal that they are willing to share these risks."
Furthermore, the adaptive nature of the industry is also being put to test in the dynamic landscape of the country. Todung Mulya Lubis of LSM Law Firm stated, "Indonesia is changing. The country is experiencing an emerging power of democracy, coupled with increasing freedom of the press and a growing middle class. You also see that there are now multiple power centers, including the civil societies, regional governments and the private sector. You have to take these into account when doing business here and adapt to it."
This is where IPA can step up and be the voice of the oil and gas industry. "The question is," said Lin Che Wei, "whether you have spoken in their language and made yourself understood. If you can do this, you will get the support you need because people understand that you have their best interest in mind."
With such a dynamic landscape, the complexity of issues, involvement of multiple stakeholders and high risks, clarity of vision is needed. President Commissioner PT Ametis Energi Nusantara, Darmawan Prasodjo stated, "Before we dwell on the details, we need to be clear with our goal."
Prasodjo recommended that the goal needs to be measured energy nationalism within the corridor of national development, without being anti-foreign involvement. He added, "success implies good governance, unified government support, and adding value to its national resources."
With this, add Prasodjo, there also needs to be an inspiring leadership, "An intelligent leadership, and not necessarily an ultra-nationalist one."
The discussion got more detailed and practical during the afternoon special session, titled "Increasing National Oil and Gas Production: Challenges for all Stakeholders." Panelists shared their views on the challenges and provided recommendations on how to tactically resolve the issues.
Suryo Pratomo of Metro TV provided a good context to the discussion when he reminded the audience, "In the past, Indonesia has enjoyed the fruits of a flourishing oil and gas industry. With it, we have managed to build fundamental infrastructure, schools and health facilities. But we need to remind ourselves, Indonesia is now a net oil importer. The conditions have changed and hence our approach should change as well."
There was a consistent voice from the government and parliament representatives among the panelists that the government is committed to support the changing dynamics of the industry.
Corporate Secretary of SKK Migas Gde Pradnyana said, "The oil and gas industry should be a prime mover for the national economy and not only be treated as a source of state income. It also needs to have the right balance of the PSC's and the government's interest in mind."
The Chairman of the Fiscal Policy Office of the Ministry of Finance, Bambang Brodjonegoro, emphasized that despite the changes, the oil and gas is still key to the Indonesia's economy. "And the key is in the upstream industry," he said. The ministry is working with other government institutions to improve facilities, especially for the exploration activities of the industry. This includes addressing possible incentives such as tax holidays, fiscal terms, import duties, and internal rate of return, although details were not presented at the Convention.
Head of the Bojonegoro regency Suyoto explained how his region has been lenient and supportive to oil and gas companies who do business in the region. "We are very responsive to any specific needs the companies may have."
He added, "We concur that the central government should regulate the oil and gas industry. We only have one request: that we all pay enough attention to the development of the regions and the communities."
Member of Commission VII, House of Representatives Milton Pakpahan added, "The benefits should also be felt not only in the regions where the oil and gas companies operate, but also in other regions in Indonesia".
IPA Board Member Marjolijn Wajong represented the voice of the industry in the session. Wajong provided several recommendations to move the industry forward. This includes sufficient incentives, pricing policies for unconventional gas (CBM), implementation of the Presidential Instruction No 2/2012, and flexibility in the cabotage implementation.
She concluded, "This is not the time for more planning. Let's move straight to action. The Presidential Instruction is there and clear. Now I challenge the government to say what the progress will be in the coming two or three months."
During the Convention closing ceremony, the Vice Minister of Energy and Mineral Resources Susilo Siswoutomo reiterated the government's commitment to support, promote and facilitate the oil and gas industry players in order to encourage exploration and production processes throughout the nation.
"The President has given his instructions to the Ministry of ESDM and other related government institutions, during the opening ceremony of the 37th IPA Convex, to take necessary steps towards improving the investment climate in the country, including bureaucracy reformations in permitting and licensing," said Susilo, adding that collaboration and cooperation between all related stakeholders was also important to support the industry's development, in order to ultimately provide optimum benefit to the public.
In line with the statement from the Vice Minister, Lukman Mahfoedz, President of the Indonesian Petroleum Association (IPA), said that the greater challenge now lies with the IPA to turn the positive messages received during the three-day convention into concrete actions.
"An ongoing effort to maintain and improve the investment climate is an absolute priority for the government in order to optimize oil and gas production nationwide. However, all the stakeholders, especially the industry players, must also play an active role in creating a conducive business climate for investors, both national and international, by working hand-in-hand to increase exploration activity," said Lukman.
This year's IPA Convention and Exhibition was visited by 16,128 participants, making it the highest number of visitors in the history of IPA Convex. As stated by the Chairman of this year's Convex, Bambang Istadi, "During the opening ceremony alone, there were more than 4,000 people registered, and the number grew significantly during the three-day convention. This shows the high enthusiasm from the industry's stakeholders to take part in the largest oil and gas event in the region."
The 37th Annual IPA Convention and Exhibition was held on May 15-17 in Jakarta with the theme ‘Promoting Investment in a Challenging Environment.'