Oil and gas companies are confident about the outlook for energy sector reforms in Indonesia, highlighting the need to tackle investment challenges through comprehensive dialogue. This will in turn spur exploration activities, as maturing fields show declining production levels.
Speaking today in Jakarta at the opening of the 36th Annual Convention & Exhibition of the Indonesian Petroleum Association (IPA), Elisabeth Proust, President, IPA, said: "The industry needs to explore and develop oil and gas reserves in difficult frontier areas in order to meet the growing needs of domestic industries, as well as the need to generate valuable export revenues".
The oil and gas sector is one of the main contributors of Indonesia's economy, contributing US$35 billion, or around 21 percent of state revenues in 2011, according to the Energy and Mineral Resources Ministry.
Direct investment in the industry reached more than US$19 billion last year and employed over 300,000 workers across the nation. These figures were highlighted at this morning's opening ceremony, which was attended by more than 3,000 participants.
"To increase exploration and production, the industry needs to be given necessary incentives to ensure that investments are made in the upstream sector," Proust said, adding that IPA members were ready to contribute valuable input in the discussion. The IPA consists of at least 51 multinational and national companies, and represents around 90 percent of oil and gas exploration and production companies in Indonesia.
The Indonesian government today expressed positive sentiment that they would endeavor to review the energy regulations and would welcome input from all stakeholders.
"The government will continue to provide incentives for the industry, strive to provide a stable regulatory environment and issue supporting policies to boost the investment climate in the sector that is needed to fund this future growth, " Energy and Mineral Resources Minister Jero Wacik said.
Wacik said energy and mineral resources ministry and the finance ministry have been formulating incentives for the industry to find the best possible solution soon.
In the short term, Wacik said, "The incentive now is for the Government to accelerate the approval process for exploration and production activity in order to achieve the production goals set by the Government".
The 36th Annual IPA Convention and Exhibition is being held on May 23-25 in Indonesia's capital city Jakarta with the theme ‘Working Together to Meet Indonesia's Energy Needs.'
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