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Indonesia plans to cut red tape to encourage oil and gas exploration as it looks to revive its domestic oil and gas industry and boost energy security, the new government and president have said.
“We must have energy self-sufficiency and we are capable to be self-sufficient,” newly sworn-in President Prabowo Subianto said in his inauguration speech, as carried by Reuters.
Indonesia, which was a member of OPEC between 1962 and 2009, reactivated its membership in the organization in early 2016, but suspended it again later that same year, when the cartel agreed on joint oil production cuts under the so-called OPEC+ deal with some non-OPEC members, including Russia and Kazakhstan.
Indonesian crude oil production has been falling in recent years, while oil demand has been rising in the world’s fourth most populous country after India, China, and the United States.
Indonesia used to be a net oil exporter but this has changed as natural depletion and insufficient new exploration have combined to push its output of hydrocarbons down. As a result, the rate of oil production has been declining, at an average annual rate of 11%, according to the U.S. International Trade Administration.
Indonesia’s oil production peaked at about 1.6 million barrels per day (bpd) in the 1990s, but has fallen since, and now stands at below 600,000 bpd.
In order to incentivize oil and gas production, Indonesia plans to shorten the permitting process, which often involves securing permits from more than a dozen agencies, some with competing priorities.
“The oil and gas contractors should be busy looking for new reserves instead of taking care of permits, it takes too much time,” Komaidi Notonegoro, an energy analyst at ReforMiner Institute, told Reuters.
Earlier this year, Indonesia offered five onshore and offshore oil and gas blocks in its first tender for 2024 amid efforts to reverse an extended production decline.
Last month, Indonesia asked U.S. supermajor ExxonMobil to raise its crude oil production in the country to 150,000 bpd in 2026, up from 125,000 bpd now.
