Indonesia is Running Out of Oil

Indonesia’s ANTARA News reports that a government official has stated that most of Indonesia’s oil and gas supplies are almost exhausted and that increased consumption cannot be sufficiently overcome by the country’s production.

"Most of our oil and gas supply is almost exhausted but we have been acting so far as if we still had a lot of oil and gas resources," Secretary of the Upstream Oil and Gas Regulator Special Task Force (SKKMigas) Gde Pradnyana reportedly stated.

Therefore, he noted that oil and gas exploration remains necessary because the remaining reserve is now only about 3.6 billion barrel. "The volume of our oil and gas reserves is very limited, and therefore we have to make an all out campaign for intensive exploration to increase the existing reserves," he said. The country faces three major obstacles: licensing, taxation and legal certainty, he said.

Indonesia’s drop in output has turned what was once Southeast Asia’s largest crude producers into a net importer of oil, leading it to withdraw from the Organization of Petroleum Exporting Countries in 2008.

The Jakata Post reports that Fahmi Radhi, a researcher from Gadjah Mada University’s (UGM) Center for People’s Studies, said the main problem in the country’s oil and gas management was the government’s policy to use oil and gas as export commodities, although Indonesia had been an oil importing country since 2004.

He says that the country’s laws had opened opportunities for the trade liberalization of oil and gas, allowing foreign investors to dominate the domestic oil and gas sector when they should be treated as strategic commodities.

Darmawan Prasodjo, an energy economist from the Indonesian Democratic Party of Struggle’s executive board, says Indonesia’s heavy dependence on imported oil showed “Pertamina’s failure in oil and gas management”.

Earlier in January, Xinhua reported that the Indonesian government planned to revise downward its oil lifting (after sold) target this year due postponement of production in some wells and poor weather condition. The cut is expected to be around 820,000 barrels per day from 870,000 barrels per day.

Indonesia's proven oil reserves stand at 4 billion barrels and gas reserves at 104.71 trillion cubic feet.

Eni is planning to raise investment levels in Indonesia, reports Xinhua. Eni has invested about US$400 million in Indonesia since 2001 and has developed 13 blocks nationwide and the company holds promise for more blocks.