Technology is government’s key to increasing national oil, gas production

September, 24 2018 | 21:16 pm Courtesy of ESDM
Courtesy of ESDM

The government is continuing to encourage technological innovation in the upstream oil and gas sector to increase national oil and gas production through short-term, middle-term and long-term programs.

Vice Energy and Mineral Resources Minister Arcandra Tahar said that a short-term program was needed as a response to the current oil and gas production condition. It is also needed to prevent the continued increase of the imports to fulfil daily national consumption.

That is why the government has welcomed all technology providers from the upstream oil and gas sector to submit proposals on technological innovations to increase Indonesia’s oil and gas production.

“All technology providers may submit proposals, as long as their technology is able to increase our oil and gas production immediately,” said Arcandra during the Grand Seminar Petroleum Incorporated Fair 2018 held by Trisakti University on Thursday, Sept 20.

As a middle-term strategy, attempts have been made to increase oil and gas production by applying enhanced oil recovery (EOR) technology to brown fields (old oil and gas wells). The EOR method can be applied by adjusting to each brown field’s characteristics.

Arcandra has given an assurance that government will fully support EOR implementation by cutting down the time and procedures needed by providers to gain permits or licenses.

Moreover, he said that all recovery costs would be paid by the government if the implementation of the EOR methods increased production. “This is the incentive the government can offer,” said Arcandra.

Meanwhile, as a long-term strategy, the government is offering both new and terminated oil and gas block (WK) contracts to contractors (KKKS) in an attempt to encourage exploitation and exploration in the upstream oil and gas sector.

Another of the government’s efforts to attract investors is the gross split profit sharing policy. There have been 25 oil and gas working contracts managed with a gross split scheme. The details are as following:

  • Nine auctioned blocks (five blocks in 2017 and four blocks in 2018)
  • Sixteen terminated blocks ( one block in 2017, six blocks in 2018, four blocks in 2019 and one block in 2021 )