Page 5 - AsiaElec Week 50

AsiaElec COMMENTARY AsiaElec
with Abdurrahman noting that doing so would allow the country to lift crude oil production to 1mn bpd by 2030.
“We have identified 12 prospects across the Archipelago. We can go offshore, we can go deep oil. This data is open to oil companies, you can come [to SKK Migas] and take a look free of charge. In other countries you have to pay,” Abdurrahman said.
What next
Despite embracing resource nationalism in the run-up to this year’s national elections, Indo- nesian President Joko Widodo appears to have listened to the business community’s concerns.
The first sign of this softening was the govern- ment’s decision to allow US super-major Cono- coPhillips and the Spanish Respol to remain partners in the new PSC for the onshore Cor- ridor gas field. Under the terms of the 20-year extension, the US company will remain operator for at least the first three years, at which point control could be gradually transferred to Per- tamina. The government has indicated, however,
that there is no fixed timeline for this to happen. Investment has fallen off in Indonesia and so too has production. Unfortunately for the government, band-aid political fixes will not see international oil majors return in force with multi-billion dollar exploration programmes. Upstream spending had been shrinking before the introduction of the gross-split scheme and offering the option to return to the way things were pre-2017 will not change the lack of confi-
dence that investors have in the country. Companies rely on a stable business climate and, despite Jakarta’s promises of providing greater flexibility and honouring existing con- tracts, the fact that the government is prepar- ing to revamp its licensing model again so soon
speaks to a fundamental lack of stability.
If the government can deliver on its prom- ises of streamlining the approvals process and expanding the contracting option, then it should provide some encouragement to smaller devel- opers with more appetite for risk. The larger players will likely prefer to wait to farm in to new
discoveries if and when they are made.™
Week 50 18•December•2019 w w w . N E W S B A S E . c o m P5