Page 8 - AsianOil Week 23 2021

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Indonesia considers

broader upstream stimulus

Jakarta has been selective when deciding which developers may access its upstream stimuli,
but a series of announcements suggest it may be ready to adopt a more relaxed approach

COMMENTARY THE Indonesia government appears ready to Jakarta may be coming around to the idea that
broaden the scope of its upstream stimulus pack- unless it takes more direct action then it will
age, which was unveiled last year, as it seeks to struggle to hit its long-term production goals.
WHAT: boost investment.
Energy Minister Arifin Upstream regulator SKK Migas outlined nine Shot in the arm
Tasrif has said the stimuli in October 2020, stating at the time that SKK Migas rolled out some of the stimuli in
government is committed the measures were designed to halt the decline in October 2020, noting that while six measures
to seeing new oil and gas upstream investment as a result of the coronavi- had been approved, three more were still to be
projects succeed. rus (COVID-19) pandemic. finalised.
The regulator said that six of measures had Some of the approved measures include the
WHY: received government approval, and had already postponement of abandonment and site resto-
SKK Migas has warned been extended to some developers, with another ration (ASR) requirements, an upstream income
that several new three were still to be finalised. tax holiday and the removal of third-party fees
upstream projects will There is little sign, however, of the stimuli at the Badak liquefied natural gas (LNG) facility.
not get off the table having their desired effect, with foreign inves- Tasrif, however, said the government would
without fiscal incentives. tors opting to exit the country in pursuit of more throw its weight behind new developments to
attractive investment options elsewhere and the tap into the country’s oil and gas reserves.
WHAT NEXT: country’s upstream regulator revealing this week “The government continues to encourage
Jakarta must hurry with that Indonesia’s largest oilfield is in decline and efforts to increase reserves and oil and gas pro-
such measures to ensure needs fresh exploration investment. duction, as well as optimise the use of natural gas
enough new fields come Indonesian Energy Minister Arifin Tas- for domestic needs, which currently stands at
online for it to reach its rif came forward this week to announce that 63.9%,” local newswire Antara quoted the energy
2030 production goal. the government was looking for ways to boost minister as saying on June 9.
upstream development. At first glance, the com- The news service reported that the govern-
ments might be considered little more than lip ment was also willing to delay or reduce indirect
service. taxes, allow gas production outside of take-or-
When weighed against SKK Migas’ revela- pay and daily contract quantity schemes to be
tion last week that some of this year’s expected sold at a discount, and open tax discussions for
upstream project approvals are unlikely to hap- businesses supporting the upstream sector.
pen without fiscal incentives, and it appears While Indonesia’s upstream sector had

P8 www. NEWSBASE .com Week 23 10•June•2021