Page 9 - AsianOil Week 16 2021

AsianOil SOUTHEAST ASIA AsianOil

Speeding up the process production, Yunus said in an interview with
“Based on data compiled by SKK Migas, licens- CNBC Indonesia on April 19.
ing and land acquisition require 30-50% of the What next
total time required for development activities. Indonesia needs to attract more than $200bn
This must be changed so that it can be acceler- worth of investment this decade if it wants to
ated, to be efficient and ultimately benefit the produce 1mn bpd of oil and 12 bcf per day of gas
government,” Yunus said in a written statement by 2030. This will be a tough ask as long as the
on April 18. country’s regulatory environment is a deterrent
The official said the time it took to secure land to IOCs.
and permits remained a major risk factor for At the same time, the country’s oil developers
international oil companies (IOCs). Yunus said are struggling to halt steep declines from exist-
removing this country risk was a key pillar of the ing fields, let alone boost production. This will be
regulator’s upstream transformation agenda. challenge enough for the country to overcome.
Yunus said SKK Migas’ adoption of a one- SKK Migas is now pushing back against gov-
door service policy (ODSP) in January 2020 ernment oil and gas rhetoric, a necessary step if
had allowed the regulator to slash its approval the country’s politicians are to begin to under-
process from 14 days to slightly more than three stand market realities. Indonesia is far from
days on average. SKK Migas also wants to trim being Southeast Asia’s most attractive invest-
this figure to three days flat this year. ment destination for IOCs, given the coun-
He also pointed to government efforts to slash try’s enduring reputation for bureaucracy and
the number of permits required by upstream resource nationalism.
operators, with the number falling from around After all, SKK Migas revealed in February
340 in 2015 to just 146 at present. that once Chevron hands over control of the
The slow process in securing land and per- Rokan oilfield, the country’ second-largest, to
mits has increased investor uncertainty, with Pertamina in August, the state-owned major
many asking for government incentives to out- will then control around 70% of national oil
weigh their concerns. Yunus warned that while production, up from 43%. Pertamina could find
the prolonged licensing process reduced the itself stretched extremely thin in terms of devel-
attraction of bid rounds, the need for investor opment capital before long.
incentives would also eat into the government’s Both SKK Migas and government agen-
oil and gas revenue. cies have been making strides to improve the
The Indonesian government already pro- upstream sector’s attractiveness, but more needs
vides a number of incentives such as the choice to be done before much-needed foreign capital
between cost-recovery production-sharing begins pouring into the country.
contracts (PSCs) and the gross split contracts, While Indonesia’s 2030 production targets
tax holidays, investment credit and access to increasingly appear more aspirational than
upstream data. achievable, if production continues to fall short
SKK Migas also offers an internal rate of of political expectations, then it should add fur-
return (IRR) on upstream projects of more than ther impetus to upstream regulatory reform
15% in an effort to encourage exploration and efforts.™

Week 16 22•April•2021 www. NEWSBASE .com P9