September 24, 2011
Media Indonesia

After 100 years exploring oil & gas in Western Indonesia, now it is the time for the government to focus on the Eastern Indonesia.

The upstream oil & gas sector is shifting its paradigm with the tendency of increasing gas production and exploration to Eastern Indonesia. Therefore, the government is asked to issue policies in accordance with the new paradigm.

According to the Deputy of BP Migas, Rudi Rubiandini, currently there is a stagnant oil production, while gas production is increasing. In his notes, gas production is increasing by 3% in the past three years.

“Oil production tends to go down, while gas production is going up. There is a paradigm shift from the oil era to the gas era,” Rudi said in a public discussion on energy and natural resource in Jakarta yesterday.

To anticipate this shift, the government should apply policies compatible with the new paradigm, especially preparing the infrastructure.

Rudi believes acceleration in building a floating storage and regasification unit and a Bulog gas unit is necessary. The Bulog gas would search and store gas reserve for the domestic need. “FSRU should be built. Whether the gas is available or not, we have to build it.”

An energy observer, Kurtubi reminded the same thing. According to him, the government must build domestic gas infrastructure. “Infrastructure development is not limited to the construction of FSRU, but also the expansion of gas distribution pipelines,” Kurtubi said.

Shifting Exploration
The oil & gas paradigm shift also occurred in exploration targets. Previously explorations are dominantly performed in Western Indonesia, in the future it would move to the East. “We have been exploring the West for 100 years, it is time to explore the East,” Rudi added.

The problem is, exploration in the East is considered more difficult and cost more compared to the West because it focuses on deep sea and remote frontier. With the high difficulty, more investment is required. “It is very likely that the government is forced to invite foreign investors,” said Rudi.

Vice President of Indonesian Petroleum Association, Sammy Hamzah, mentioned, oil & gas exploration investment in Eastern Indonesia is estimated to be 10-20 times more expensive compared to exploration in Western part of the country. However, he disagrees if the government relied on foreign investors as the only solution to the issue at hand.

He prefers to strengthen the state-owned oil & gas company PT Pertamina, in dealing with the condition. “Pertamina should no longer taking care of the marginal oil & gas fields, an oil & gas field map should be prepared in the future focusing on the deep sea exploration,” Sammy said.

On the other hand, a member of the Commission VII of the DPR Satya W. Yudha said, the government still needs to create a better oil & gas investment climate due to the limited government budget to develop the oil & gas sector.