The Ministry of Energy and Mineral Resources of Indonesia is considering overhauling its energy policy, in an attempt to attract as much as US$200bn of investments over the next decade and to reverse the decline in its oil production. The proposed amendments, which have to be approved by the President, will offer explorers various financial incentives, such as easier cost recovery or tax-free import of drilling equipment and technology.
Indonesia is offering 14 unexplored (mainly offshore) oil and gas blocks and expects to attract new investments to raise domestic oil and gas production. Between 2010 and 2015, crude oil production fell by 17% (-3.6%/year), while gas production fell by 14% (-3%/year), forcing the country to resort to energy imports (+18% for crude oil, i.e. +3.3%/year). Indonesia should continue to import oil for at least 10 years.
Massive investments will be required to develop the much-delayed Masela gas project estimated at US$16bn and the East Natuna block (48 Tcf or 1,355 bcm of reserves) estimated at US$30-40bn.
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