Indonesia’s oil and gas sector is set to see a significant increase in investments, with the country expecting a 29% rise in investments to $17 billion in 2024. This is according to Dwi Soetjipto, the chairman of the country’s oil and gas regulator, SKK Migas.
The immediate push for increased investments in the sector is crucial for Indonesia, a resource-rich Southeast Asian nation, as it looks to reverse a protracted output decline amid increasing financing challenges for fossil fuel projects. This comes after the recent exits of global giants Shell and Chevron from the country’s oil and gas market.
Of the planned investments for this year, 40% will come from foreign companies, including Eni, Exxon Mobil, and BP. The investments will be used to boost exploration and drilling activities, with the country planning to increase the number of wells drilled from 790 last year to around 930 this year.
Exploration spending is also expected to increase, from $0.9 billion last year to $1.4 billion in 2024, as the country looks to invest in projects that will begin production later this decade.
However, Soetjipto highlighted that decarbonization requirements for fossil fuel projects are a major challenge, as most of the investment funding is coming from foreign banks, and there is no immediate pathway for consistent returns on investments in carbon capture.
The Indonesian government is aiming to reverse the trend and has set a target to increase oil lifting to one million barrels per day and gas production to 12 billion standard cubic feet per day by 2030.