Reuters Summit: Indonesia's drive to reduce oil imports a boon for producers - GSS Energy

GSS Energy

12/10/2017 11:01

By Roslan Khasawneh 
    SINGAPORE, Oct 12 (Reuters) - The appeal of Indonesia's oil 
and gas sector is improving for some independent producers as 
the resource-rich nation scrambles to reduce its dependence on 
imports and fill a gap left by the exit of some producers, the 
head of GSS Energy told Reuters. 
    "There could be some assets that will be available that 
three or five years ago would have been very difficult to gain 
access to for a relatively small and new player like us," said 
Sydney Yeung, group chief executive at Singapore-listed GSS 
Energy.  GSSE.SI  
    Amid depressed oil prices, international oil companies such 
as ConocoPhillips  COP.N  and Chevron  CVX.N  have reduced their 
holdings in Indonesia, a former member of the Organization of 
the Petroleum Exporting Countries. As a result, the country has 
struggled to attract fresh investment and to develop new fields. 
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    The risks that energy investors face in Indonesia are 
highlighted by recent change to the development plans of the 
Masela gas field developed by Japan's Inpex  1605.T . There has 
also been a long-standing dispute between France's Total and 
Indonesia's government over the Mahakam block, the country's 
largest gas-producing field. 
    The recent departure of the producers, as well as its drive 
to reduce its dependence on imports, "can only force the 
government to move faster" in implementing more favourable 
policies and incentives for operators, said Yeung.  
    Indonesia's crude oil output peaked at around 1.7 million 
barrels per day (bpd) in the mid-1990s. But with few significant 
oil discoveries in the past 10 years, production has fallen to 
roughly half that as old fields have matured and died. 
    "Indonesia is a net importer of oil not because there's a 
lack of resources," said Yeung, but because "previous policies 
that did not encourage or anticipate the demand they needed and 
did not push as aggressively as they should have." 
    With oil demand at about 1.2 million bpd and production at 
about 800,000 bpd, investors in Indonesia's oil and gas sector 
will have a big supply gap to fill, said Yeung.      
    The energy industry is a vital part of the Indonesian 
economy, but its contribution to state revenue has dropped from 
around 25 percent in 2006 to an expected 3.4 percent this year, 
according to data compiled by consulting firm 
PricewaterhouseCoopers. 
    "It's very clear to me that Indonesia's number one agenda is 
to push its economy forward as fast as they can but that would 
be difficult without greater energy supply," said Sydney.  
             
 
 (Additional reporting by Fergus Jensen in JAKARTA; Editing by 
Christian Schmollinger) 
 ((roslan.khasawneh@thomsonreuters.com;)) 
 
Keywords: COMMODITIES SUMMIT/GSS ENERGY