Indonesian Government Optimistic the Upstream Oil and Gas Industry

Indonesian Government Optimistic the Upstream Oil and Gas Industry Can Answer the Challenges of Increased Energy Consumption and Climate Change

JAKARTA - Oil and gas resources certainly will remain important elements in meeting energy needs during the energy transition. Based on data from BP statistics, to meet the energy demand, world oil production has increased from 88.6 million barrels per day (bpd) in 2012 to 93.8 million bpd in 2022. Gas production has also increased by around 20% in the last 10 years with an average gas consumption increasing 1.7% per year.

Arifin Tasrif, Minister of Energy and Mineral Resources (ESDM) said that the data cited from BP shows the important role of the oil and gas sector in meeting the demand for affordable energy, especially for the transportation and industrial sectors driven by economic growth, especially in developing countries, including Indonesia. Arifin said this at the opening of the 2023 IPA Convention and Exhibition (Convex) themed Enabling Oil & Gas Investment and Energy Transition for Energy Security at ICE BSD, Tangerang, Tuesday (25/7/2023).

The increasing need for energy is going parallel to demands for improving environmental quality, among others, by reducing carbon emissions resulting from oil and gas production operations. Energy security is not only about the certainty of supply and affordability but also must be safer and more sustainable and lower in carbon emissions.

According to Arifin, there are several ways to ensure the upstream oil and gas industry’s growth to meet demand while, at the same time, playing a role in carbon emissions reduction efforts. Efficient use of energy to reduce greenhouse gas emissions in operational activities is the easiest way available to business actors.

"Besides, there is also an option to reduce exhaust gas, regulate methane gas emissions and, in parallel, increase the use of low-carbon power plants utilizing new, renewable energy sources. The next step is to increase the use of gas, initiate the use of efficient technology, and develop low-carbon mobility, such as the use of electric vehicles, biofuels, and LNG," said Arifin.

Arifin also explained the importance to encourage the development of hydrogen. According to him, hydrogen technology will answer the challenges of a low-carbon emission industry in the future. This is supported by the capabilities of the oil and gas industry which has the experience and qualification to develop and produce hydrogen.

The Minister of Energy and Mineral Resources emphasized that the most crucial thing in the upstream oil and gas sector at the moment is the implementation of Carbon Capture Storage (CCS) and Carbon Capture Utilization and Storage (CCUS). Moreover, this year the government has issued new regulations regarding CCS/CCUS in the oil and gas business.

"The regulations describe CCS and CCUS as promising technologies for reducing carbon emissions in order to pursue the Net Zero Emissions (NZE) target by 2060 or sooner," he said.

Currently, there are 15 CCS/CCUS projects underway in Indonesia. Among them are CCS projects Gundih Enhanced Gas Recovery (EGR) in Central Java and Sukowati in East Java.

The project that will soon be implemented is at Tangguh CCUS, targeting carbon emissions reduction by 25 million tons of CO2 and increasing gas production up to 300 BSCF in 2035. "This project is targeted to be onstream in 2026," said Arifin.

Yuzaini Md Yusof, President of IPA in his remarks said that Indonesia is one of the countries moving quite fast in implementing CCS/CCUS, including by issuing Minister of Energy and Mineral Resources Regulation No 2/2023 concerning CCS/CCUS in the upstream oil and gas industry. Going forward, several things that must be prepared are fiscal policies, tax credits, and carbon price policies as well as preparedness of the carbon storage facilities.

"Even though the CCS/CCUS projects have started development, there are still many high-risk projects requiring further regulatory support. With the success of the CCS/CCUS projects mainly still depending on regulatory support and commercial attractiveness, of course there is still a lot of work to be done," explained Yuzaini.

IPA CONVEX 2023 will be taking place for three days from Tuesday (25/7/2023) to Thursday (27/7/2023), held in collaboration with the Indonesian Petroleum Association as organizer and Dyandra Promosindo as co-organizer. Several panel discussion sessions involving a number of resource persons contributed to this year's IPA CONVEX. Convex IPA implementation is made possible by the support of a number of partners and sponsors, including PT. Pertamina Hulu Energi as the Titanium sponsor; MedcoEnergi, Elsewedy Electric, COSL, bp Indonesia, Wood Mackenzie, PETRONAS Indonesia, and ExxonMobil Indonesia as Platinum sponsors; Energi Mega Persada and Mubadala Energy as Gold sponsors; and Conrad Asia Energy Ltd, Sinopec International Petroleum E&P Corporation (SIPC) Indonesia, Chevron, Harbor Energy, and INPEX MASELA LTD as Silver sponsors. (**)

For more info further, please contact:

POSMAN SIANTURI

Indonesian Petroleum Association

email: posman.sianturi@ipa.or.id

Mobile: +62 811 8181 813

RANTIKA A.

Dyandra Promosindo

email: rantika@dyandra.com

Mobile: +62 813 8138 2003