Indonesia's declining oil production and rising domestic oil consumption have been a big issue for the last few decades which has turned Indonesia into a net oil importer from 2004 onward. The lack of exploration activities and other investments in oil and gas sector have resulted in the decline of Indonesia's oil production. This condition is a result of the plunge of global oil price which has fallen to its lowest level, i.e., US$43.14/Bbl (average oil price in 2016) over the last 12 years. The purpose of this paper is to analyze the distribution of oil and gas production in Indonesia along with the production cost. This analysis will allow investors to find and map working areas in Indonesia with potential commercial reserves while maintaining the lowest possible production costs. The approach of this empirical study is to divide Indonesia into 6 (six) geographical areas, namely Sumatera, Natuna Sea, Java, Kalimantan, Sulawesi and Papua. We have collected relevant data about commercial reserves and production cost from existing working areas. Our preliminary results depict that Kalimantan has the highest commercial reserves (i.e., 18.60 MMBOE per contract area) and Papua has the lowest production cost (i.e., US$3.24/BOE). Sulawesi, meanwhile, has the lowest commercial reserves (i.e., 5.39 MMBOE/Contract Area) and Natuna has the highest production cost (i.e., US$16.46/BOE). In summary, this study has shown that Eastern area of Indonesia might hold more oil and gas reserves which can be further managed by Contractor for the benefit of the Country. This study also recommends the Government of Indonesia to be aware of the condition of each working areas to maintain a sustainable oil and gas production on a National level and create attractiveness for investors in the future. Keywords: Commercial reserves, cost per barrel, energy, investment, production cost, working areas.

No abstract

No abstract

In early 2016, oil price has fallen to its lowest level (30.32 US$/bbl) over the last 12 years. Since then, petroleum exploration and exploitation activities are decreasing worldwide due to high production cost and low oil prices. As of December 2017, there were 431 Projects or PODs approved by government of Indonesia and the 327 of them were PODs that located in onshore area. This paper will evaluate and analyze the distribution of commercial reserves per projects and the operating cost to help Contractors to find the onshore area in Indonesia that has the highest commercial reserves and the lowest operating cost. The purpose of this paper is, to divide the geographical areas of Indonesia into 5 different areas (Sumatera, Java, Kalimantan, Sulawesi and Papua)). Then, to collect the data that related with number & location of Projects (POD), commercial reserves and operating cost and then the project reserves (MMBOE/project) and project operating costs (US$/boe) are calculated and distributed to those aforementioned areas. Based on the analysis and mapping of Petroleum Operating Cost and Commercial Reserves of 327 onshore Projects (POD), Sulawesi had the highest commercial reserves (64.00 MMBOE per Project) and Sumatera had the lowest commercial reserves (7.20 MMBOE per Project). As for the operating cost, Papua had the lowest operating cost (2.50 US$/BOE) and Kalimantan had the highest operating cost (10.10 US$/BOE) which remained lower than the current oil price (49.52 US$/BBL, average oil price January – July 2017). These analyses showed that the onshore area in eastern of Indonesia tends to have low operating cost and the high commercial reserves, which consequently mean that the onshore petroleum exploration and exploitation activity should be done by contractors in eastern area of Indonesia. Finally, this paper is expected to provide contractors a quick look at oil and gas industry in Indonesia especially at onshore area and guide them to choose which onshore area of Indonesia to explored and also help them create their petroleum exploration strategy in Indonesia by considering on this information.

No abstract