Indonesia Oil & Gas Report Q2 2016 - New Report Available

From: Fast Market Research, Inc.
Published: Mon Mar 28 2016

An uncertain regulatory environment and low oil prices will impede exploration and hydrocarbons in Indonesia. Outlook for the downstream sector is more positive as economic growth will support refined fuels consumption growth and refinery projects have attracted interest from overseas investors.

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Indonesia's crude oil production is on a long-term decline and the country will become a net importer of crude oil from 2020. As firms continue to relinquish their exploration and production blocks, we see limited upside risks to production.

Indonesia's refining capacity is set to expand by 510,000b/d over the next decade as several of the country's aging refineries undergo upgrading and the expected start-up of the Bontang refinery in 2022. This will reduce Indonesia's refined fuels deficit, though it will remain a sizeable net importer to 2025. Foreign investors continue to be interested in the country's refining projects.

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Indonesia is forecast to maintain self-sufficiency in natural gas over the next 10 years, but stagnant production and rising domestic demand will progressively require the country to reduce its gas exports to prioritise satisfying domestic needs. We highlight that greater commercialisation of the country's vast CBM reserves could help to ease the pressure, though regulatory uncertainties and environmental concerns pose headwinds.

To attract investments into unconventional, the Ministry of Energy and Mineral Resources (MEMR) introduced new production sharing contracts (PSCs) in November 2015 which allow the percentage split between the contractor and the government to be adjusted based on the amount of production.

The MEMR invited firms to submit bids to explore three non-conventional oil and gas blocks in the country under this new regulation. These blocks are Blora in East and West Java; Batu Ampar in East Kalimantan; and Central Bangkanai in Central and East Kalimantan. Interested companies should submit their bids electronically by December 15 2015.

We believe that the proposed amendment to Indonesia's oil and gas law, which points towards greater state involvement in the upstream sector, together with the low oil price environment will serve to dampen investor interest in the upcoming licensing round in 2016.

The Indonesia Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for Indonesia including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.

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