JAKARTA –—- The 38th IPA Convention & Exhibition was opened by HE Prof. Dr. Boediono, the vice-president of the Republic of Indonesia, under the theme of “Strengthening Partnerships to Enhance Indonesia’s Energy Resilience and Global Competitiveness” which aims to highlight the strategic importance of the oil and gas industry to Indonesia, whilst laying out the challenges and actions that are required to ensure its future success and sustainability.
Industry leaders and stakeholders from Indonesia’s upstream oil and gas sector came together with leaders and representatives from the government to discuss the issues facing the sector and new innovations and ways forward for the future. The three day Convex is the most important event for the oil and gas industry in Indonesia and one of the most important in the Asia region, with a total of 290 companies participating as exhibitors, 2,400 convention participants,200 delegates from 25 countries and more than 20,000 visitors attending throughout the three days.
Giving the opening speech, Lukman Mahfoedz, president of the Indonesian Petroleum Association, laid out the urgent need for stronger and mutually beneficial partnerships between government and the private sector, and the community, as vital to increase the competitive advantage of Indonesia.
“We are here today to work as partners with the government. Together – and only together – we can work to help achieve energy goals and ensure the country continues to expand its economy for the people of Indonesia,” said Mahfoedz.
In 2013, Indonesia’s oil and gas sector contributed approximately US$31 billion in state revenues or equivalent to 23 percent of it, as well as providing more than 300,000 jobs across the country. There is, however, a widening supply and demand gap which poses a serious threat to Indonesia’s economy. Energy consumption in Indonesia by 2025, is predicted to triple to 7.7 m boe per day, but future oil and gas supply is not on track to keep up with this demand, as by 2025 the gap could well exceed 2m boe per day. This is why Indonesia’s National Energy Policy is central towards the country’s ability to close the widening supply and demand gap and address Indonesia’s low reserve replacement ratio, which currently stands at 46% for oil and 92% for gas.
“Three times the current exploration activity level is needed if conventional oil and gas is to fill 50% of the 2025 supply-demand gap. We also recognise the geological structure is more complex, causing less oil and gas discovery and relatively small average discovery sizes for Indonesia (8 million BOE/discovery vs 20-35 million BOE/discovery in other SE Asia countries). Based on a recent report, the remaining resources are spread out, with 75% located in offshore (shallow & deepwater), Eastern Indonesia and dominated by 85% gas. Therefore, the remaining potential resource development requires high technology, massive capital investments and competent human capital,” stated Mahfoedz.
“We have legal and regulation challenges, around 30% of current national production (635,000 boepd) comes from 20 PSC expiring within 5 years and around 61% of current national production (1.2 million boepd) comes from the PSC expiring within 10 years. Therefore, it is important to make clear and transparent regulation on contract extension, taking into consideration the position of the National State Company (Pertamina), the International Oil and Gas Company and the National Oil and Gas Company. IPA expects this regulation could facilitate these stakeholders to work together well, in accordance with its ability to maintain the growth of the National Oil and Gas industry, which plans to invest US$26 billion in 2014.”
“In addition, two more regulations have come to IPA’s attention, namely (1) the implementation of Government Regulation no. 79 of 2010 and the potential issues rising from its multi-interpretation, and (2) the revision of Oil and Gas Law 22 of 2001, in which IPA hopes it can give positive changes for oil and gas management in the future and provide legal certainty towards the existing contracts.”
“This is why IPA and its members need to work in partnership with Government to create an investment climate to protect the best interests of the people of Indonesia, whilst ensuring companies that the investments they are making here are both welcome and safe,” added Mahfoedz.
During the opening ceremony, the IPA presented Prof. Dr. Subroto – three times former Minister, former Minister of Mining and Energy, and the first Indonesian Secretary-General of OPEC – with the IPA’s Lifetime Achievement Award, for his dedication and contribution to the industry.
The IPA Convex aims to summarise the challenges and recommendations discussed across the Convex’s three plenary and two special sessions for the Indonesian government in the form of a White Paper, to provide input and guidance on the formulation of Indonesia’s new energy laws and working towards the shared aim of ensuring an energy resilient and globally competitive Indonesian oil and gas sector which continues to contribute towards the prosperity and success of Indonesia’s economy and its people.
About the IPA
- The Indonesian Petroleum Association (IPA) is a non-profit organization founded in 1971 which aims to bring the key players in the Indonesia’s upstream oil and gas industries together to promote partnership and communication within an industry that plays a vital role in Indonesia’s national development.
- The IPA represents almost the entire Upstream Oil and Gas sector in Indonesia through its 58 Company Members (Multinational and National Oil and Gas Company), 116 Associate Members and thousands of individual members.
- The IPA is a forum for its members and new investors to exchange news, views, concerns and ideas about the industry.
- The IPA also promotes education and knowledge transfer within the industry and with the wider community via courses, Field Trips, Workshops and the IPA Annual Convention.
About the IPA Convention and Exhibition
- It is Indonesia’s premier event for the oil & gas industry, aimed at helping to promote and attract investments into Indonesia.
- It is an open-dialogue forum between the government and oil and gas industry players that is intended to address opportunities and challenges faced by the oil & gas industry and come up with the best solutions.
- It showcases the latest technology and innovations within the industry.
- It fosters education and knowledge transfer through interaction among participants, scientists, engineers, government officials, academics, and other professionals.