When the Oil and Gas Business Can No Longer Become the Mainstay of the Country
PojokId. In the 1980-1990 era, Indonesia might have felt the pleasure of becoming a petroleum producing country. Indonesia's oil production at that time not only helped state revenues, but also helped the trade balance and current account.
Unfortunately, this condition cannot last long enough. Oil production has declined, while consumption has increased. As a result, state revenues from oil shrank, while fuel subsidies grew.
Not only that, this condition created a trade deficit in oil. In recent years, the oil deficit can no longer even be closed by a surplus on gas. As a result, the oil and gas trade balance also registered a deficit.
Institute for Development And Economics And Finance (INDEF) researcher Eko Listiyanto revealed the achievement of revenues and the condition of the oil and gas trade balance were mainly influenced by domestic oil production and world oil prices. "In the past few years, the explosion in commodity prices has ended," Eko said
Based on data from the Ministry of Finance, during the period of 2012 - 2013 state revenues from the oil and gas sector reached above Rp. 300 trillion. At that time, world oil prices were at a high level, which was around US $ 100 per barrel. The share of oil and gas revenues to state revenues is also above 20 percent.
Then, in 2016, when oil prices plummeted to reach US $ 30 per barrel, oil and gas revenues also declined to Rp. 84.7 trillion. Its contribution is not up to two digits against state revenues.
This year, world oil prices tend to rise until October and touch US $ 80 per barrel. However, oil prices fell again at the end of the year to return to levels below US $ 60 per barrel. As a result, the contribution of oil and gas revenues to state revenues has relatively improved to reach Rp207.9 trillion after last year only Rp138 trillion.
In the trade balance, the lowest oil and gas deficit in the last five years was recorded in 2016, which was only US $ 5.6 billion. Meanwhile, this year, the oil and gas deficit between January and November 2018 was recorded at US $ 12.15 billion, following the trend of rising oil prices until October this year.
The oil and gas deficit occurs because Indonesia cannot meet domestic fuel needs which reach 1.6 million barrels per day (bpd). This happened amid the trend of domestic crude oil production which declined from year to year.
"Lifting oil will continue to decline every year, automatic fuel production will decline," he said.
Based on SKK Migas data, in 2008, Indonesia was able to produce oil at 977 thousand bpd. Then, in 2009, it fell to 949 thousand bpd, 2010 to 945 thousand bpd.
In 2011, production fell sharply to 902 thousand bpd. In 2012, it fell again to 860 thousand bpd, 2013 to 824 thousand bpd, 2014 to 789 thousand bpd, 2015 786 thousand bpd.
In 2016 there had been an increase to 831 thousand bpd. Unfortunately, last year, it dropped to 801 thousand bpd. This year, Indonesia's oil and gas production is estimated to be below 800 thousand bpd.
According to Eko, the way to increase oil and gas contribution to state revenues and improve the oil and gas balance is to increase oil and gas production. This can be achieved if oil and gas exploration activities are multiplied or optimize production from existing oil fields. However, this method requires substantial time and investment, especially from PT Pertamina (Persero).
"Investments in oil fields need tens of trillions of rupiah. This means that Pertamina's profits must be large and investment from these profits must also be large. This will not happen if most of the dividends go to state revenues," he said.
For this reason, Eko advised the government to be consistent in running fossil fuel substitution programs using renewable energy such as biofuels. Meanwhile, other countries have clear road maps and rigid targets.
"In Indonesia, there is no consistency in running the program. If the oil price is no longer high and the exchange rate is again unstable, just remember (developing BBN)," he said.
To that end, Eko hopes that the mandatory program for biodiesel mixtures to Solar oil can run sustainably. At present, the mandatory program running is B20.
"This B20 is also not smooth. Most of the palm oil production is in Kalimantan and Sumatra. Many refineries are in Java," he said.
In addition, Eko reminded that there should be no price competition between the use of commodities for biofuel and food. In this case, commodity prices for fuel need to be maintained so as not to affect commodity prices related to food.
"What is feared is that food prices rise because commodities are used for fuel," he said.
Executive Director of the Institute for Essential Service Reform (IESR) Fabby Tumiwa said Indonesia's oil exports were crude oil exports. Meanwhile, Indonesia's oil imports are BBM products. The price of crude oil is about 20 percent cheaper than that
Unfortunately, this condition cannot last long enough. Oil production has declined, while consumption has increased. As a result, state revenues from oil shrank, while fuel subsidies grew.
Not only that, this condition created a trade deficit in oil. In recent years, the oil deficit can no longer even be closed by a surplus on gas. As a result, the oil and gas trade balance also registered a deficit.
Institute for Development And Economics And Finance (INDEF) researcher Eko Listiyanto revealed the achievement of revenues and the condition of the oil and gas trade balance were mainly influenced by domestic oil production and world oil prices. "In the past few years, the explosion in commodity prices has ended," Eko said
Based on data from the Ministry of Finance, during the period of 2012 - 2013 state revenues from the oil and gas sector reached above Rp. 300 trillion. At that time, world oil prices were at a high level, which was around US $ 100 per barrel. The share of oil and gas revenues to state revenues is also above 20 percent.
Then, in 2016, when oil prices plummeted to reach US $ 30 per barrel, oil and gas revenues also declined to Rp. 84.7 trillion. Its contribution is not up to two digits against state revenues.
This year, world oil prices tend to rise until October and touch US $ 80 per barrel. However, oil prices fell again at the end of the year to return to levels below US $ 60 per barrel. As a result, the contribution of oil and gas revenues to state revenues has relatively improved to reach Rp207.9 trillion after last year only Rp138 trillion.
In the trade balance, the lowest oil and gas deficit in the last five years was recorded in 2016, which was only US $ 5.6 billion. Meanwhile, this year, the oil and gas deficit between January and November 2018 was recorded at US $ 12.15 billion, following the trend of rising oil prices until October this year.
The oil and gas deficit occurs because Indonesia cannot meet domestic fuel needs which reach 1.6 million barrels per day (bpd). This happened amid the trend of domestic crude oil production which declined from year to year.
"Lifting oil will continue to decline every year, automatic fuel production will decline," he said.
Based on SKK Migas data, in 2008, Indonesia was able to produce oil at 977 thousand bpd. Then, in 2009, it fell to 949 thousand bpd, 2010 to 945 thousand bpd.
In 2011, production fell sharply to 902 thousand bpd. In 2012, it fell again to 860 thousand bpd, 2013 to 824 thousand bpd, 2014 to 789 thousand bpd, 2015 786 thousand bpd.
In 2016 there had been an increase to 831 thousand bpd. Unfortunately, last year, it dropped to 801 thousand bpd. This year, Indonesia's oil and gas production is estimated to be below 800 thousand bpd.
According to Eko, the way to increase oil and gas contribution to state revenues and improve the oil and gas balance is to increase oil and gas production. This can be achieved if oil and gas exploration activities are multiplied or optimize production from existing oil fields. However, this method requires substantial time and investment, especially from PT Pertamina (Persero).
"Investments in oil fields need tens of trillions of rupiah. This means that Pertamina's profits must be large and investment from these profits must also be large. This will not happen if most of the dividends go to state revenues," he said.
For this reason, Eko advised the government to be consistent in running fossil fuel substitution programs using renewable energy such as biofuels. Meanwhile, other countries have clear road maps and rigid targets.
"In Indonesia, there is no consistency in running the program. If the oil price is no longer high and the exchange rate is again unstable, just remember (developing BBN)," he said.
To that end, Eko hopes that the mandatory program for biodiesel mixtures to Solar oil can run sustainably. At present, the mandatory program running is B20.
"This B20 is also not smooth. Most of the palm oil production is in Kalimantan and Sumatra. Many refineries are in Java," he said.
In addition, Eko reminded that there should be no price competition between the use of commodities for biofuel and food. In this case, commodity prices for fuel need to be maintained so as not to affect commodity prices related to food.
"What is feared is that food prices rise because commodities are used for fuel," he said.
Executive Director of the Institute for Essential Service Reform (IESR) Fabby Tumiwa said Indonesia's oil exports were crude oil exports. Meanwhile, Indonesia's oil imports are BBM products. The price of crude oil is about 20 percent cheaper than that
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