Indonesia’s oil industry is languishing, it’s fields are depleting and it desperately needs investment, but unlike another up-and-coming oil major—Argentina—it’s not willing to do what is necessary to lure in big foreign money.
Indonesia’s oil industry contributed just 3 percent of GDP last year, from almost 15 percent in 2014 and as much as a quarter back in 2006. The decline in production has been steady since the 1990s, thanks to a sharp drawdown on exploration and new investment—despite the fact that the county’s energy needs have been growing steadily. Now, Jakarta is trying to turn things around.
Indonesia is currently producing around 800,000 barrels of crude daily, which constitutes half of what it consumes every day. This compares to a little over a million bpd in 2010. The local fields are mature, well on their way to depletion, and the state energy major, Pertamina, has set its sights on international expansion to compensate for decline.