Exploring the Black Gold Investor survey of the Indonesian oil and gas Industry

PwC Indonesia has undertaken its third bi-annual survey of the Indonesian oil and gas industry. The survey responses come from companies representing approximately 89% of Indonesia’s current petroleum production. The objective of the survey is to highlight contributions of the oil and gas industry to the Indonesian economy and the challenges preventing full realization of benefits for all stakeholders.

The survey covered the following key areas:
  • Supply and demand for oil and gas
  • Employment
  • Capital Expenditures
  • Challenges facing the industry
  • Competitiveness
  • Other Challenges

Survey participants believe that the demand for oil and gas will continue to grow, both globally and in Indonesia. The majority of survey participants indicated that crude oil prices would be in the US$81-$100 per barrel range for the next two years (spot crude prices ranged from US$85 – US$109 per barrel when the survey was undertaken but have since moved higher). Eastern Indonesia was viewed as the most geologically prospective area for gas while participants were evenly split between eastern Indonesia and North Western Indonesia for potential oil discoveries.

The survey highlighted several challenges that are preventing the Indonesian oil and gas industry from attracting much needed investment. Although there have been some minor changes in the top five challenges confronting the industry many of the most significant issues identified in the prior survey remain. The top five challenges hindering the industry’s competitiveness are:
  • Uncertainty over cost recovery (governmental audit findings)
  • Contract sanctity
  • Interference from other government agencies
  • Taxation
  • Security of assets, people and ownership rights

Survey participants were generally neutral or pessimistic on the development of these issues in the near term but were slightly more optimistic for improvement over the longer term. Survey participants were generally positive on the steps taken by the Indonesian Government to tackle corruption, collusion and nepotism, however, survey participants noted that this is a long term journey which requires strong leadership.

To find out more about the Survey Report, please contact:
Paul van der Aa
Arfianti Syamsuddin

To get copy of the Survey Report, please contact:
Maria Purwaningsih