Herman, Prisma Ardianto, Jakarta – Energy and Mineral Resources Minister Bahlil Lahadalia has warned that he will revoke licenses for idle oil wells as part of his plan to enhance Indonesia's oil and gas production.

Speaking at the BNI Investor Daily Summit 2024 at the Jakarta Convention Center on Wednesday, Bahlil highlighted the significant number of inactive wells that could still be utilized.

Out of more than 16,000 idle oil wells, approximately 5,000 belong to state oil and gas company Pertamina, which can potentially be optimized.

"I asked why these wells are not being operated, and the answers were unclear. It seems I will initiate the revocation of business licenses. We are looking at the potential to reorganize the wells that are not being worked on by contractors, including state-owned enterprises," Bahlil said.

Minister Bahlil is willing to offer the business license for these idle wells to other parties to ensure these wells are effectively optimized. "For wells that are not being optimized, we will revoke their license and offer them to those capable of increasing our national production. We shouldn't hold onto them; our country needs this," he remarked.

Currently, Indonesia has 44,985 oil wells, with approximately 16,990 classified as idle wells. However, not all of these wells can be reactivated due to various factors, including lack of subsurface potential, economic viability issues, and health, safety, and environmental (HSE) concerns, as well as non-technical problems.

Minister Bahlil said Indonesia's oil production was recorded at 600,000 barrels per day in 2023, with little expected change in 2024. Meanwhile, the country's oil consumption averages 1.6 million barrels per day, resulting in a deficit of 1 million barrels daily that must be covered through imports.

He described this situation as concerning, considering that Indonesia was once capable of producing up to 1.6 million barrels per day in 1996-1997, while oil consumption at that time was only 600,000 barrels per day, allowing for an export capacity of 1 million barrels daily.

Furthermore, Indonesia spends approximately Rp 400-500 trillion on oil imports. From a macroeconomic perspective, this oil issue contributes to the fluctuating value of the rupiah.

Indonesia's oil and gas production has been steadily declining, despite the government setting a production target of 1 million barrels per day (BOPD) and 12 billion cubic feet (BCF) for 2023. According to data from the Ministry of Energy and Mineral Resources, oil production has decreased since 2015. In that year, production was recorded at 779,000 BOPD, briefly rising to 829,000 BOPD in 2016 before dropping to 804,000 BOPD in 2017.

Since then, oil production has continued to decline, with figures of 778,000 BOPD (2018), 746,000 BOPD (2019), 707,000 BOPD (2020), 660,000 BOPD (2021), 612,000 BOPD (2022), and 605,400 BOPD (2023). In the first half of 2024, oil production reached 576,000 BOPD.

Source: https://jakartaglobe.id/business/bahlil-lahadalia-time-to-optimize-indonesias-16000-idle-oil-well