Indonesia's oil and gas industry, a century-old economic pillar, contributed IDR 587.6 trillion in 2022. Dominated by Pertamina, it faces high entry barriers. Notably, M&A activity, including a remarkable IDR 7,300 trillion acquisition, showcases resilience amid challenges like fluctuating oil prices and the COVID-19 pandemic, signifying economic vitality and adaptability.
Indonesia's Oil & Gas Sub-Sectors
Upstream
Here, we explore and extract, navigating complex terrain for precious oil and gas resources. Leading the expedition is Pertamina, joined by industry giants like Chevron and ExxonMobil.
Midstream
This phase is all about logistics and refinement. Pertamina plays a central role, supported by key players such as TotalEnergies and Shell. It's a network of pipelines, storage, and precision.
Downstream
The culmination of our journey. Pertamina leads with 93.2% market share and 7,868 gas stations in 2023. Both government-owned and franchise stations thrive as the nation's vehicle count grows. Private players like Shell and Vivo add intrigue
Challenges
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Declining Production: Oil production has steadily decreased due to depleting fields and rising production costs, potentially falling short of domestic demand.
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Activating Old Wells: To meet growing demand, the government is reactivating old wells, which has increased barrel production but comes with higher operational costs.
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Aging Infrastructure: Aging infrastructure poses safety risks, reduced efficiency, and increased costs for the industry.
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Environmental Concerns: Oil and gas operations raise environmental issues, leading to regulations that may hinder field operations.
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Subsidies: Government subsidies for oil and gas products strain the national budget while aiming to keep prices affordable for consumers.
Growth Prospects
Inclining numbers of personal vehicles
Personal vehicles in Indonesia have shown a positive trend, and it will continue to grow Hence, the increase of vehicles users are mainly affecting an elevation to gas demand
Indonesia infrastructure development
Government emphasizes building toll roads and bridges for regional connectivity, relying on oil and gas for energy.
Indonesia's oil and gas industry, facing hurdles such as declining production and environmental concerns, is resolute in its pursuit of a sustainable future. By showcasing resilience, adaptability, and innovation, it aims to contribute to a greener energy landscape.
Insights
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