Heaptalk, Jakarta — The efforts of the Special Task Force for Upstream Oil and Gas Business (SKK Migas) and Cooperation Contract Contractors (KKKS) to increase investment and work programs that are more massive and aggressive yielded positive results in the third quarter of 2022. Despite the increase in world oil prices in early 2022 which persisting at high levels up to now, the achievements of the main upstream oil and gas activities and investments have increased compared to the same period last year.
As one of the main activities for upstream oil and gas, the drilling of development wells in Q3 2022 reached 545 wells) or around 171% compared to the achievement of the third quarter of 2021 and reached 116% compared to the achievement until the end of 2021. This is a positive catalyst to boost oil and gas production achieving the 2022 target.
The increasing graph of development well drilling encourages additional targets in 2022 from 790 wells to 801 wells. In 2023, all stakeholders agreed to drill 1,053 development wells. The high main activity of upstream oil and gas will have a positive impact on efforts to maintain a more optimal entry level of oil and gas production entering the beginning of 2023.
During the press conference (10/17), the Head of SKK Migas Dwi Soetjipto delivered that until Q3 2022 the investment realization reached US$7.7 billion from the target of US$13.2 billion, making the largest upstream oil and gas investment on average in the last seven years since 2016. With the massive drilling of development wells, he believed there will be a significant additional investment until the end of the year.
Besides development wells, exploration well drilling activities have reached 21 wells, equal to the achievement of Q3 2021. By the end of 2022, upstream oil and gas is expected to drill 42 exploration wells, currently 50% of which have been realized.
Workover activities—oil well intervention involving invasive techniques—have reached 495 wells or 116% above Q3 2021 attainment and 87% of the 2022 target. Meanwhile, well service activities have reached 22,511 wells equivalent to 134% compared to the same quarter last year and around 99% of the 2022 target.
Further, Dwi conveyed the massive drilling of development wells that has increased production is advantageous to maintain optimal production and lifting of oil and gas amid multiple obstacles, spanning unplanned shutdowns and facility constraints in several KKKS. Those obstacles have caused the loss of oil and gas production, in addition to the decline that occurred naturally.
Until the third quarter of 2022, oil production reached 613 thousand barrels of oil per day (BOPD) while oil lifting reached 610 BOPD. Gas lines have reached 5.35 billion cubic feet per day (MMSCFD), with total oil and gas lifting reaching around 1,562 million barrels of oil equivalent per day (BOEPD), equivalent to 89.8% of the 2022 target.
“The high global oil prices also have a positive impact on the country, as of this quarter, state revenues have reached US$13.95 billion, equals to Rp202 trillion, or around 140% of the 2022 state budget target and around 83% of the 2022 revised state budget target. The threat of economic recession and high inflation that the President has always reminded, optimal state revenue from the upstream oil and gas sector is a tangible form of this industry’s contribution in supporting national development,” said Dwi.
The main performance attainment of upstream oil and gas in the aspect of reverse replacement ratio (RRR) recorded encouraging performance results reaching 97.5% of the target until Q3. As of early October 2022, with additional approval for the plan of development (POD) the attainment of RRR already exceeded 100%. By the end of 2022, Dwi estimated that the RRR achievement will reach around 186% of the target, resulting in 5 consecutive years of SKK Migas comply the RRR target above 100%.
SKK Migas also continues to encourage increasing national capacity as part of the multiplier effect of the upstream oil and gas industry. As of September 2022, the domestic component level (TKDN) achievement has reached 63.96% with the value reaching US$2.895 billion equivalent to Rp42 trillion. According to Dwi, this shows the support of the upstream oil and gas industry to national entrepreneurs, including absorbing goods or services and guidance to develop their business.
Dwi added, “SKK Migas has promoted national companies at oil and gas exhibitions in Malaysia and some of them have received work contracts there. Encouraging national industries to take part internationally is another form of effort to increase the positive impact of the upstream oil and gas industry for the economy.”
SKK Migas also facilitates business services one of which is through the one-door service policy (ODSP) the average licensing process period reaches 1.04 days. Previously the ODSP took longer time for 3 days. In his closing statement, Dwi emphasized that SKK Migas is committed to encouraging the upstream oil and gas industry to thrive.
