Will Widodo Succeed in Reforming Indonesia's Upstream Sector?

Separately earlier this month, both BP and Inpex received approvals of their environmental and social impact assessment, known locally as AMDAL (Analisis Mengenai Dampak Lingkungan), for the Tangguh expansion, which will add a third LNG processing train, and the Abadi LNG projects, respectively.

“We are engaging closely with SKK Migas, the Ministry of Energy and Mineral Resources and other related government agencies to receive these critical approvals," Christina Verchere, BP regional president Asia Pacific said in a press release.

Meanwhile, front-end engineering and design (FEED) work for the Abadi project, comprising a 2.5 million tons per annum floating LNG facility, nears completion. Just like the Mahakam Block, Inpex has requested for the contract for the Masela Block be extended beyond 2028 as it needs more time to recoup its investment in the Abadi project.

“The FEED [for the Abadi project] had been 98 percent completed,” Johannes Widjonarko, SKKMigas chairman told Jakarta Globe, which reported that local authorities wanted the link the talks on contract extension to a request for Inpex to allocate at least 30 percent of the gas production from Abadi for domestic use.

Jokowi Faces Obstacles in Seeking Upstream Investments

Despite his victory, Jokowi’s grip on political power in Indonesia is relatively weak as his coalition – led principally by the Indonesian Democratic Party-Struggle (PDI-P) of former president Megawati Sukarnoputri – controlled only 37 percent of the seats in Parliament, while the remainder is held by supporters of his defeated electoral opponent Subianto. 

"Jokowi is going to face internal challenges in the coalition … Widodo will try to engage parliament directly rather than building coalitions beforehand but that will be a challenge,” Dr Marcus Mietzner, Associate Professor at Australia National University told BBC News July 22.

The assessment is shared by others monitoring the upstream industry in Indonesia.


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