Mega Gas Projects to Boost Indonesia E&P on Regulatory Overhaul

Mega Gas Projects to Boost Indonesia E&P on Regulatory Overhaul
BMI Research sees supportive regulations as necessary to develop two mega gas projects that could stem the decline in Indonesian petroleum production.

With at least two mega gas or liquefied natural gas projects on the horizon, Indonesia could well buck the trend of reduced oil and gas exploration and production (E&P) in Southeast Asia if the country’s regulations were revised in support its upstream sector.

At a BMI Research briefing, senior oil and gas analyst, Shun Ling Yap flagged Indonesia as potentially “a notable exception” to cutbacks on E&P already unveiled elsewhere in Asia “if and when upstream regulations are overhauled under newly-appointed President Joko Widodo”.

Shun expects the clarification of the regulatory framework projected for mid-2015 to prompt investors to redirect their attention to the large market in Indonesia.

Shun’s projection is backed up by BMI’s growth projections for the Indonesian economy. Indonesia stands with India as among two exceptions in Asia, with growth rates forecasted to continue an expansionary trajectory over 2013 levels in contrast to slower growth in China and Japan.

BMI – a Fitch Group company – forecasts Indonesia’s real gross domestic product to expand by 5.3 percent in 2015 and 6.5 percent in 2016 compared to 5.8 percent in 2013.

Indonesia’s expansive gas-powered economy has already driven the country’s national oil company, PT Pertamina to seek more liquefied natural gas (LNG) imports, which are available at lower prices thanks to falling oil prices. Indonesia – as with India – started a trend of importing LNG from 2013, which will continue to ramp up in South and Southeast Asia, according to BMI.


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