The 41st IPA Convention & Exhibition 2017:
“Accelerating Reform to Re-Attract Investment to Meet the Economic Growth Target”
· Indonesia competes for capital globally, consequently Indonesia must reform its attractiveness to win investment
· Competitive companies require competitive returns
· The significance of upstream oil and gas industry is to be the engine for Indonesia’s economic growth with its associated multiplying impact
JAKARTA, 17 May 2017 – The 41st Indonesian Petroleum Association (IPA) Convention and Exhibition 2017 is officially opened today by the Minister of Energy and Mineral Resources, Ignasius Jonan, accompanied by Oil and Gas Director General, Ministry of Energy and Mineral Resources, I Gusti Nyoman Wiratmaja, Chairman of SKK MIGAS, Amin Sunaryadi, and IPA President, Christina Verchere.
This year’s convention and exhibition, themed “Accelerating Reform to Re-Attract Investment to Meet the Economic Growth Target”, highlighted Indonesia’s need for massive investments for exploration to find new reserves, the majority of which lie in frontier deep-water area in eastern Indonesia. To maximize the economic recovery of the currently producing hydrocarbon, Indonesia also needs to deploy costly Enhanced Oil Recovery (EOR), amidst challenging regulatory environment and global economic conditions. Only exploration and EOR that can prevent the growing gap between oil and gas demand and supply in Indonesia.
Chistina Verchere, in her opening remark, also reiterated the contribution of upstream oil and gas sector in addition to producing energy and generating revenues, “The Indonesian oil and gas industry, combined with all its supporting sectors, has a large multiplier effect on the Indonesian economy. Making Indonesia competitive and attractive for investment is an absolute priority for the government.”
Ignasius Jonan, Minister of EMR, spoke about global capital expenditure reduction due to low oil price in the past 3 years. Oil companies were driven to be competitive and efficient in order to weather current business situation. “Challenges on this industry is not only the operation cost. We are still facing the low oil price. The industry is the key driver for the Indonesia economic growth, hence, Government continues to find ways to improve the ease of doing business in Indonesia. Deregulation by reducing required permits, and bureaucracy reformation are aimed to support investment in Indonesia,” added Minister Jonan.
While contribution to state revenue from upstream oil and gas sector has been declining, its contribution in generating economic growth and catalyzing regional development through its multiplying impact, could not be discounted.
Such significant economic impact, unfortunately, has been constrained by various challenges currently faced by upstream oil and gas industry in Indonesia such as legal uncertainty, competitiveness of fiscal regime, regulatory reform (revision of Government Regulation No. 79/2010 and the economics of gross split scheme), and cost of capital that resulted in declining oil production, alarmingly low reserve replacement ratio, slow investment in domestic gas infrastructure, and lack of interest in new blocks offered by Indonesia.
“Investment in upstream oil and gas, in exploring for new reserves, is important toward achieving future energy security,” explained Christina Verchere, ”The urgency is high because Indonesia must compete globally for investment. If Indonesia wants to attract competitive companies, it must enable competitive returns.”
“IPA, in partnership with the government will continue to increase the efficiency of the industry, to set priority for required reform in order to generate maximum value for Indonesia. We will work together with the government to re-attract investment to meet the economic growth target,” Christina further explained.
IPA Convention and Exhibition, the largest in the region, brought together key stakeholders in upstream oil and gas industry, including policy makers, regulators and other government agencies, investors and service sectors to attract more investments into Indonesia.
This year, IPA proudly introduces Business Case Competition to its portfolio of program. The industry faces more and more non-technical challenges, and over 200 young talents took part to test their business acumen in solving the complex set of commercial, political, and societal issues. IPA Convex also convenes its signature knowledge transfer sessions where hundreds of young Indonesians participate in dozens of technical sessions. More than 119 oral papers and 66 poster that will emphasize the achievements and the breakthrough of the latest developments within the industry, to be delivered in technical sessions and poster sessions..Over many years, IPA Convex has accumulated over 3,400 international-quality technical papers. Experts from around the world would also share their best practices in exploration and production activities.
Attracting more than 1,500 participants and 113 exhibitors in almost 3,000 square meters of Jakarta Convention Center, the Convex showcased the newest technology, innovations and solutions from around the world. It is the platform of choice for professional and business networking.