Table of Contents
This report profiles Indonesia's oil and gas industry, discussing market trends and outlook through 2014 and into 2015. The report also highlights leading players in the sector including PT Medco Energi Internasional Tbk, PT Perusahaan Gas Negara Tbk, and PT Energi Mega Persada Tbk.
The Indonesian oil and gas sector experienced a challenging period in FY14. The upstream segment saw a decline in the production of crude oil as well as natural gas. Furthermore, domestic crude production was not sufficient to meet the demand. As a result, a large proportion of the requirement was met through imports, thus disturbing the trade balance in the sector as well as the economy. There has been a rapid increase in trade deficit in the sector during the last five years, despite having a substantial export share.
Government subsidies are another concern for the sector. Though the government has tried to reduce it by gradually implementing some cuts, yet it still poses a big drain on the country's fiscal balance. The rapid surge in fuel subsidies has put a strain on government finances, resulting in recent cuts to the gasoline subsidy.
Decline in crude oil prices in FY14 and FY15 brought some relief to the trade balance as the value of imports declined. Natural gas exports are being reduced over time to meet the needs of domestic consumption. Additionally, oil production continued to decline causing a strain in finances of upstream players; and the annual average price of crude oil has dipped significantly since its high in FY12.
o Indonesia was ranked 22nd in terms of crude production and accounted for about 1% of the global production as of 2014.
o The country is highly dependent on the oil and gas sector for its primary energy consumption. Petroleum and natural gas together accounted for 53% of the country's primary energy consumption requirement.
o Total oil production declined at a CAGR of 3% during 2010-14. Meanwhile, domestic consumption of petroleum grew at a CAGR of 4% during the same period.
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