The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) recorded that investment in Indonesia’s upstream oil and gas sector reached USD 7.19 billion or IDR 117.23 trillion during the first half of 2025. This figure represents only 43.6% of the national budget (APBN) target, which was set at USD 16.5 billion. 

"The outlook is, hopefully, we can reach the 2025 target or even exceed it, possibly reaching USD 16.9 billion," said SKK Migas Head Djoko Siswanto during a press conference on Monday, July 21. 

SKK Migas Deputy for Finance and Commercialization Kurnia Chairi stated that upstream oil and gas investment in Indonesia has shown an upward trend since the COVID-19 pandemic. In the first year of the pandemic, investment only reached USD 10.5 billion. However, it has gradually increased year by year, reaching USD 14.4 billion or IDR 231 trillion in 2024. 

“In 2025, we hope that investment will continue to rise,” Kurnia said. 

This increase is also supported by improvements in exploration activities. In 2019, exploration investment stood at only USD 0.6 billion, but rose to USD 1.5 billion by 2024. 

He explained that the increase in upstream oil and gas investment is supported by improved attractiveness of the sector, including in terms of fiscal aspects, risk, and overall upstream activity. 

In his presentation, it was stated that upstream investment is strongly influenced by commodity prices, government policy, technology, operational risks, and macroeconomic factors. 

At the same time, oil and gas companies must assess economic feasibility—such as IRR and NPV calculations—as well as apply risk management practices to mitigate uncertainty. On the other hand, the government must strive to create a conducive investment climate to attract capital and mitigate capital flight. 

The trend of upstream oil and gas investment from 2019 to 2024 has followed a generally upward trajectory. In 2019, investment reached USD 11.7 billion. It dropped to USD 10.5 billion in 2020 before rising to USD 11 billion in 2021, USD 12.1 billion in 2022, USD 13.3 billion in 2023, and USD 14.4 billion in 2024. 

State Revenue Target Falls Short 

SKK Migas projects that state revenue from the upstream oil and gas sector will fall short of the national budget target this year. The government had set a target of USD 13.03 billion or IDR 212.45 trillion for 2025. However, as of the first half of the year, realization has only reached USD 5.88 billion or 45.1% of the target. 

SKK Migas Head Djoko Siswanto stated that the revenue projection by year-end will likely reach only USD 10.83 billion, or 83.1% of the target. He cited the main reason as the lower-than-expected global oil price. 

“The APBN assumed an oil price of USD 82 per barrel, but the average realization is only USD 69 per barrel. Automatically, the revenue target won’t be met due to the lower oil price,” said Djoko during a press conference in Jakarta, Monday, July 21. 

This article is published in partnership with Katadata 

Original article here