An independent and autonomous research and policy studies institution, the Institute for Development of Economics and Finance (Indef), has revealed a number of challenges in achieving the target of oil and gas lifting in 2025.

The government is targeting oil and gas lifting of 1.61 million barrels of oil equivalent per day (boepd), consisting of 605 thousand barrels of oil per day (bopd) and 1.005 million boepd of gas. Indef assesses that achieving this target faces major challenges.

"This challenge is mainly due to the downward trend in production that has been seen in the last few years," Indef said in its report “Dynamics of Food and Energy Economy Ahead of Eid,” on Sunday, March 30, 2025.

Established in 1995, Indef's main activities is to undertake research and policy studies on wide-range economic and finance issues and to enhance public awareness in the decision making process for the search for viable solutions to the complex social and economic problems of Indonesia.

In 2024, the realization of oil lifting will only reach 579 thousand bopd, lower than the State Revenue and Expenditure Budget (APBN) target of 635 thousand bopd.

Until February 2025, oil lifting has only reached 551.7 thousand bopd, while gas lifting has reached 978 thousand boepd, still below the target of 1.005 million boepd.

"This production decline is mainly due to the large number of oil wells that have entered the mature stage, so that production continues to decrease," said Indef.

Risk of lifting targets

Indef also highlighted that without new exploration and the implementation of more aggressive Enhanced Oil Recovery (EOR) technology, national oil production is at risk of continuing to decline. In addition to technical challenges, the upstream oil and gas sector also faces regulatory and investment obstacles.

"Legal uncertainty due to the unresolved revision of the Oil and Gas Law has reduced investor confidence," Indef said.

Fiscal policies and less competitive profit-sharing mechanisms have also reduced the attractiveness of investment. The exploration and development licensing process, which is considered complicated, has also slowed down the implementation of new projects.

"If regulations are not immediately simplified and investment schemes are not improved, Indonesia risks losing out to other countries such as Malaysia and Vietnam in attracting global oil and gas companies," Indef said.

With the increase in domestic energy consumption, dependence on oil imports will also increase. Therefore, Indef recommends that the Government establish a more effective strategy to maintain national energy security.

Meanwhile, the Ministry of Energy and Mineral Resources (ESDM) remains optimistic that the 2025 oil lifting target can be achieved.

Throughout 2024, the average oil lifting was recorded at 579.7 thousand barrels per day (bpd), or around 91.29 percent of the APBN target of 635 thousand bpd.

Meanwhile, the performance of natural gas lifting also experienced similar obstacles throughout 2024, the average natural gas lifting was recorded at 1.02 million boepd, slightly below the APBN target of 1.03 million boepd.