Friday, February 23, 2024

Investment risks in oil and gas sector: Challenges, opportunities

Reading Time: 2 minutes
Journalist IBP




A. Rinto Pudyantoro, a lecturer at the University of Pertamina, has identified 12 business risks associated with oil and gas investments. These risks, applicable globally and in Indonesia, encompass fiscal, economic, market, subsurface, technological, quality, cost, labor, time, environmental, security, and political.

Rinto emphasized the importance of the government’s role in controlling these risks to facilitate smoother business operations. However, Rinto acknowledged the government’s limitations in managing all the identified risks.

“Out of the 12 risks, only one can be entirely controlled by the government, which is fiscal,” Rinto told a media briefing at the IPA Convex event in Jakarta, on Thursday, February 1, 2024.

He said that the government held full control over fiscal aspects in the upstream oil and gas sector, allowing it to enact policies without external interference.

While some of the other 11 risks can be partially managed, Rinto emphasized that there is no guarantee of complete success. Factors such as security, economic conditions, market dynamics, political stability, among others, are challenging to control entirely.

Rinto expressed hope that future Indonesian leaders would play a crucial role in fostering a conducive environment for upstream oil and gas businesses by effectively managing these risks.

He urged the new government to focus on improving the ease of doing business in the upstream oil and gas sector and addressing operational challenges. “The government we hope for is one that can support the growth of upstream oil and gas businesses,” he added. According to Rinto, minimizing risks would make investments more appealing to potential investors, whereas heightened risks could deter investment.

In addition to risk management, Rinto advised the incoming government to avoid controversial decisions that might create uncertainty for investors. He also emphasized the need for improvements in agreements, tax treaties, and other operational aspects affecting upstream oil and gas activities.

Regarding the new leadership, Rinto proposed, “It would be better if the next five years were used to fix shortcomings, such as streamlining licensing processes and accelerating project commercialization. Why does it take 7 years here when Petronas in Malaysia can finish in 2-3 years?”

Oil and gas investment in 2023

In a related context, the Investment Coordinating Board (BKPM) reported positive outcomes in the oil and gas sector, with a record-high investment of USD 13.7 billion or approximately IDR 210 trillion in 2023. This marks the highest investment in the last eight years, surpassing the global growth rate of oil and gas investments estimated at 6.5 percent.

Dwi Soetjipto, Chirman of the Upstream Oil and Gas Regulatory Task Force (SKK Migas), attributed this achievement to the government’s efforts and policies that improved the investment climate. He expressed gratitude for the success of Indonesia’s Oil & Gas 4.0 strategic plan and the oil and gas sector’s ability to adapt to challenges amid the ongoing energy transition.

The continuous increase in oil and gas investments signifies restored investor confidence and highlights Indonesia as an attractive destination for investment in the sector.

Journalist IBP






We will provide you with an invoice for your reimbursable expenses.


New to Indonesian market? Read our free articles before subscribing to the premium plan. If you already run your business in Indonesia, make sure to subscribe to the premium subscription so you won’t miss any intelligence & business opportunities.


$550 USD/Year


$45 USD/Month

Cancelation: you can cancel your subscription at any time, by sending us an email

Add keywords to your market watch and receive notification:
Schedule a free consultation with us:

We’ll contact you for confirmation.


President Director of State electricity company PT PLN, Darmawan Prasodjo, has suggested that hydrogen fuel cell vehicles as future transportation is much more efficient when compared to fuel-based, even electric vehicles.
Vale Indonesia, a subsidiary of Canadian company Vale, has denied the Indonesian government’s claim that Vale Indonesia and Indonesian state-owned mining holding company MIND ID had reached an agreement with the government on the price of divestment shares.
Pertamina Hulu Mahakam (PHM) has secured the final investment decision (FID) approval to proceed with the implementation of the more than US$ 300 million Offshore Field Development Project (OPLL-3B) in the Mahakam Block.
Vela Alpha, a drone developed by PT Dirgantara Indonesia or PTDI in collaboration with PT Vela Prima Nusantara, also known as Vela Aero, made its appearance at the Singapore Airshow 2024 aviation exhibition.
The Upstream Oil and Gas Regulatory Task Force (SKK Migas), along with Inpex Corporation, is still studying global liquefied natural gas (LNG) market projections to secure long-term gas sales contracts for the Masela Block.
Ministry of Energy and Mineral Resources (ESDM) is unveiling a promising prospect for sustainable energy development mainly in Papua’s hydropower and its potential export.