Indonesia energy ministry, SKK Migas, DPR set US$10.4b cost recovery for 2017

JAKARTA ( – The Energy and Mineral Resources Ministry (ESDM) and the Special Task Force for Upstream Oil and Gas (SKK Migas) and the People’s Representative Council (DPR) Commission VII which overseas energy sector have agreed to set cost recovery at US$10.4 billion for the 2017 Draft State Budget.

The cost recovery – recoverable costs spent by oil and gas companies (PSC) to develop and produce oil and gas – for 2017 will be higher than cost recovery set in the revised 2016 State Budget at US$8 billion, but lower than cost recovery in 2015 at US$13.4 billion and US$16.3 billion in 2014.

Nevertheless, the SKK Migas has indicated that this year’s cost recovery could be higher than planned. The oil lifting has also continued to decline but expected to bounce back this and next year, following the achievement of ExxonMobil and Pertamina in boosting the production of Cepu Block to its peak level at 200,000 barrels of oil per day this and next year, or 20 percent of Indonesia’s oil production.

Acting Minister for the Energy and Mineral Resources Ministry (ESDM) Luhut Binsar Panjaitan said the planned 2017 cost recovery is already lower US$1 billion than earlier plan.

Chairman of SKK Migas Amien Sunaryadi said a cut in cost recovery could affect oil and gas production.

Secretary of SKK Migas Budi Agustyono said based on the work plan and budget (WP&B) of oil and gas companies for 2017, the amount of WP&B is at US$13-14 billion. If the cost recovery is cut to US$10.4 billion, the oil and gas companies will then have to adjust their expenditure plans that could have an impact on oil and gas production. However, a lower cost recovery is reasonable given current lower oil price environment. (*)

Check Also

Cue Energy

Pertamina’s oil and gas output overseas reaches 120,590 boepd

JAKARTA ( - Indonesia's state owned energy company PT Pertamina (Persero) through its subsidiary PT Pertamina Internasional ...

Leave a Reply

Your email address will not be published. Required fields are marked *