Satistical Analysis and Mapping of Oil and Gas Development Cost Based on Field Development Plan in Indonesia

The oil price has already sunk to its lowest level at 37.13 US$/bbl (per December 2015) over the last 11 years. In this economic downturn, the oil and gas company must take extra measures to cope with this issue. In a country that adopts a Production Sharing Contract fiscal regime such as Indonesia, there are several changes which can be proposed such as accelerating depreciation, providing incentives (Investment Credit and Interest Cost Recovery), DMO Holiday or readjusting the First Tranche Petroleum or Split Ratio. Another solution is to discover a new oil and gas area that has low cost development which also has large commercial reserves. Here, this paper will provide an insight about the development of oil and gas industry in Indonesia during the downfall of oil price and produces the bubble map of development cost and commercial reserves based on geographic area of Indonesia to show the attractiveness of investing in oil and gas industry based on statistical data analysis. There were 387 Plan of Development (POD) approved during 2003 - 2015. For the purpose of this paper, the geographic area of Indonesia shall be simplified into 6 different area (Sumatera, Natuna Sea, Java, Kalimantan, Sulawesi and Papua). From here, the total development cost and commercial reserves of each respective contract area in the POD shall be calculated and redistributed into the aforementioned clusters. Based on data analysis, the oil and gas industry in Indonesia is still considered attractive for the investors despite suffering from low oil price, this is because the maximum development cost needed in Indonesia is around 15.48 US$/bbl or smaller than the current oil price. Futhermore, there are several areas which have untapped wealth of commercial reserves such as Papua and Natuna Sea. Under the current adverse condition, this paper eventually provides a good insights for the investors and help them creating and revisiting their strategy and portfolio to invest in Indonesia's oil and gas industry.