According to Andang Bachtiar, one of the challenges holding the sector back is that crucial seismological data is not being made available to exploration companies. Photo by Flickr user Enrico Strocchi.
It was one of the quieter visits in what has been a steady stream of senior Indonesian officials to Australia this year to talk business, but Andang Bachtiar’s mission and message were revealing.
In May, he was put in charge of a committee, under reformist Energy Minister Sudirman Said, which has the task of boosting Indonesian oil and gas exploration. And while he is grappling with a raft of complex issues that have dragged the industry down for a decade, he has also found it is being impeded by some of the simplest. This includes the way that crucial seismological data is made available so exploration companies can make smarter commercial decisions.
“It is not open to the public, it is held tight and there is surprise on that,” Andang said in a private interview in Melbourne.
Normally such data is readily released after a patent period, but Indonesia has a different approach. The 2008 Freedom of Information Law requires government bodies and institutions to routinely publish data on their activities and provide citizens with information on request. But the Law also contains a long list of exemptions from disclosure, including information that could “reveal the natural wealth of Indonesia”. There are also conflicting articles in the 2011 State Intelligence Law, which classify such information as “intelligence secrets”.
In picking apart the myriad of sticky regulations and practices surrounding the industry, Andang has made it one of his goals to free the data. “You know the data is very scarce in Indonesia, there is no openness in the data, although there are regulations about it,” he said. “But why don’t we have the data complete and open in Indonesia? Because there is a problem there. And it has been from years ago.”
Making the data more open and far less costly is just one of many changes the Indonesian Petroleum Association has been lobbying for. And according to the organisation, Andang is the kind of person the industry needs.
“He’s on the right track,” IPA President Craig Stewart said. “If you look at best practice around the world, if you own the resource, you want to encourage companies to come in and explore.”
Andang brings a background in geophysics and 23 years experience in the industry, and is also the secretary general for the Association of Oil and Gas Producing Regions (ADPM). He wants to encourage both domestic and international players back in but the task is immense.
Oil and gas exploration has been described as “in crisis”. In oil, the situation has been going backwards since the early 2000s. As fields have matured, governments have given investors little reason to risk tapping new sources, and production has dropped from more than a million barrels a day to about 800,000. The natural gas industry has also faltered despite expectations of it becoming a vibrant and alternative source of energy for a growing nation.
Andang’s examination has confirmed what many others know: that excessive and contradictory regulations mixed with an inefficient bureaucracy have been choking production and stifling a longer-term view. “There has been a long list of why we have failed exploring in Indonesia, creating more new reserves, and the long list has already been told several times to the government by the industry,” Andang said. And it’s a very, very slow response from the government.”
Even releasing the key data in a more timely manner is going to require reforms that include prising a government agency from a source of income. Andang is putting his ideas for reform forward.
“One of them is the possibility of abolishing the government regulation stating that the data is a source of government income,” he said. “We don’t want that. Because it’s stated as a source of government income, the data of oil and gas is very, very restricted.”
According to business representatives, there are many Indonesian professionals in the field who could create start-up companies but are stymied by costs. IPA President Stewart said: “A major oil company may find it’s not very expensive but as the industry matures it’s not necessarily the big companies that are the innovators.”
The industry is still waiting for a new oil and gas law to replace the one that was struck down in 2012 by the Constitutional Court, creating even further uncertainty for investors.
Despite all these concerns, Andang was keen to strike a positive tone in Australian about the new government in Indonesia and its commitment to change.
“I will tell them that we are changing, we are changing,” he said. “The new administration under Jokowi, of course it is already several months now but the changes in oil and gas with the new Ministry of Energy and Mineral Resources, and also my position in the National Energy Council, we are trying to balance all of this into the movement changing in the oil and gas industry.”
Andang believes that even seemingly small gains to improve data access and process will eventually force politicians to come support the mood for change.
