The Urgency of Oil and Gas Exploration and the Need for Regulatory and Policy Support
The average annual natural decline rate for national oil and gas fields is approximately 22.3% for oil and 12.0% for gas. This downward trend directly increases dependency on imported oil and gas supplies, thereby threatening macroeconomic stability and burdening the country’s foreign exchange reserves. The cumulative foreign exchange requirement to finance oil imports during the 2026-2030 period is estimated to reach between US$181.3 billion and US$217.9 billion, assuming a world oil price of US$90 per barrel. Mathematically, every 100,000 barrel of oil per day (BOPD) decrease in domestic oil production can directly result in an additional gross import exposure of around US$2.6 billion per year, assuming an oil price of US$70 per barrel.
The administration of President Prabowo Subianto has set energy self-sufficiency as a key national strategic target. Within this framework, increasing domestic energy availability is positioned as the primary foundation for economic stability. Energy self-sufficiency cannot be achieved without a radical change in upstream oil and gas management, particularly in the most upstream aspect, namely exploration. Exploration serves both to stem the rate of production decline and as an engine for new volume growth.
Referring to the 2025 SKK Migas Long Term Plan (LTP) simulation on a national scale, the sensitivity to the number of exploration structures is the main determining factor for the success of the 1 million BOPD production target. The Base Case scenario, involving 215 contributing exploration structures, projects that the national production peak will only be sustained at around 837,000 BOPD by 2032. However, under the High Case scenario, where the number of structures is increased to 227 (a difference of only 12 oil exploration structures), the national production peak is projected to break through 1.14 million BOPD. This sensitivity simulation shows that the addition of 12 oil exploration structures is the decisive factor in achieving national energy self-sufficiency.
To carry out massive exploration, fulfilling investment needs is the most critical factor. The characteristics of the upstream oil and gas industry, which are high-risk, high-capital, and high-technology, demand certainty of a competitive return on investment compared to other oil and gas producing countries. However, data shows that investment allocation for oil and gas exploration activities in Indonesia has not been sufficiently progressive. In 2025, national exploration investment realisation only reached US$941.69 million. This figure reflects a decrease of 32.4% compared to the 2024 exploration investment realisation, which recorded US$1.39 billion. The realisation of 2D seismic surveys in 2025 only reached 419.84 km, or just 24.1% of the set target of 1,745.11 km.
This condition results in a minimal number of ready-to-drill geological structures, making it less attractive for international contractors who require certainty of subsurface macro data. This capital gap underscores the need for fiscal policy reforms specifically designed to attract exploration capital, both from domestic and global investors. Of the total national upstream oil and gas investment in 2025, which reached US$15.42 billion, the portion allocated specifically for exploration activities was only around 6.1%. The majority of the investment, reaching over US$10.38 billion, was absorbed by production activities in existing fields.
From a technical geological perspective, the characteristics of Indonesia’s sedimentary basins actually show competitive prospectivity. During the 2022-2024 period, exploration activities successfully identified a number of large-scale hydrocarbon accumulations through strategic exploration wells such as Timpan-1 (estimated 2 TCF gas), Geng North-1 (5 TCF gas and 400 million barrels of condensate), Layaran-1 (6-6.5 TCF gas-in-place), and Tangkulo-1 (2 TCF gas). The Geng North-1 and Layaran-1 discoveries were even categorised as two of the largest deepwater discoveries in the world in 2023.
The attractiveness of this geological prospectivity is confirmed by the IHS Markit/S&P Global report as of April 2026, which noted that Indonesia’s Activity & Success indicator increased from a score of 5.00 in 2020 to 6.03 in 2026. This achievement places Indonesia in 4th place out of 15 countries in the Asia Pacific region for the technical success aspect of exploration. Throughout the 2020-2024 period, the national geological success ratio remained stable in the range of 52%-74%, with a cumulative average of 63.2% from the total execution of 144 exploration wells.
However, the operational quantity in terms of exploration shows a significant deviation from the target. The trend in national exploration well drilling realisation during the 2021-2025 period was consistently below the annual target, with fulfilment ranging from only 52% to 78%. In the current year 2026, as of 31 May 2026, drilling realisation has only reached five wells out of an annual target of 39 exploration wells (12.8%). This data indicates that the national upstream oil and gas problem regarding exploration lies not in limited geological potential, but in operational execution and investment bureaucracy obstacles.
From the analysis conducted, the realisation of the energy self-sufficiency target through massive exploration is currently still constrained by several operational and regulatory-policy barriers. The three main clusters can be grouped as follows: Licensing Complexity, where the seismic survey and drilling phases require approximately 39 permits or approvals.