Upstream Oil and Gas Industry Plays Strategic Role in Supporting Regional Economy
Jakarta (ANTARA) - The upstream oil and gas industry is considered to have a strategic role in driving regional economic growth through various multiplier effects generated from its operational activities.
“Not only for state revenues, but also for increasing regional incomes up to creating jobs and developing infrastructure,” said Lecturer from the Faculty of Economics and Business at Universitas Pertamina, Rinto Pudyantoro, in a statement in Jakarta on Friday.
He explained that the contribution of the upstream oil and gas industry to regions can be seen from various main components such as revenue-sharing funds (DBH), tax revenues (Oil and Gas PBB), as well as contributions through participating interest (PI) of 10 percent involving Regional Owned Enterprises (BUMD).
For example, he said, in 2023, Riau Province received oil and gas DBH of Rp3.6 trillion and oil and gas PBB of Rp3.9 trillion.
“Often there is a perception that the presence of the oil and gas industry does not provide direct benefits to the surrounding community. However, if viewed comprehensively, this industry actually provides very significant and multi-layered economic impacts to the region,” Rinto stated.
Furthermore, the multiplier effects are also reflected in the oil and gas sector’s contribution to the development of downstream industries, the provision of energy for domestic needs such as power plants, as well as the construction of public facilities that support the welfare of communities around the operational areas.
Corporate social responsibility (CSR) programmes and community development (PPM) also play an important part in strengthening the socio-economic impacts produced.
“The multiplier effect of the upstream oil and gas industry does not stop at state revenues, but also extends to various sectors, including local workforce, infrastructure, and overall strengthening of the regional economy,” he added.
Rinto also highlighted the oil and gas sector’s contribution to state revenues in the form of land and building tax (PBB). Based on data, national PBB reached Rp24.01 trillion in 2022.
From that amount, oil and gas PBB reached Rp13.711 trillion or more than 50 percent of national PBB revenue.
Nevertheless, Rinto said the main challenge lies in local government decisions on the utilisation of the funds obtained, because the large receipts of oil and gas DBH and oil and gas PBB do not directly impact regional welfare.
“If local governments can appropriately allocate those funds for development, it can provide significant economic benefits to the community,” he stated.
Amid the decline in oil and gas production, Rinto emphasised that the upstream oil and gas industry still has an important role as a pillar of the economy both nationally and regionally.
According to him, with proper management, the sector not only produces energy but also becomes a driver of sustainable economic growth.