By: Andi Sudjatmiko)*
National energy security has become an increasingly important strategic issue amidst global uncertainty, fluctuating energy prices, and increasing domestic demand. In this context, the upstream oil and gas sector plays a crucial role as the primary foundation of the nation’s primary energy supply. Upstream oil and gas encompasses all oil and gas exploration and exploitation activities, from reserve discovery to production. Without strong and sustainable upstream oil and gas performance, achieving energy independence and security will be difficult, as dependence on energy imports will continue to increase.
Indonesia possesses substantial potential oil and gas resources, both proven and prospective. However, the main challenge lies in declining production from mature fields explored decades ago. This natural decline in production must be offset by the discovery of new reserves and the optimization of existing fields. This is where upstream oil and gas development becomes a strategic agenda for the country, not merely as an economic sector, but as a tool for maintaining the stability of the national energy supply in the long term.
George NM Simanjuntak, Head of the Formality Division of the Upstream Oil and Gas Regulatory Agency (SKK Migas), explained that the government continues to encourage increased investment in the upstream oil and gas sector by simplifying regulations, improving contract schemes, and providing more attractive fiscal incentives. This step is crucial because oil and gas exploration activities require significant capital, high technology, and carry significant risks. With a more competitive investment climate and strong legal certainty, it is hoped that interest from domestic and foreign investors in developing oil and gas working areas in Indonesia will increase again, making national production targets more realistic to achieve.
Beyond investment, strengthening the upstream oil and gas sector is also closely linked to technological mastery and increasing the capacity of national human resources. The use of enhanced oil recovery technology , digitizing operations, and utilizing more accurate seismic data are key to increasing reserve recovery rates. At the same time, the involvement of national workers and companies needs to be continuously expanded to ensure broader economic benefits from the upstream oil and gas sector, while simultaneously strengthening technological independence in the energy sector.
Acting Director General of Electricity at the Ministry of Energy and Natural Resources (KESDM), Tri Winarno, stated that within the energy security agenda, upstream oil and gas does not stand alone but is integrated with the downstream sector and overall energy policy. Stable oil and gas production will support the resilience of the transportation, industrial, and electricity sectors, which are still heavily dependent on fossil fuels. Natural gas, in particular, is seen as a relatively cleaner and more flexible transitional energy source, making the role of upstream oil and gas increasingly strategic in bridging the transition to new and renewable energy.
Energy security is not solely measured by production volume, but also by a country’s ability to manage resources sovereignly and sustainably. Transparent, accountable, and nationally-interested upstream oil and gas management is a public demand. State revenue from this sector must support development, strengthen fiscal policy, and finance future energy transformation. With good governance, upstream oil and gas can be a driver of development and a pillar of national stability.
Amid global commitments to emission reduction and energy transition, the role of upstream oil and gas is often viewed as contradictory. However, in the reality of national energy needs, oil and gas remains a crucial component that cannot be abruptly abandoned. What is needed is more efficient management, lower emissions, and alignment with sustainable development goals. With this approach, upstream oil and gas remain relevant as part of a grand strategy for energy security, without neglecting the environmental agenda.
The Director General of Oil and Gas (Dirjen Migas) at the Ministry of Energy and Mineral Resources (ESDM), Laode Sulaeman, explained that in the past two years there has been an increase in the discovery of areas with potential national oil and gas reserves. Laode emphasized that the government will auction 110 of these oil and gas working areas. So far, he noted that several offers have been received from investors interested in participating in the auction. In addition to strengthening oil and gas production and reserves, the Ministry of Energy and Mineral Resources is also actively implementing the mandatory blending program for diesel fuel with palm oil at 40%, or B40. The B40 program is even estimated to have boosted the country’s foreign exchange by up to IDR 130 trillion. The program has also successfully created new jobs, reaching 2 million workers in Indonesia.
Ultimately, upstream oil and gas within the national energy security agenda must be understood as a long-term strategic effort. It is not simply a matter of production and lifting figures, but also concerns energy sovereignty, economic stability, and sustainable development. Synergy between the government, business actors, and the public is key to optimally managing the nation’s oil and gas potential. With a strong upstream oil and gas sector, Indonesia has a more solid foundation to face current and future energy challenges.
*) The author is a contributor to the Indonesian Strategic Information Study Institute