Indonesia's Oil Exploration Challenges Persist Despite Improved Success Rates

Funding Remains Major Obstacle

Indonesia's oil and gas exploration continues to face significant challenges despite an improved success rate in discovering new reserves. The Head of SKK Migas, Djoko Siswanto, revealed that the success rate has risen to 30% from a previous rate of 10% ¹

. However, the primary obstacle remains the lack of funding from local banks due to the high risks associated with exploration activities.

Unexplored Basins and Existing Challenges

Djoko Siswanto highlighted that Indonesia has 128 identified basins, with 65 of them remaining underexplored ²

. The main challenges hindering exploration activities include fiscal terms, licensing issues, and limited budget allocation for exploration. While the government has been working to address these challenges, the progress remains slow.

Banking Sector's Risk Aversion

The banking sector's reluctance to finance exploration activities stems from the high risks involved. Djoko emphasized that not a single local bank is willing to provide financing for exploration projects due to these risks ¹

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Source 2

https://finance.detik.com/energi/d-8207169/skk-migas-ungkap-kendala-cari-minyak-di-ri-bank-dalam-negeri-tak-mau-biayai

. This creates a significant funding gap that hampers the development of Indonesia's oil and gas sector.

Government's Role in Addressing Challenges

The government has been working to improve the investment climate for oil and gas exploration. Djoko noted that while some improvements have been made in addressing existing barriers, more needs to be done to attract investment and facilitate exploration activities.