TEMPO.CO, Jakarta - Minister of Energy and Mineral Resources Bahlil Lahadalia mentioned the International Monetary Fund (IMF) policy as one of the main causes of the decline in Indonesia's oil and gas production (lifting migas) since the late 1990s. He stated that the IMF intervention during the 1998 monetary crisis has actually triggered the decline in the energy sector, which has not fully recovered to this day.
He then revealed that the IMF recommended revising the Oil and Gas Law as part of the national economic rescue package at that time. However, the impact turned out to be the opposite of the original intent.
"We saw the IMF at that time as an expert doctor. However, since they suggested a change in the oil and gas law system, our lifting has continued to decline," said Bahlil at the Human Capital Summit in JCC Senayan, Central Jakarta, on Tuesday, June 3, 2025.
Bahlil said that before the crisis between 1996 and 1998, Indonesia was able to produce oil at a rate of 1.5 to 1.6 million barrels per day (bpd). Of that amount, only about 500,000 bpd were used for domestic needs. The rest, approximately 1 million barrels per day, were exported, making Indonesia one of the main oil-exporting countries and a member of the Organization of the Petroleum Exporting Countries (OPEC).
However, he stated that the situation has now drastically reversed. Indonesia's oil production in 2024 only reached 580,000 bpd, while domestic consumption surged to 1.6 million bpd.
He said that the deficit of more than 1 million barrels per day must be covered by imports, making Indonesia highly dependent on energy supplies abroad. "This is the result of the prescription given by the IMF when we were in crisis. We trusted it too much, assuming that all outside advice would be beneficial. However, not all medicine suits our illness," said Bahlil.
Therefore, the General Chairperson of the Golkar Party emphasized the importance of energy policies based on national needs and context, rather than simply following prescriptions from international institutions. He also stressed that the government is now making vigorous efforts to restore national oil and gas production capacity through various strategies, including investment and energy industry downstreaming.
Energy economist and founder of the ReforMiner Institute, Pri Agung Rakhmanto, previously stated that the government will not be able to increase oil production soon. According to him, what can be done now is only to reduce the rate of decline. At the very least, he said, domestic oil production should be adjusted to the state budget target.
"Actually, if only to achieve the state budget target, it's simpler. The target is already low. Therefore, it is realistic to try to achieve the state budget target. However, when it comes to increasing lifting capacity, there are many steps to take," he said when interviewed by Tempo on Monday, October 14, 2024.
Furthermore, Pri explained that broadly speaking, one thing to increase lifting is to offer substantial incentives to the fields managed by PT Pertamina (Persero). This is aimed at persuading Pertamina to invest in boosting oil production. "The management has been transferred to Pertamina, old fields. Yes, Pertamina needs incentives," he said.
M Rizki Yusrial contributed to the writing of this article
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