Oil and Gas Equipment in Indonesia

A Hot Tip about Oil in Indonesia

Posted on: 3 Mar 2010


Indonesia is a valuable market for U.S. suppliers of oil and gas equipment, technology, and services. The country’s production was 988,000 barrels per day (bpd) output of crude and condensate in 2008, is slightly higher than the target of 977,000 million bpd. In 2009, it is estimated that production will be 960,000 bpd. The production could be higher since nine oil and gas fields will start production in 2009.


In order to increase oil and gas production, the GOI provided fiscal incentives by issuing three Ministerial Decrees in December 2007, which are:

- Decree No. 177/PMK.011/2007 on exemption of import duty on goods imported for the purpose of upstream oil and gas and geothermal business activities;

- Decree No.178/PMK.011/2007 on value added tax on imported goods for upstream, oil and gas and geothermal exploration activities, will be paid by the GOI and;

- Decree No. 179/PMK.011/2007 on tariff of import duty on imported drilling platforms or floating or sub-sea production facilities.


In 2007, investment in the oil and gas industry reached $11.2 billion, increasing from $9.7 billion in 2006. The investment in 2008 was $12.2 billion and it is expected to reach $12.94 billion in 2009. The oil and gas companies allocate $3.73 billion for drilling 1,273 wells, $2.85 billion for production facilities, $4.72 billion for production cost and $1.64 billion for general administration cost. In addition, oil and gas companies will spend $201.57 million for exploration activities at 50 production fields and 71 exploration fields


Indonesia imported $699.1 million of oil and gas equipment in 2007. Imported U.S. products represented 27 percent of the total import value. The actual import value of U.S. products could be higher than reported, because many U.S. products are imported to Indonesia through Singapore. Industry sources estimate that the market will increase by 10 percent, with U.S. market share increasing in response to expanding exploration and the enhancement of existing oil fields.



Best Products/Services

U.S. companies are strong suppliers of parts for boring/sinking machinery, drill pipes for oil and gas, pumps, compressor/pump parts, and floating or submersible drilling production platforms.


Based on market observations and discussions with agents and distributors, drilling and production equipment has the most potential. With a total value of more than 60 percent of the total expenditure, this category includes drilling, machinery, mud equipment and accessories; production surface equipment; drilling tools and retrievable production tools; casing, tubing and accessories; cementing equipment and liner hanger systems; fishing and repair tools (drilling); drilling and mud control instruments; production well test and monitoring instruments; wellhead equipment and accessories; production string components and subsurface pumps; derricks and accessories; and geological and geophysical operating equipment.



The GOI has announced a tender offering for 31 new oil and gas fields. The tender consists of direct proposal tender for 15 fields and regular tender for 16 fields. It is expected that the GOI will announce the winners in mid 2009.


In 2009, the GOI also plans to develop two small oil refinery plants, three small LPG plants, a gas pipeline, a LPG storage plant, a fuel storage plant, a LNG storage plant, and gas infrastructure.


Most of the oil and gas production (90%) in Indonesia will come from mature fields, which are continuing to decline. The secondary recovery from the mature fields provides opportunities for American firms to introduce the Enhanced Oil Recovery technology (EOR).


Construction of additional oil and gas facilities in Indonesia should bring significant commercial opportunities for U.S. companies that supply engineering services and equipment such as compressors, metering systems, and pumps.




Read the full market research report

Posted: 03 March 2010

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