Digging for a Petroleum Fund

Indonesia’s oil and gas production has fallen short of the government’s ambitious target, exposing the difficulties of building a petroleum fund while output continues to weaken.

The 2026 State Budget set a target of 610,000 barrels of oil per day. Yet average lifting, the volume of crude and gas produced and ready for sale, reached only 578,000 barrels per day between January and July, according to Djoko Siswanto, head of the Special Task Force for Upstream Oil and Gas Business Activities, or SKK Migas.

Djoko said several obstacles had disrupted efforts to increase production. Major fields experienced operational problems, while aging fields continued to decline. At the Rokan Block in Riau, operated by Pertamina Hulu Rokan, the production target stood at 163,000 barrels per day, but actual output reached only 133,000 barrels per day after a disruption involving a pipeline owned by Transportasi Gas Indonesia.

The Cepu oil and gas field, located on the border of Central and East Java, faces a different problem. The field has long been one of the mainstays of national oil production, but its output is now beginning to fall because of natural factors. “We are trying to keep production from falling further,” Djoko told lawmakers at a hearing of House of Representatives Commission XII in Jakarta on August 26.

SKK Migas is looking for ways to recover the lost output. One effort involves extracting oil that has settled at the bottom of storage tanks, known as dead stock. The agency is also targeting small wells operated by local communities, with a goal of obtaining 5,000 barrels per day from them by the end of the year.

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We are trying to keep production from falling further.