The Investment of Upstream Oil and Gas in Indonesia

Siti Muarofah, Telisa Aulia Falianty

Abstract


Direct investment is expected to be a source of financing for the current account deficit in Indonesia's Balance of Payments. One of the contributors to the current account deficit is the oil and gas trade balance. Therefore, this study will focus on direct investment in the upstream oil and gas sector. This study will examine the impact of implementing regulations related to restrictions on costs that can be claimed to the government and economic factors that include prices and costs per unit of oil and gas on the upstream oil and gas investment. The study was conducted using micro data from 33 oil and gas companies in Indonesia, with a data period 2005-2018. The analysis model used is panel data regression. Empirical results show that the implementation of regulation as well as price per unit (lag-2) have a significant and positive correlation to the upstream oil and gas investment. While operational cost per unit (lag-2) have a significant effect with a negative correlation after the implementation of the regulation.


Keywords


upstream oil and gas investment, price, cost per unit, regulation

Full Text:

PDF

References


Ahmadi, M. (2019). The Investment-Uncertainty relationship in The Oil and gas Industry. Resource Policy 63 (2019) 101439.

Amelia, A. A. (2016). The most important article is the Association of Oil and Gas Beleid Cost Recovery 2010 Pride of Sluggish Investment. Website of Economic and Business Data Center – Databoks. https://databoks.katadata.co.id/.

Azzam, et.al. (2015). The Impact of Inflation and GDP Per Capita on Foreign Direct Investment: the case of United Arab Emirates. Investment Management and Financial Innovations, 12(3). https://businessperspective.org/assets.

Brown, et.al. (2018). Effects of State Taxation on Investment: Evidence from the Oil Industry. Research Working Paper. ISSN 1936-5330. United State of America.

Blundell, et.al. (1992). Investment adn Tobin Q. Journal of Economics, 51, 233-257. North-Holland.

Oil and Gas Bulletin. (2019 May). Special Unit for Oil and Gas (SKK Migas).

Chen, et.al (2017). Investment and Operating Choice: Oil and Natural Gas Future Prices and Drilling Activity. Energy Economics 66, 54-68.

Cox., & Wright. (1976). The Determinants of Investment in Petroleum Reserves and Their Implications for Public Policy. The American Economic Review, 66(1), 153-67.

EIA: Malaysia Oil Market Overview. Https://www.hellenicshippingnews.com/eia-malaysia-oil-market-overview.

Falianty, T. (2017). Balance of Payment Dynamic in Indonesia and the Structure of Economy. Economic and Finance in Indonesia, 63(1), 53-80.

Gozgor., & Guris. (2015). Trade Openness and FDI Inflows in Turkey. Research Gate, 15(2). Retrived from https://www.researchgate.net/publication/287260837.

Gunes., & Cambazoglu. (2016). The Relationship Between Foreign Exchange Rate and Foreign Direct Investment in Turkey. Addleton Academic Publishers, 11(1), 284-293

Gawad., & Muramalla (2013). Foreign Direct Investment (FDI) and Its Effects on Oil, Gas and Refinery Production and Their Exports: an Applied Study. ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online), 4(1),

Hvozdyk., & Blackman, (2010). What Determines Investment in the Oil Sector? IBD Working Paper Series No. IDB-WIP-209.

IPA-31 Annual Convention and Exhibition, (May 2007). PSC Term and Condition and Its Implementation in South East Asia Region. IPA07-BC-127.

Korutaro., & Biekpe. (2013). Effect of Business Regulation on Investment in Emerging Market Economies. SciVerse ScienceDirect. Review of Development Finance, 3, 41-50.

Ministry of Law and Human Rights (2010). Government Regulation No. 79 of 2010 concerning Refundable Operating Costs and Income Tax Treatment in the Upstream Oil and Gas Business Sector. Jakarta.

Ministry of Law and Human Rights. (2017). Government Regulation No. 27 of 2017

concerning Amendment to Government Regulation No. 79 of 2010 concerning Refundable Operating Costs and Income Taxes in the Upstream Oil and Gas Sector. Jakarta.

Ministry of Energy and Mineral Resources (2008). Minister of Energy and Mineral Resources Regulation No. 22 of 2008 concerning Types of Costs for Upstream Oil and Gas Business Activities which cannot be returned to the Cooperation Contract Contractor. Jakarta.

Ministry of Economic Coordinator. (2018). Ministry of Religion Press Release regarding the 16th Economic Policy Package, 16 November 2018. Ministry of Coordinating Website (https://ekon.go.id/press/view/siaran-pers-paket.4370.html).

Ministry of Energy and Mineral Resources (https://migas.esdm.go.id/post/read/optim-p Reception-negara-pemerintah-review-formula-icp).

Lerskullawat, A. (2018). Financial Development, Financial Constraint, and Firm Investment: Evidence from Thailand. Kasetsart Journal of Social Science, 1-12.

Lubiantara, B. (2012). Oil and Gas Economy: Overview of the Commercial Aspects of Oil and Gas Contracts. Jakarta: PT Gramedia.

Mandala, M., & Rahardja, P. (2004). Macroeconomic Theory. University of Indonesia Faculty of Economics Publisher. Jakarta.

Mahbud, et.al. (2019). Determinants of Foreign Direct Investment (FDI) in the Power Sectors: a Case Study of Bangladesh. Energy Strategy Review, No. 24 (2019), 178-192.

Mankiw, N Gregory. Makroekonomi., 6th edition. Jakarta: Erlangga (Fitria Liza dan Imam Nurmawan, penerjemah).

Mikhael, G. (2017). Indonesia Previously Producers of Petroleum, Now Importers, Why? Kompas Website, Economic Section, 3 October 2017 economy.kompas.com.

Ong, et.al. (2018). Foreign Direct Investment Inflow in Malaysia: a Quantitative Approach. E-Acamedia Journal, 7(1), 120-133

Phan, et.al. (2018). Crude Oil Price Uncertainty and Corporate Investment: new global evidence. Energy Economics, 77, 54-65.

Patria., & Adrison. (2015). Oil Exploration Economics: Empirical Evidence from Indonesian Geological Basins. Economic and Finance in Indonesia, 61(3), 196-213.

Price Waterhouse Cooper (2016 May). Is the Drum half full or half empty. www.pwc.com.

Reiss. (1990). Economic and Financial Determinants of Oil and Gas Exploration Activity. Nationl Bureau of Economic Research. 0-226-35585-3.

Sukirno, S. (2013). Macroeconomics: Introduction Theory. Jakarta: PT Raja Grafindo Persada

State Secretary of the Republic of Indonesia, (2001 November). Law No. 22 of 2001 concerning Oil and Gas. Jakarta.

State Secretary of the Republic of Indonesia. Law No. 8 of 1971 concerning Oil and Gas Mining Companies. Jakarta.

Bank Indonesia (SEKI) Economic and Financial Statistics. Bank Indonesia website. www.bi.go.id.

Soemanto., & Ratnasary. (2017). Article about 9 Indonesian Upstream Oil and Gas Phenomenon. https://www.esdm.go.id

Tsaurai. (2018). Investigating the Impact of Inflation on FDI in Southern Africa. Ceconomica, 14(4), 597-611

The IPA Convex. (April 2019). The Great Potential of LNG in Indonesia. convex.ipa.or.id.

The United Nations Economic Commission for Europe. Global Production Manual. Switzerland.

The IPA Convex (2019 April). The Great Potential of LNG in Indonesia. IPA website (convex.ipa.or.id).

Knoema website. (2014). Related article 'Oil production and operating cost'. https://knoema.com/rqaebad/cost-of-producing-a-barrel-of-crude-oil-by-country.

Tempo Website, (2018 November). Related article 'Energy Resistance from Oil Refineries'.




DOI: https://doi.org/10.15294/jejak.v13i1.23248

Refbacks

  • There are currently no refbacks.




Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.