The Energy insurance industry in Indonesia is witnessing phases of rapid growth. This industry seems to hold good prospects with ongoing production activities of oil and gas and a projected increase in consumption. Indonesia is witnessing new opportunities in increasing local oil and gas production, thereby reducing its dependence on imported crude oil. The increased focus on the production of oil and gas will create more employment opportunities and also improve the country’s financial security. Indonesia’s oil and gas sector has always been the backbone of the country’s economy. The production target of 1m barrels of crude oil per day will boost the insurance protection business.
Due to the ongoing production activities of oil and gas coupled with a projected increase in consumption, the energy insurance business in Indonesia is being regarded as an industry that seems to hold good prospects shortly. Mr. Eka Bhayu Setta, the head of the Business Strategy, Risk Management and Taxation Division of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) expects consumption of oil and gas in Indonesia to grow exponentially in the next 10 years. He feels that since the consumption of oil and gas in the country will still be huge in the future, there is a need to step up production to support this booming demand.
Mr. Eka Bhayu Setta reiterated that production is not an overnight project. He said it is going to continue and will need protection.
The oil and gas insurance business declined for several years until 2019 due to reduced drilling activity since 2010 and also, in part, due to the decline in oil prices. This decline is about to get reversed with the production target of 1m barrels per day set by the President Mr. Joko Widodo and will lead to an increase in coverage by the SKK Migas-KKKS construction project insurance consortium. SKK Migas has big plans to increase field development work with the aim to drill 1000 development wells annually by the year 2025.
