Indonesia's oil and gas upstream revenue expected to fall short of 2025 budget target due to lower-than-expected global crude prices.

Indonesia's oil and gas upstream revenue is expected to fall short of its target for this year due to lower-than-expected global crude prices. State revenue from the upstream sector in the first half stood at $5.88bil, or 45.1% of the full-year target of $13.03bil. Despite strong investment and production performance, SKK Migas projects total receipts by the end of the year to reach only around $10.83bil, or roughly 85% of the state budget assumption.

Indonesia's oil and gas upstream revenue is expected to fall short of its 2025 target due to lower-than-expected global crude prices. As of July 2025, state revenue from the upstream sector in the first half stood at $5.88 billion, or 45.1% of the full-year target of $13.03 billion. Despite strong investment and production performance, SKK Migas projects total receipts by the end of the year to reach around $10.83 billion, or roughly 85% of the state budget assumption [1].

The country's oil lifting reached 578,000 barrels of oil per day (BOPD) as of June 2025, slightly higher than the 576,100 BOPD recorded in the same period last year but still below the 2025 state budget (APBN) target of 605,000 BOPD. SKK Migas remains confident in meeting the annual target, attributing the upward trend in production to the inauguration of the Forel and Terubuk fields in the Riau Islands in May [1].

Despite the shortfall in oil production, the upstream sector has seen robust investment. SKK Migas reported $7.19 billion in investment during the first half of 2025, marking a 28.6% increase year-on-year. This positive investment climate reflects renewed confidence in Indonesia’s oil and gas sector from both domestic and international stakeholders [1].

Operational metrics also showed improvement. As of June 2025, 409 development wells had been drilled, up 14% from 358 wells in the same period last year. Workover operations increased by 6%, and well services rose 12%, reaching 20,644 activities. The sector recorded a remarkably low incident rate of 0.13, far below the government’s target of 0.5 and significantly better than the global average of 0.81 [1].

On the gas side, Indonesia is in a stronger position. As of June 2025, total gas delivery stood at 5,483 MMSCFD, slightly below the APBN target of 5,628 MMSCFD. The nation continues to discover major gas reserves, positioning gas as a strategic energy source for the long term [1].

The study by Setyo Tri Wahyudi and Amalia Rahmawati, examining the link between world oil price volatility and sectoral stock performance in Indonesia, found that sectors closely tied to oil prices, such as energy and property, benefit from rising oil prices, whereas sectors like health are adversely affected. This suggests that oil price volatility spills over to various sectors, necessitating the consideration of such risks in investment and policy decisions [2].

In conclusion, while Indonesia's oil and gas upstream revenue is expected to fall short of its 2025 target, the sector continues to show positive momentum with strong investment and operational performance. The challenges posed by lower global crude prices highlight the importance of diversifying energy sources and maintaining robust investment in the upstream sector.

References:
[1] https://indonesiabusinesspost.com/4814/energy-and-resources/indonesia-s-oil-lifting-inches-up-in-h1-2025-but-still-below-target
[2] https://www.researchgate.net/publication/393962990_Examining_the_link_between_world_oil_price_volatility_and_sectoral_stock_performance_in_Indonesia?_tp=eyJjb250ZXh0Ijp7InBhZ2UiOiJqb3VybmFsIiwicHJldmlvdXNQYWdlIjpudWxsLCJzdWJQYWdlIjoib3ZlcnZpZXcifX0