Jakarta, CNBC Indonesia – The upstream oil and gas industry cannot be separated from the impact of the corona pandemic (Covid-19) which has targeted all sectors. Former Deputy Minister of the Ministry of Energy and Mineral Resources (ESDM) Arcandra Tahar explained the scenario of the oil and gas industry to be ready to face all conditions.
He explained that in the world of energy, especially oil and gas will always face the potential of up and down. According to him there is nothing in history that the oil and gas industry is always at the top. When it is at the bottom, like now, usually big and good oil companies have prepared scenarios.
“Anticipating the situation. This is extraordinary? Agree. Is it not prepared? I don’t think so. They don’t know the exact up and down periods, there are companies that are ready with mitigation and not ready,” Arcandra explained in a discussion Wednesday evening, (07/29/2020 ).
In theory, a good oil company when oil prices rise, the upstream sector will make a large contribution in the company. But when oil prices fall, the downstream sector contributes greatly. For large companies, the two sectors must be balanced.
“This will always happen up and down. How do companies prepare for migration changes in oil prices at the top and bottom. Not also (always large companies) there are medium-sized companies called independent oil companies, they also have investments in addition to upstream as well as getting ready in downstream, “he explained.
Then if the oil company already has a scenario, is incentive still needed?
About this matter Arcandra provides an illustration if people are in a difficult situation whether they should not ask for help? Sometimes the worst scenario of an oil company is when the price of oil is in the position of US $ 40 or US $ 45 per barrel, but in fact it is in the position of US $ 30 per barrel.
“Beyond expectations, who can predict down to US $ 30, there is no prediction of US $ 40. For companies that are not ready with prices below estimates they ask for help,” he said.
For example, with deep water assets at a price of US $ 50 per barrel, they can still survive, then below US $ 40 per barrel they are already distressed. “There is a company on land with a price of US $ 30 and it still makes money,” he explained.
Arcandra said that no country and group of countries can control oil and gas prices, therefore the only step that can be taken is efficiency. This efficiency can be obtained by improving the technology, systems and human resources.
“The price of oil and gas cannot be controlled, efficiency can be. It is sought after in each line, whether the people who normally produce 10, during the pandemic produce 11, do not let this pandemic only 7-8, after adapting and adopting from the side humans, from productivity back up again, “he said.
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