In early 2016, oil price has fallen to its lowest level (31.68 US$/bbl) over the last 12 years. Since then, petroleum exploration and exploitation activities are decreasing worldwide due to high production cost and low oil prices.

As of November 2016, there were 403 field development plans (FDPs) approved by the government of Indonesia in 2003 – 2016 period. In 2015, there were 57 approved FDPs, which became the largest number of FDPs approved since 2003. The increasing number of approved FDPs indicates that the fall of oil price had no big impact on the number of projects (FDPs) in Indonesia. The oil and gas industry in Indonesia is still considered attractive by contractors.

Before investing in the oil and gas industry in Indonesia, there are some of ways that can be done by investors to minimize risk of loss and maximize revenue such as, searching, finding and collecting data of cost expenditure (Capital and Operating Expenditure) and commercial reserves across Indonesia, analyzing social issue that may occur in oil and gas exploitation area, considering infrastructure and geographical area (remote area or not), etc. This paper will collect and evaluate the operating cost of production of 403 approved FDPs and analyze the correlation between the operating cost of 403 FDPs and the world oil price, and create maps showing the distribution of operating cost in each clustered area in Indonesia.

For the purpose of this paper, the geographical areas of Indonesia were divided into 6 different areas (Sumatera, Natuna Sea, Java, Kalimantan, Sulawesi and Papua). Then, the data that related with Operating cost of oil and gas production from 403 FDPs was collected and then the operating cost was calculated and distributed to those aforementioned areas. Finally, areas that had the lowest and the highest operating costs of oil and gas production were defined.

Based on analysis of 403 FDPs, the western area of Indonesia had the highest Operating cost of oil and gas production. The highest Operating cost was equal to 7.91 US$/bbl and located in Sumatera, meanwhile the lowest Operating cost was equal to 3.22 US$/boe and located in Kalimantan.

Hopefully, this paper will provide contractors (Investors) with a quick look at oil and gas industry in Indonesia especially related to cost of oil and gas productions and help them to build their oil and gas portfolios before making decision to invest in the oil and gas industry in Indonesia.

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