In view of Indonesia being the world's 2nd largest producer of LNG, foreign investment is needed by Indonesia into this sector, as producing the gas is both expensive & incredibly technically complicated.
To boost investment in exploration of Gas, Energy and Mineral resources, Minister Purnomo Yusgiantoro would consider raising the producers' share of production to 49 percent, said the government. Producers currently receive 30 percent of production with the rest going to the government, as per a news published on STRATFOR.
As per STRATFOR In the year 2005, nearly 83.4 billion cubic meters (bcm) of natural gas was produced by Indonesia, in which 37.5 bcm of natural gas was exported. The Indonesian government is aiming to increase its natural oil production from 1.1 million barrels to 1.3 million barrels per day in the year 2009. Until Indonesia manages to increase the production, the country will be forced to cut LNG exports.
As per a Research Analyst at RNCOS, "Due to the lack of new investment in Indonesia around 2.76 trillion cubic meters of natural gas reserves have not been tapped completely, also the foreign investors have been gradually declining from the country's energy sector because of confusing shifts in regulations".
The president of Indonesia said, "Indonesia was providing opportunities for investment in its oil and gas sector at the upstream and downstream levels by cutting the operational costs, so as to make it more attractive to domestic and foreign energy companies", in news published on antara.
In the year 2007, Indonesia is expecting to cut its exports of natural gas by 19% to Japan, Taiwan and South Korea , shipping them only 21.4 million tons instead of 26.4 million tons as contracted to meet its increasing domestic demand.
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