What's driving this decline in production? Well, lack of discovery. The report mentions that in 2012, over 1 billion boe reserves were discovered. In 2017, the figure dropped to 300 million boe. This is driven by a lack of spending, which has dropped from $160 billion in 2013 to $101 billion in 2015-2016.
This forecasted decline got me interested so I did some research. Oil Price had a post from Aug 2016 that discussed how the oil majors were leaving the area.
In August 2017, Bloomberg wrote an article about Indonesia's oil and gas industry. The article states that exploration expenditures declined from $1.3 billion in 2012 to only $100 million in 2016. There's an interesting quote from the article about oil production in the region.
“We’re expecting a healthy jump of investment in the near term in Brunei, India, Malaysia, and Vietnam. The total upstream spend for Malaysia in 2018 is expected to grow about 20 percent compared to 2017," Utama said. Utama said up to four offshore rigs were probably active in Indonesia in the first half of 2017 compared with as many as 19 in 2013-14. “The overall picture is of declining production,” he said.
The article also states that Indonesia is focused on other areas of the economy. Of course, if oil prices rise, it might find it interesting again; however, by that time it might be too late to join in on the party. This is similar to Venezuela, where oil production is also anticipated to decline -- though driven by economic chaos. There is an expectation that the world will hit supply problems around the 2020s and then oil supply will start to decline around 2040. So not putting a focus on oil exploration now may mean leaving money on the table.
So based on this, Indonesia appears to be the main driver for the oil production declines that Rystad Energy is forecasting.
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