Policy and Institution of Offshore Platform Decommissioning in Indonesia Oil and Gas Upstream Industry to Improve the Performance of Navigational Safety and State-Owned Asset Management

Abstract

The development of offshore upstream oil and gas industry in Indonesia was established in 1971 through the discovery of Arjuna Field in Nothern Java Sea by Atlantic Richfield Indonesia, Inc. (ARII). In 2017, 637 offshore platforms are installed in Indonesian water. Of these, 601 platforms are active and 36 of them are not. Furthermore, 17 of ready to be decommissioned platforms are now in write-off process. A research is conducted to study the policy and institution of offshore platform decommissioning with objective to improve the performance of navigational safety and state-owned asset management. Data of accidents in offshore installations showed some accidents between ship and production facility. These number of accidents in the water region is the key performance indicator (KPI) of authorized institution in Marine Affair which is related to navigational safety. Meanwhile, from state-owned asset management perspective, the success of offshore platform decommissioning will broaden the spectrum of experience of respective institutions, especially in area of Oil and Gas Asset Management. The study is part of applied research which utilized qualitative and quantitative methods. For pilot study, a stakeholder analysis was conducted to identify the key stakeholders of the offshore platform decommissioning program. Six variables were highlighted as latent variables in offshore platform decommissioning: (1) policy, (2) institution, (3) decommissioning method, (4) financing, (5) performance of navigational safety, and (6) performance of state-owned asset management. A conceptual framework was developed for modelling how each variable linkage to build an interaction model between policy, institution, decommissioning method, and financing to improve the performance of navigational safety and state-owned asset management. Structural Equation Model Partial Least Square (SEM PLS) was adopted for this purpose.