In national energy discourse, the upstream oil and natural gas sector is often perceived merely through production achievements and annual lifting figures. This approach is not entirely incorrect, but it frequently oversimplifies the strategic role of upstream oil and gas within the broader framework of energy security and the national economy. Beyond these quantitative indicators, the upstream sector in fact serves as a fundamental pillar supporting the sustainability of energy supply, economic stability, and Indonesia’s competitiveness at the regional level.
As national industrial activity expands and energy demand continues to rise, the availability of reliable and affordable energy becomes a prerequisite for sustained economic activity. Industry requires energy certainty not only to maintain operations, but also to plan expansion and improve efficiency. In this context, the strength of the upstream oil and gas sector becomes a decisive factor that often receives insufficient attention, as public discourse tends to focus more heavily on downstream issues.
According to A. Rinto Pudyantoro, a lecturer at Universitas Pertamina in the Economics, Business, and Energy Economics program, the role of upstream oil and gas must be understood within a broader framework than production alone. He emphasized that upstream activities are directly linked to three key national energy agendas, namely energy security, the enhancement of the national energy mix, and efforts to reduce dependence on energy imports. “In the context of energy supply, Indonesia remains highly dependent on oil and gas. Nearly 50 percent of our primary energy still comes from oil and natural gas,” Rinto stated.
The most fundamental role of the upstream oil and gas sector is to ensure the continuity of national energy supply. Consistent investment, along with ongoing exploration and field development, is essential to ensure that energy availability keeps pace with the growing needs of industry and society. Without a strong upstream foundation, downstream policies risk facing structural pressures over the medium and long term.
In Rinto’s view, efforts to improve the national energy mix cannot be carried out instantaneously. The energy transition requires realistic stages, and during this phase natural gas plays a critical role. “Improving the energy mix cannot be done abruptly. Therefore, the role of upstream oil and gas, particularly natural gas, becomes crucial as a support in the transition toward a more diversified energy structure,” explained the former SKK Migas practitioner.
He also addressed the common perception that the oil and gas business is a sunset industry. This view, he argued, is not entirely accurate. While declining oil production does present a structural challenge, natural gas has different characteristics and is expected to remain dominant for decades to come. “When we talk about oil, there is indeed a declining trend. But natural gas is different. Over the next one to two decades, gas will become the backbone of energy, both for industry and power generation,” Rinto said.
Equally important, beyond ensuring energy supply, the upstream oil and gas sector functions as a driver of the energy industry value chain. Exploration and production activities generate multiplier effects across various downstream industries such as petrochemicals, manufacturing, fertilizers, and electricity, which in turn impact subsequent user sectors.
From a macroeconomic perspective, the contribution of upstream oil and gas is reflected not only in state revenue, but also in the scale of its investment impact on the economy. Rinto argued that the current paradigm of oil and gas management must shift from a narrow focus on production volumes toward the creation of broader economic value. “Upstream oil and gas activities are not merely about lifting or cost recovery. The greatest impact comes from oil and gas investment, which generates a substantial multiplier effect for the domestic economy,” he said.
Upstream oil and gas investment stimulates the growth of supporting industries, increases the use of domestic services and equipment, and creates employment opportunities at both national and regional levels. In this context, the upstream sector acts as a catalyst for broader economic development, including in oil- and gas-producing regions.
Furthermore, the upstream oil and gas sector serves as a foundation for building a globally competitive energy ecosystem. Investment sustainability is strongly influenced by policy certainty, credible governance, and consistency in national energy policy direction. Without clear and predictable policy signals, long-term investment decisions will be delayed, with direct implications for national energy security.
Within an evolving global energy landscape, strengthening the upstream oil and gas sector cannot be separated from the national strategy to safeguard energy security and enhance national competitiveness. The upstream and downstream sectors must be positioned as an integrated whole that reinforces each other, ensuring that the national energy system remains balanced, reliable, and competitive amid global dynamics.