Jakarta. Upstream oil and gas regulator SKK Migas has warned that domestic banks’ reluctance to finance exploration projects is constraining the country’s efforts to boost crude output and reverse its dependence on imports.

Djoko Siswanto, head of the Special Task Force for Upstream Oil and Gas Business Activities at SKK Migas, said Indonesia’s vast untapped reserves remain underexplored largely due to limited funding. Of the country’s 128 identified oil and gas basins, 65 have yet to be explored, he said during a hearing with the House of Representatives’ energy commission on Wednesday.

“One of the key challenges is the lack of exploration funding, which is currently just around $1 billion,” Djoko told lawmakers. “Not a single domestic bank is willing to finance oil and gas exploration because it is considered too risky.”

Djoko said the exploration success rate in Indonesia has improved significantly from a ratio of one in ten wells to roughly 30 percent today, meaning that three out of every ten wells drilled are likely to lead to new discoveries.

“Now the probability of finding hydrocarbons is around 30 percent, that’s a very encouraging figure,” he said. “But without funding, those opportunities will remain unrealized.”

The limited availability of domestic financing has left oil companies reliant on foreign capital or state budgets, both of which have tightened in recent years.

Djoko suggested Indonesia adopt a more aggressive exploration financing model similar to that used in the United Kingdom and Malaysia, where governments once reinvested much of their upstream revenues into new exploration campaigns.

“We can learn from the UK and Malaysia, which once allocated nearly all their upstream revenues for exploration. That led to major discoveries like the North Sea gas fields,” Djoko said.

He urged lawmakers to incorporate stronger exploration funding mechanisms into the upcoming Oil and Gas Bill currently under discussion.

“Indonesia used to be a major oil exporter, producing more than a million barrels per day and even joining OPEC,” he said. “But because exploration has declined, we’ve now become an importer. We need to change that trajectory.”