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Proposing a decision-making process for the development of sustainable oil and gas resources using the petroleum fund: A case study of the East Natuna gas field

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  • Batubara, Marwan
  • Purwanto, Widodo Wahyu
  • Fauzi, Akhmad

Abstract

The East Natuna gas field in Indonesia is planned to be developed to meet the increasing natural gas demand of Indonesia. This research investigates the sustainable development of the field using a multi-criteria decision analysis method (MCDA), namely the preference ranking organisation method for enrichment of evaluations (PROMETHEE). For this purpose a PROMETHEE model is employed to compare and appraise four alternative of petroleum funds against technical, economic, environmental and socio-political criteria. Those alternatives are determined by allocating 0%, 10%, 15% and 25% of the government's share of the gas field exploitation as petroleum funds. The results show that the adoption of a petroleum fund for the sustainable field development is both relevant and feasible. The bigger the petroleum fund, the better the merits. Employing 25% of the government's revenue towards this fund is found to be the most preferable choice, since it benefited from technology, environment and social aspects. However, the downside of this alternative lies in the economic aspects, such as the reduction of government revenues and potential increase in government debt as well as government resistance. As this study demonstrates, PROMETHEE can provide a relevant tool to assist decision makers to formulate policies aiming at a sustainable petroleum resources development.

Suggested Citation

  • Batubara, Marwan & Purwanto, Widodo Wahyu & Fauzi, Akhmad, 2016. "Proposing a decision-making process for the development of sustainable oil and gas resources using the petroleum fund: A case study of the East Natuna gas field," Resources Policy, Elsevier, vol. 49(C), pages 372-384.
    • Handle: RePEc:eee:jrpoli:v:49:y:2016:i:c:p:372-384
    DOI: 10.1016/j.resourpol.2016.07.010
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