Examining the Relation between Reserves Replacement Ratio, Production, Proven Reserves and Upstream Oil & Gas Investment in Indonesia (2010-2022)

The oil and gas sector has a parameter that is used to assess the ability of a company or country to maintain its production level. This parameter is called the Reserve Replacement Ratio (RRR). Underperformance in the oil and gas sector occurred in 2010-2011 and 2013-2017 where the RRR figure was below 100%, indicating that the oil and gas reserves discovered were unable to cover the reserves produced. This study aims to analyze whether there is a relationship between reserve replacement ratio (RRR), oil and gas production, proven oil and gas reserves and upstream oil and gas investment and analyze how the correlation between research variables. The data used in this study are reserve replacement ratio (RRR), oil and gas production, proven oil and gas reserves and upstream oil and gas investment for the period 2010-2022. The Granger Causality Test and the Spearman Rank Correlation Test are used in the study to see if there is a relationship between variables and to determine the strength of the correlation between variables.

The results of the Granger Causality Test and Spearman Rank Correlation Test found that an increase in upstream oil and gas investment will encourage an increase in proven oil and gas reserves which in turn increases oil and gas production. Oil and gas production affects upstream oil and gas investment and upstream oil and gas investment affects the reserve replacement ratio, but no significant correlation was found. It was also found that the reserve replacement ratio is negatively correlated with oil and gas production and proven oil and gas reserves, but has no causal relationship.