During the period of 2005 to 2020, the oil prices reached the highest level in 2008 (99.67 US$/bbl) and the lowest level in 2020 (39.16 US$/bbl). The fluctuation in oil prices will affect the expenditures for both investment and production in oil and gas projects. Based on this condition, the standardization of the costs of investment and production is needed to help the government and contractor in estimating the costs needed in an oil and gas project.

As of December 2018, 471 projects (POD) have been approved by the government of Indonesia. All of them are projects that produce oil (oil projects) and gas (gas projects). In these projects, details of operating (Production) costs are included in the economic evaluation.

For the purpose of this paper, Indonesia was divided into 2 areas (Onshore and Offshore). Each of the areas had 2 different types of projects (oil project and gas project). Then, to collect the data related to the cost of production and reserves, the maximum cost of production per BOE was calculated and produced using the Control Chart Analysis method. Lastly, the result was distributed to those aforementioned areas.

Based on the evaluation and analysis of the cost of production from 273 oil and gas projects in Indonesia, oil and gas projects in Indonesia are economically acceptable as the maximum cost of production (US$ per BOE) is still far below the oil price (~65 US$/BBL). The following is the estimated Maximum Cost of Production generated in Indonesia: Onshore – Oil Projects (28.00 US$/BOE), Onshore - Gas Projects (12.27 US$/BOE), Offshore - Oil Projects (21.20 US$/BOE), Offshore - Gas Projects (15.95 US$/BOE).

Finally, this paper will show how to produce the maximum cost of productions per BOE using control chart analysis. This paper is expected to provide references (method) for the government of Indonesia in giving approval to the cost of production proposed by contractors. In addition, this paper may provide contractors with a quick look at oil and gas industry in Indonesia, especially those who plan to invest in Indonesia. It may also help them create their petroleum exploration and exploitation strategy in Indonesia if they take this information into consideration, which will benefit both the government and contractors.

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