Indonesia expects to see a further 20% reduction in capital spending in the offshore industry next year, a trade body has warned.

The Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) said spending would range between $16bn and $17bn versus the $22bn spent in 2015.

“The protracted pressure on global oil prices is the main cause for the lower capital spending,” a SKKMigas spokesman told The Jakarta Post.

“Companies have to recalculate their investment and keep working only on priority activities,” he added.

SKKMigas said exploration activities would also be significantly reduced as only 26 exploration wells had been proposed for next year as compared to this year’s total of 184 wells.

Indonesia had averaged around 70 exploration and appraisal wells per year between 2010 and 2014, according to Wood Mackenzie.

Investment in Indonesia’s oil and gas industry has reached $13.6bn in the year-to-date, well below the government’s full-year target of $23.7bn, according to the Energy and Mineral Resources Ministry.

Indonesia, which recently re-joined OPEC, has suffered from declining oil production as its oil fields have depleted.

The country, which is Southeast Asia’s largest economy, had proven oil reserves at the end of last year of 3.7bn barrels, according to the BP Statistical Review of World Energy.

Indonesian oil and gas investments have suffered the most within the region down by 88%, according to analysts at Singapore’s UOB Kay Hian.

“Indonesia’s upstream sector – like the rest of the world – has been hard hit by capital expenditure cuts,” said analyst Nancy Wei.

“In addition, floundering government regulation has added to its woes. As a result, Indonesian companies are hardest hit.”

Wei said that while Pertamina is raising its capex by 36% to $6bn for 2016, she expects actual spending to be lower based on the company’s track record.

“Of its $4.4bn spending budgeted for 2015, only 66% has so far been spent. The same could be seen in 2014, during which only 72% of its budget of $7.85bn was spent.”

“We do not see a major upswing in Indonesia offshore E&P activity in 2016,” said Wei.