The plan is to cut taxes on drilling equipment to speed up oil and gas projects in the region, officials announced Wednesday.

"Through this policy, oil and gas and geothermal companies can accelerate their exploration and production activities, which ultimately will help the government meet its revenue target from this industry," said Energy and Mineral Resources Minister Purnomo Yusgiantoro.

Indonesia currently imposes a 27.5 percent duty on imported drilling equipment. The head of BP Migas, Kardaya Warnika, said that several oil companies like ExxonMobil and Total have threatened to postpone their exploration plans until the government addresses the issue on import duties.

Though it is a member of the Organization of Petroleum Exporting Countries, Indonesia has been a net oil importer in recent years with the country's oil output falling below 1 million barrels of oil per day. The government is trying to boost domestic oil production although output this year is only expected to reach 950,000 barrels per day.