"We need to regain the confidence of those who have already invested in the oil and gas sector. I regard the honouring of existing contracts as being a crucial step in this process. We also need to attract new investors," he told the opening of the Indonesian Petroleum Association (IPA) annual convention.

"On a broader front, let me also reassure you that the Indonesian government is taking clear steps to restore investor confidence," he said.

"We are aware that competition is intensifying and we shall stay alert to ensure our investment policy remains attractive to the investor community," he said.

He said the Indonesian downstream oil sector was not exposed to international competition.

"It is here that we are less certain about our competitive edge... The era of globalisation is now uponus and our downstream oil sector will face open competition from overseas in the near future. We need to take steps to increase our competitiveness."

Ron Wilson, the IPA president, said there were two areas where there were obvious opportunities to increase oil production and maintain investor confidence.

"One is to find win-win solutions to placing on production the oil and gas discoveries that have not been developed. This includes small discoveries that are not economically attractive given current terms," he said.

"The second is to at least maintain current exploration investment levels and encourage even more investment which will be a challenge," Wilson said.

He said Indonesia currently produces about 1.4 million barrels per day (bpd) of oil.

Indonesia, Asia's only OPEC member, has committed to cap production at 1.28 million bpd.