International Journal of Business and Management Invention (IJBMI)

ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X

www.ijbmi.org || Volume 13 Issue 3 || March, 2024 || PP—87-95

The Influence of Environmental Management of Oil and

Natural Gas Companies on Environmental Performance
Rating Value
Ibrahim Arsyad, Budi Santoso, Bambang Sudaryono, Willy Arafah
University of Trisakti, Jakarta

Abstract
The main objective of this research is to analyze the influence of GHG Emissions, Energy Consumption and
Waste Generation on Profit and the PROPER Index as well as Profit as a mediator and the Role of
Environmental Management Cost Regulations as a moderating variable.
The design used in this research is quantitative research by developing a sustainable practice model which is
proxied by achieving the company's Proper value using a panel regression model, namely by testing and
analyzing the influence of Emissions, Energy Consumption on Proper performance with company profits as a
mediating variable and Environmental Management Costs. as a moderating variable. The data structure used is
a combination of time series data (multiple data or time series data) and cross section data, using a panel
regression equation.
The results of this research show that the variation in PROPER Index values between one company and another
is quite high. The blue PROPER Index ranking has the lowest number of PROPER Index ranking achievements.
The GHG emission values issued by one oil and gas company compared to other oil and gas companies are
relatively heterogeneous or have quite large differences. The energy consumption value is quite heterogeneous
between one company and another company and the waste generation produced by oil and gas companies from
one company to another company is heterogeneous. Profit values between one company and another oil and
gas company are quite heterogeneous. The development of oil and gas company profits during the 2017-2020
period shows a decreasing trend during the 2017-2020 period. Environmental Management Costs, it was found
that there was quite heterogeneous variation in Environmental Management Costs between one company and
another. The development of Environmental Management Costs during the 2017-2020 period shows an
increasing trend from year to year.
Keywords -GHG Emissions, Energy Consumption, Waste Generation, Profit, PROPER Index and
Environmental Management Costs.
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Date of Submission: 14-03-2024 Date of acceptance: 27-03-2024
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I. INTRODUCTION
Oil and Gas or oil and gas is one of the natural resources that is still the backbone of development in
Indonesia. According to (Nasir, 2014) Indonesia can be said to be an oil producing country, and has even been a
member of the world crude oil producing organization, namely OPEC. Based on data from BP (2013),
Indonesia has succeeded in producing crude oil of more than 1 million barrels of oil per day or barrel oil per day
(bopd) during the period 1972 to 2006. Based on data from SKKMIGAS (2019) with a total of 220 working
areas per February 2019, oil and gas production was 768,000 bopd, gas production was 1,311,000 barrels of oil
equivalent per day (boepd), and total oil and gas production was 2,079,000 boepd. This makes Indonesia the
23rd oil producing country out of 98 oil producing countries, but if we look at Oil Production per capita
(bopd/million population) Indonesia is in 55th place out of 98 countries. Meanwhile, oil and gas production in
2022 will be 644,000 barrels of oil per day (bopd), a decrease of around 6.94% compared to the previous year
which reached 692,000 bopd (Energy Institute, 2023). Meanwhile, natural gas production in Indonesia in 2022
will reach 955,000 boepd or barrels of oil equivalent per day (SKKMigas, 2023).
Meanwhile, based on Energy Outlook 2018, Indonesia's oil and gas reserves continue to decline, in
2016 they were 7,251.11 million metric barrels of tank stock or Million Metric Stock Tank Barrels (MMSTB),
down 0.74% from 2015, while gas reserves also fell 5.04%. With oil and gas production of 338 million barrels
and proven reserves, it is estimated that oil and gas will run out in 9 years (2025) and oil and gas will run out
within 42 years. Indonesia's oil reserves in 2023 are reported to be 4.17 billion barrels. This figure includes
proven reserves, which are estimated at around 2.44 billion barrels, and unproven reserves, also at 2.44 billion

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 The Influence of Environmental Managementof Oil and Natural Gas Companies On ..

barrels (ESDM, 2023). By 2024, Indonesia's remaining oil reserves are projected to be around 1137.86 million
metric tank stock barrels (MMSTB), which represents a significant decline of 48.56% from 2020 levels.
The oil and gas industry today faces fundamental problems related to sustainability and environmental
performance. The problems faced at least include the issue of decreasing production and reserves, increasing
energy consumption, climate change due to increasing greenhouse gases, increasing waste and increasingly
stringent environmental regulations. To overcome this challenge, effective and strategic steps are needed to
create a more sustainable and environmentally friendly future for the oil and gas industry. (ESDM, 2020) There
are many reasons why industry does not take stronger action to fulfill its sustainable development commitments.
This is supported by the research of Dalal Clayton (2004), who states that decision-making difficulties, when
applied explicitly as part of a sustainability assessment, are faced with common challenges, related to policy,
practical approaches or performance, and positive outcomes of sustainability change. Policy reconciliation,
related to how to weigh, 7 balance or reconcile economic, social and environmental objectives and
considerations. Performance or practical approaches, namely which processes and methods (macro and micro)
can be used to conduct integrated analysis to inform decision making. Positive outcomes of sustainable change
are whether the actions and implementation actions taken contribute to the organization's long-term progress
towards sustainable development.
A review of the performance of oil and gas companies needs to be carried out to see the influence of
environmental management performance mediated by the company's net profit dimension and moderated by
environmental management costs 8 (BPL) on environmental sustainability in this sector, as measured by the
Proper Index, as a measure. sustainable comprehensive environmental management. It is hoped that this
dissertation can assess the practices that have been carried out in oil and gas companies in Indonesia related to
efforts to assess and achieve SDGs by understanding the concepts and principles of sustainable development
that are included in oil and gas business decision making and implemented in projects or business activities so
that business sustainability (business sustainability).

Theoritical Review
The Indonesian government has committed to achieving the 17 goals and 169 SDG targets set by the
United Nations (UN) in the 2030 Agenda for Sustainable Development. The Indonesian government has an
Indonesian national action plan to achieve sustainable development goals and integrate sustainability principles
into national development policies and programs (Bappenas, 2014). This roadmap provides an overview of the
steps taken by the Indonesian government to achieve the SDGs, including the roles of various stakeholders and
efforts to measure progress (Bappenas, 2017). The Indonesian government is committed to successfully
implementing the Sustainable Development Goals by achieving the 2030 development agenda. In this case,
Indonesian Presidential Regulation no. 59/2017 concerning the implementation of SDGs in Indonesia mandates
the Ministry of National Development Planning of the Republic of Indonesia to provide an Indonesian SDGs
Roadmap (Bappenas, 2019). In 2019, issued a Roadmap of SDGs Indonesia at the 2019 SDGs Annual Summit
in Jakarta. The roadmap defines the issues and projections of key SDG indicators for each goal, including
forward-looking policies to achieve these targets. Indonesia's SDGs consist of around 60 indicators (Bappenas,
2019). Implementing the SDGs in the oil and gas industry in Indonesia involves efforts to reduce environmental
impacts, increase energy efficiency, and support the transition to cleaner and more sustainable energy sources.
Yulisman (2016), reviewed the regulatory framework and implementation of sustainable development in the
Indonesian oil and gas industry, and highlighted efforts to achieve relevant SDGs goals. PwC Indonesia. (2019).
explores how energy, utility and resource companies in Indonesia, including the oil and gas industry, can
contribute to achieving the SDGs through implementing sustainable and innovative business practices.
Sudiyanti et. al. (2020) evaluated the role of the Indonesian oil and gas industry in achieving the SDGs, with a
focus on increasing energy efficiency, reducing GHG emissions, and developing new and renewable energy
sources.
To minimize the environmental impact of hazardous waste generation in the oil and gas industry,
companies must implement appropriate waste management practices, including waste reduction, recycling,
processing and disposal. In addition, regulatory compliance and regular monitoring are essential to ensure that
hazardous waste is managed in a safe and environmentally responsible manner. The main journal literature
reference that discusses the generation of hazardous waste in the oil and gas industry is the paper entitled
"Environmental Issues and Management of Waste in Energy and Mineral Production" by R. K. Singhal and A.
K. Mehrotra, which was published in the International Journal of Mining, Reclamation and the Environment in
2007.
The performance of environmental and institutional management is the main dimension in seeing
changes in the environmental sustainability of oil and gas companies in Indonesia. Based on problem
identification, research questions and previous research, the researcher created a framework for thinking in this
research which is also based on previously researched dimensions which are contained in the following

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 The Influence of Environmental Managementof Oil and Natural Gas Companies On ..

conceptual framework in Figure 1.

Figure 1.
Research Model

II. METHODOLOGY
The research design used is quantitative research by developing a sustainable practice model which is
proxied through achieving the company's Proper value using a panel regression model, namely by testing and
analyzing the influence of Emissions, Energy Consumption on Proper performance with company profits as a
mediating variable and Environmental Management Costs as a variable moderation. With the data structure
used being a combination of time series data (many times data or time series data) and cross section data (many
objects at a certain time) a panel regression equation is used. Meanwhile, descriptive research design is used to
describe or explain the variables studied as well as see the relationship and dependence of variables on their
sub-variables and to analyze the influence of each independent variable and dependent variable in this research.
The value of each of these variables is searched for then the development is explained descriptively using
hypothesis testing, namely testing the influence of Emissions, Energy Consumption, Waste Accumulation on
the Proper Index with Production as a mediating variable and Environmental Processing Costs as a moderating
variable.
Based on the population criteria in this research, there were 96 oil and gas companies with a research
period of 4 years (2017-2020), so the total sample used in this research was 96 samples.

III. RESULTS AND DISCUSSION

Uji parsial atau uji t dilakuan untuk menguji pengaruh dari masing-masing variabel independen terhadap
variabel dependennya. Hasil pengolahan ditunjukkan dengan Tabbel 1. Sebagai berikut :

Tabel 1. Hasil Uji t (Uji Parsial)

Hipotesis Beta t-Statistic Prob. Simpulan

H1 Terdapat pengaruh Emisi GRKterhadap Profit 0.3272 2.3534 0.0103** Hipotesisdidukung
H2 Terdapat pengaruh KonsumsiEnergi terhadap Profit Hipotesis tidak didukung
0.0976 1.4375 0.0770*
H3 Terdapat pengaruh TimbulanLimbah terhadap Profit 0.2309 2.6377 0.0049** Hipotesisdidukung
H4 Terdapat pengaruh Emisi GRKterhadap Indeks PROPER -0.7228 -3,8711 0.0001** Hipotesisdidukung
H5 Terdapat pengaruh Konsumsi Energi terhadap Indeks -1,3486 -9,0929 0,0000** Hipotesisdidukung
PROPER
H6 Terdapat pengaruh Timbulan Limbah terhadap Indeks 1.5507 7,4407 0.0000 Hipotesisdidukung
PROPER
H7 Terdapat pengaruh Profitterhadap Indeks PROPER -0,4612 -2,5887 0,0059** Hipotesisdidukung
H8 Biaya Pengelolaan Lingkungan memoderasi pengaruh Hipotesisdidukung

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 The Influence of Environmental Managementof Oil and Natural Gas Companies On ..

Emisi GRKterhadap Indeks PROPER 0.0247 3.0124 0,0018**

H9 Biaya Pengelolaan Lingkungan memoderasi pengaruh Hipotesisdidukung
KonsumsiEnergi terhadap Indeks PROPER 0.0477 7.9366 0,0000**
H10 Biaya Pengelolaan Lingkungan memoderasi pengaruh Hipotesisdidukung
timbulan limbah terhadap Indeks PROPER -0.0623 -7.0353 0,0000
H11 Biaya Pengelolaan Lingkunganmemoderasi pengaruh 0,0188 2,5449 0,0067** Hipotesisdidukung
profit

Hipotesis Beta t-Statistic Prob. Simpulan

terhadap Indeks PROPER

H12 Profit memediasi pengaruh dariemisi GRK terhadap Indeks Hipotesisdidukung
PROPER -0.1509 -1,7413 0,0408**
H13 Profit memediasi pengaruh dari konsumsi energi terhadap Hipotesis tidak didukung
IndeksPROPER -0.0450 -1,2567 0,1044

H14 Profit memediasi pengaruh dari timbulan limbah terhadap Hipotesisdidukung

IndeksPROPER -0.1065 -1,8475 0,0320**
H15 Profit memediasi pengaruh dariEmisi GRK terhadap Hipotesisdidukung
Indeks PROPER yang dimoderasi olehBiaya Pengolahan 0.0061 1,7279 0,0420**
Lingkungan

H16 Profit memediasi pengaruh dari konsumsi energi terhadap Hipotesis tidak didukung
IndeksPROPER yang dimoderasi oleh Biaya Pengolahan 0.0018 1,2516 0,1053
Lingkungan
H17 Profit memediasi pengaruh dari timbulan limbah terhadap Hipotesisdidukung
Indeks 0.0043 1,8315 0,0335**
PROPER yang dimoderasi olehBiaya Pengolahan
Lingkungan
Sumber: Data Diolah

A partial test or t test is carried out to test the influence of each independent variable on the dependent variable.
The processing results are shown in Table 1. As follows:
Hypothesis 1:
Hypothesis 1 was carried out with the aim of testing the positive influence of GHG emissions on profits in oil
and gas companies in Indonesia. The processing results are shown by an estimated coefficient value of 0.3272,
which means that increasing GHG emissions will increase profits and conversely decreasing GHG emissions
will reduce profits. The statistical t value of 2.3534 produces a p-value of 0.0103 < 0.05, which means that Ho
is rejected and Ha is accepted so it can be concluded that it is proven that GHG emissions have a positive
influence on profit.
Hypothesis 2
Hypothesis 2 aims to test the influence of Energy Consumption on Profit in Oil and Gas companies in
Indonesia. The estimated coefficient value of 0.0976 means that increasing energy consumption will increase oil
and gas profits and conversely decreasing energy consumption will reduce profits. The statistical t value of
1.4375 produces a p-value of 0.0770 > 0.05, which means Ho is accepted and Ha is rejected so it can be
concluded that it is proven that Energy Consumption does not have a positive influence on the Profit of the oil
and gas sector in Indonesia.
Hypothesis 3
Hypothesis 3 was carried out with the aim of testing the positive influence of waste generation on profits in oil
and gas companies in Indonesia. The processing results are shown by an estimated coefficient value of 0.2309,
which means that increasing waste generation will increase oil and gas profits and conversely decreasing waste
generation will reduce profits. The statistical t value of 2.6377 produces a p-value of 0.0049 < 0.05, which
means Ho is rejected and Ha is accepted so it can be concluded that it is proven that Limban Generation has a
positive influence on Profit.
Hypothesis 4
Hypothesis 4 was carried out with the aim of testing the negative influence of GHG emissions on the PROPER
Index. The processing results are shown by an estimated coefficient value of -0.7228, which means that
increasing GHG emissions will reduce the PROPER Index and conversely decreasing GHG emissions will
increase the PROPER Index. The statistical t value of -3.8711 produces a p-value of 0.0001 < 0.05, which
means that Ho is rejected and Ha is accepted so that the hypothesis that GHG emissions have a negative effect
on the PROPER Index is proven.

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Hypothesis 5
Hypothesis 5 aims to test the negative influence of Energy Consumption on the PROPER Index. The processing
results are shown by an estimated coefficient value of -1.3486, which means that increasing Energy
Consumption will reduce the PROPER Index and conversely decreasing Energy Consumption will increase the
PROPER Index. The statistical t value of -9.0929 produces a p-value of 0.0101 < 0.05, which means that Ho is
rejected and Ha is accepted so that the hypothesis that Energy Consumption has a negative influence on the
PROPER Index is proven.
Hypothesis 6
Hypothesis 6 aims to test the influence of Waste Generation on the PROPER Index. The processing results are
shown by an estimated coefficient value of 1.5507, which means that increasing Waste Generation will increase
the PROPER Index and conversely decreasing Waste Generation will reduce the PROPER Index. These
findings indicate that the hypothesis which states that waste generation has a negative effect on PROPER is not
proven. The statistical t value of 7.4407 produces a p-value of 0.0000 ≤ 0.05, which means Ho is rejected and
Ha is accepted so that the hypothesis stating that Waste Generation has a positive influence on the Proper Index
is proven.
Hypothesis 7
Hypothesis 7 was carried out with the aim of testing the influence of Profit on the PROPER Index in oil and gas
companies in Indonesia. The results of data processing show an estimated coefficient value of -0.4612, which
means that increasing oil and gas profits will reduce the PROPER Index and conversely, decreasing oil and gas
profits will increase the PROPER Index. The statistical t value of -2.5887 produces a p-value of 0.0059 ≤ 0.05,
which means that Ho is rejected and Ha is accepted so that the hypothesis that oil and gas profits have a positive
effect on the PROPER Index is proven.
Hypothesis 8
Hypothesis 8 was carried out with the aim of testing the role of Environmental Management Costs in
moderating the influence of GHG Emissions on the PROPER Index. From the results of data processing, an
estimated coefficient value of 0.0247 is obtained, which means that increasing GHG emissions will increase the
PROPER Index with Environmental Management Costs moderating and conversely decreasing GHG Emissions
will reduce the PROPER Index with Environmental Management Costs as moderation. The statistical t value of
3.0124 produces a p-value of 0.0018 ≤ 0.05, which means Ho is rejected and Ha is accepted so that the
hypothesis stating that the role of Environmental Management Costs has an influence in moderating oil and gas
GHG emissions on the PROPER Index is proven.
Hypothesis 9
Hypothesis 9 was carried out with the aim of testing the role of Environmental Management Costs in
moderating the influence of energy consumption on the PROPER Index. From the results of data processing, an
estimated coefficient value of 0.0477 is obtained, which means that increasing Energy Consumption will
increase the influence on the PROPER Index which is moderated by Environmental Management Costs and
conversely decreasing Energy Consumption will reduce the PROPER Index with Environmental Management
Costs as moderation. The statistical t value of 7.9366 produces a p-value of 0.0000 ≤ 0.05, which means that Ho
is rejected and Ha is accepted so that the hypothesis states that Environmental Management Costs positively
moderate Energy Consumption which has an influence on the PROPER Index with proven Profit.
Hypothesis 10
Hypothesis 10 was carried out with the aim of testing the role of Environmental Management Costs in
moderating the influence of Waste Generation on the PROPER Index. From the results of data processing, an
estimated coefficient value of -0.0623 is obtained, which means that increasing Waste Generation will reduce
the PROPER Index moderated by Environmental Management Costs and conversely decreasing Waste
Generation will increase the PROPER Index with Environmental Management Costs as moderation. The results
of the data processing findings state that the statistical t value is -7.0353, resulting in a p-value of 0.0000 ≤ 0.05,
which means that Ho is rejected and Ha is accepted so that the hypothesis stating that Environmental
Management Costs positively moderate Waste Generation has an influence on the PROPER Index is proven.
Hypothesis 11
Hypothesis 11 was carried out with the aim of testing the role of Environmental Management Costs in
moderating the influence of Profit on the PROPER Index. From the results of data processing, an estimated
coefficient value of 0.0188 is obtained, which means that increasing Profit will increase the PROPER Index
with Environmental Management Costs as moderation and conversely decreasing Profit will reduce the
PROPER Index with Environmental Management Costs as moderation. The statistical t value of 2.5449
produces a p-value of 0.0067 ≤ 0.05, which means Ho is rejected and Ha is accepted so that the hypothesis
states that Environmental Management Costs moderate Profit which has a positive influence on the PROPER
Index is proven.

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Hypothesis 12
Hypothesis 12 was carried out with the aim of testing profit mediating the effect of GHG emissions on the
PROPER Index. The processing results are shown by an estimated coefficient value of -0.1509, which means
that increasing emissions will reduce PROPER with profit as mediation and conversely decreasing emissions
will increase PROPER with profit as mediation. The statistical t value is -1.7413 with a p-value of 0.0408 ≤
0.05 so that Ho is rejected and Ha is accepted so it can be concluded that it is proven that profit mediates the
positive influence of GHG emissions on the PROPER Index.
Hypothesis 13
Hypothesis 13 was carried out with the aim of testing profit mediating the effect of energy consumption on the
PROPER Index. The results of data processing show that the estimated coefficient value is -0.0450, which
means that increasing energy consumption will reduce the PROPER Index with profit as mediation and
conversely decreasing emissions will increase PROPER with profit as mediation. The statistical t value is -
1.2567 with a p-value of 0.1044 > 0.05 so that Ho is accepted and Ha is rejected, thus it can be concluded that it
is proven that profit mediates the influence of GHG emissions and does not have a positive effect on the
PROPER Index.
Hypothesis 14
Hypothesis 14 was carried out with the aim of testing profit mediating the effect of waste generation on
PROPER. The results of data processing show that the estimated coefficient value is -0.1065, which means that
increasing waste generation will reduce the PROPER Index with profit as mediation and conversely decreasing
waste generation will increase the PROPER Index with profit as mediation. The statistical t value is -1.8475
with a p-value of 0.0320 ≤ 0.05 so that Ho is rejected and Ha is accepted and it can be concluded that Profit
mediates the effect of waste generation on the Proper index.
Hypothesis 15
Profit mediates the effect of emissions on the Proper Index, moderated by the regulatory role of environmental
processing costs. Hypothesis 15 was carried out with the aim of testing Profit mediating the effect of GHG
emissions on the PROPER Index moderated by Environmental Processing Costs. From the data processing
results, it was found that the estimated coefficient value was 0.0061, which means that increasing GHG
emissions will increase the PROPER Index moderated by Environmental Processing Costs and profit as
mediation and conversely decreasing GHG emissions will reduce the PROPER Index moderated by
Environmental Processing Costs with Profit as mediation. The statistical t value is 1.7279 with a p-value of
0.0420 ≤ 0.05 so that Ho is rejected and Ha is accepted so that the hypothesis states that Profit mediates the
effect of GHG emissions on the PROPER Index moderated by Environmental Processing Costs and this is
proven.
Hypothesis 16
Hypothesis 16 was carried out with the aim of testing Profit mediating the influence of energy consumption on
the PROPER Index which is moderated by environmental processing costs. From the processing results, it is
found that the estimated coefficient value is 0.0018, which means that increasing energy consumption will
increase the PROPER Index moderated by Environmental Management Costs and profit as mediation and
conversely decreasing energy consumption will reduce the PROPER Index moderated by Environmental
Management Costs with profit as mediation. The statistical t value is 1.2516 with a p-value of 0.1053 > 0.05 so
that Ho is accepted and Ha is rejected. It can be concluded that Profit does not mediate the effect of energy
consumption on the Proper Index which is moderated by Environmental Management Costs.
Hypothesis 17
Hypothesis 17 was carried out with the aim of testing Profit mediating the influence of waste generation on the
PROPER Index moderated by Environmental Management Costs. From the results of data processing, an
estimated coefficient value of 0.0043 is obtained, which means that increasing waste generation will increase
the PROPER Index moderated by Environmental Management Costs and profit as mediation and conversely,
decreasing waste generation will reduce the PROPER Index moderated by Environmental Management Costs
with profit as mediation. The statistical t value is 1.8315 with a p-value of 0.0335 ≤ 0.05 so that Ho is rejected
and Ha is accepted so that the results of the hypothesis test state that profit mediates the effect of waste
generation on the PROPER Index moderated by Environmental Management Costs and this is proven.

IV. Conclusion
From the results of the research that has been carried out, the following conclusions are obtained: GHG
emissions have an influence on profits. Energy Consumption has no influence on Profit. Waste generation has
an influence on Profit. GHG emissions have an influence on the PROPER Index. Energy Consumption has an
influence on the PROPER Index. Waste generation has an influence on the PROPER Index. Profit has an
influence on the PROPER Index. Environmental Management Costs moderate the influence of GHG Emissions
on the PROPER Index. Environmental Management Costs moderate the influence of Energy Consumption on

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the PROPER Index. Environmental Management Costs moderate the influence of Waste Generation on the
PROPER Index. Environmental Management Costs moderate the influence of Profit on the PROPER Index.
Profit mediates the influence of GHG emissions on the PROPER Index. Profit does not mediate the influence of
Energy Consumption on the PROPER Index. Profit mediates the influence of Waste Generation on the
PROPER Index. Profit mediates the influence of GHG emissions on the PROPER Index which is moderated by
Environmental Processing Costs. Profit does not mediate the influence of Energy Consumption on the PROPER
Index which is moderated by Environmental Processing Costs. Profit mediates the influence of Waste
Generation on the PROPER Index which is moderated by Environmental Processing Costs.

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