Energy
From The Report: Indonesia 2015
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After years of treading water, Indonesia’s energy sector is finding new optimism in the fresh faces being appointed to key government positions by the new president, Joko Widodo, with the hope that they will be able to renew investor interest in the industry and spur a wave of development. The changes at the top come at a critical time, as myriad factors continue to buffet the sector in Indonesia, which ranked among the world’s top-five liquid natural gas (LNG) exporters in 2013 and remains Asia’s second-largest natural gas producer despite continuing production declines. After years of halting progress in the power sector, the new energy strategy has the potential to add much-needed capacity to the domestic market, provided that policymakers can avoid some of the pitfalls that have affected similar rapid development programmes in the past. A concentration on building coal-fired power plants, designed to run on inexpensive, domestically produced coal, should help smooth out the process. In the meantime, the strategy’s emphasis on boosting efficiency and reducing Indonesia’s high energy intensity levels should also help to rein in the country’s domestic consumption.

This chapter contains an interview with Dwi Soetjipto, President-Director, Pertamina; and an Energy roundtable with Lukman Mahfoedz, President-Director and CEO, PT Medco Energi Internasional; Roberto Lorato, President, Premier Oil Indonesia; Craig Stewart, President, Indonesian Petroleum Association and President, Salamander Energy; and Hardy Pramono, President-Director, Total E&P Indonesia.

Articles from this Chapter

Overview

Power projects under way in the energy sector to meet Indonesia’s rising demand
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After years of treading water, Indonesia’s energy sector is finding new optimism in the fresh faces being appointed to key government positions by the new president, Joko Widodo, with the hope that they will be able to renew investor interest in the industry and spur a wave of development. The changes at the top come at a critical time, as myriad factors continue to buffet the sector in Indonesia, which ranked among the world’s top-five liquid natural gas (LNG) exporters in 2013 and remains Asia’s…

Interview

OBG talks to Dwi Soetjipto, President-Director & CEO, Pertamina
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Interview:Dwi Soetjipto What areas will Pertamina focus its development strategies on with a new administration in place? DWI SOETJIPTO: The global petroleum industry is going through a period of turbulence as a result of low international oil prices. At home, meanwhile, we must address the shortage in the energy supply. Pertamina has put together five strategic pillars to serve as a basis for company activities in the coming years. The first pillar is to develop our upstream business, given…

Interview

OBG talks to Lukman Mahfoedz, President-Director and CEO, Medco Energi Internasional; Roberto Lorato, President, Premier
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Interview: Lukman Mahfoedz, Roberto Lorato How would you assess the level of collaboration between public and private stakeholders? LUKMAN MAHFOEDZ: With Indonesia’s demand for energy exceeding supply, the public and private sectors must work together so that the country can avert an energy crisis. Major oil and gas producers have called on the government to introduce a more flexible regulatory framework, in order to prevent an energy crisis that could occur in the future if no serious, meaningful,…

Analysis

More local natural gas needed in Indonesia
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As Indonesia’s economy keeps chugging along with annual growth rates around 6% in recent years, its appetite for energy continues to expand in parallel. Demand for primary energy hit 130m tonnes of oil equivalent (mtoe) in 2013, and GDP growth of 8% a year through to 2025 forecast by the National Energy Council (NEC) is expected to push growth in energy consumption up to 7.3% a year in 2013-25, under a business-as-usual scenario. This would put primary energy demand at 277 mtoe within a decade,…

Analysis

Stamping out corruption on the energy sector in Indonesia
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Throughout the 2014 campaign for the presidency, Joko Widodo, the eventual winner, stressed the need to bring new blood into a system widely perceived as broken and corrupt. With Widodo now in the driver’s seat, the optimism and hope that often follow a change in leadership is coming to a head during his first year of office. The big questions on everyone’s mind are whether the grand promises made on the campaign trail by the media-savvy former furniture salesman will be kept, and whether he…

Analysis

Indonesia’s energy subsidy reforms
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Long known for maintaining low fuel prices despite its large population, Indonesia has recently begun to take meaningful steps to reform a decades-old policy that has bloated federal budgets and often fallen short of its purported aim of helping the less fortunate. Policymakers in Indonesia, as in many countries around the world, have long seen energy subsidies as a quick and easy way both to appease voters by offering cheaper electricity and fuel, and to entice large, power-hungry industries to…

Analysis

Regulatory changes to speed up geothermal development in Indonesia
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Already the world’s third-largest geothermal power producer, Indonesia is poised to enter a fresh phase of expanding this resource, with a new law setting the stage for further investment. By smoothing out many regulatory wrinkles for developers, the government hopes to tap the many subterranean thermal hotspots that dot the country as electricity producers scramble to meet growing demand. The same forces that cause natural disasters like earthquakes and volcanic eruptions across the nation’s…

Analysis

Coal-fired plants offer a more affordable power source for Indonesia
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With the spectre of an electricity shortfall looming larger with each passing year, the Indonesian government is looking to coal-fired thermal power plants to provide a quick and easy solution. Coal has many advantages over other forms of power generation in Indonesia: it is cheaper, more established technologically and abundant. It is also seen as preferable to diverting dwindling supplies of natural gas away from profitable export operations. To boot, coal prices fell sharply in 2014, mainly due…

Analysis

Indonesia’s equatorial location an asset for solar energy projects
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Although the focal point of renewable energy development in Indonesia has been geothermal resources, of which the country holds over a third of the global total, in recent years solar power has gained new attention as a viable source. As an equatorial country, Indonesia is well-placed to reap the benefits of new solar options, with off-grid projects offering new ways to connect rural residents. Meanwhile, the government’s move to cut billions in annual fuel subsidies bodes well for broader development…