Energy & Mineral Resources
From The Report: Indonesia 2019
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Replacing diminishing reserves and guaranteeing domestic energy security are two of Indonesia’s policy priorities. As such, oil and gas exploration and development are key areas in which the government is eager to progress. To encourage this, policymakers have adopted a series of reforms aimed at ushering in a new wave of foreign investment in the sector. Similarly, in a bid to offset declining oil fields in western Indonesia, the government is working to incentivise contractors to explore deep-sea areas along the eastern frontier. Substantial mineral reserves have put Indonesia on the brink of a new wave of development. Nevertheless, investors still need to contend with a legacy of regulatory uncertainty and a growing trend of resource nationalisation. While policymakers have made efforts to adjust the regulatory regime, exploration hurdles remain in place in the form of divestment rules and a lack of coordination between central and regional governments. This chapter also contains interviews with Ignasius Jonan, Minister of Energy and Natural Resources, and Arie Prabowo Ariotedjo, President Director, ANTAM.

Articles from this Chapter

Overview

Going for gas: Home to an abundant supply of natural resources, Indonesia’s energy sector sits at a crossroads
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Replacing diminishing reserves and guaranteeing domestic energy security are two of Indonesia’s policy priorities. As such, oil and gas exploration and development are key areas in which the government is eager to progress. To encourage this, policymakers have adopted a series of reforms aimed at ushering in a new wave of foreign investment into the sector. Similarly, in a bid to offset declining oil fields in western Indonesia, the government is working to incentivise contractors to explore…

Interview

Looking ahead: Ignasius Jonan, Minister of Energy and Natural Resources, on diversification and plans to address increased energy demand
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Interview:Ignasius Jonan How can renewable energy companies participate in the diversification of energy production? IGNASIUS JONAN: Oil and gas companies usually raise their own capital. This makes it easier for them to operate in Indonesia than renewable energy companies, which have to secure equity from local banks that charge high interest rates. Lower interest rates have to be established to allow local companies – and the renewables segment as a whole – to contribute more to the…

Analysis

Striking a balance: Recent nationalisation in the energy sector draws concerns over future investment inflows
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While Indonesia’s lawmakers have promised to safeguard the country’s lucrative oil and natural gas assets, there are concerns that recent examples of resource nationalisation may deter future investment, and President Joko Widodo has largely carried forward the resource nationalism agenda championed by his predecessor, President Susilo Bambang Yudhoyono. In a bid to cut imports, in September 2018 the government directed all oil producers to sell their crude to state-owned refiner Pertamina,…

Analysis

Coal-fired growth: New regulations ease the financial burden of domestic coal plants
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Given the current market dynamics, state-owned utility Perusahaan Listrik Negara (PLN) is unable to pass increases in the cost of coal on to the consumer because subsidised rates of electricity are imposed by the central government. In a bid to shield PLN from price fluctuations, the Indonesian government implemented regulations on domestic coal prices in 2018. Price Cap In March 2018 policymakers announced that the price of domestic coal purchased by power stations would be capped at between…

Overview

Untapped treasure: Reclamation of strategic assets plays a central role in the restructuring of the mining industry
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Substantial mineral reserves have put Indonesia on the brink of a new wave of development. Nevertheless, investors still need to contend with a legacy of regulatory uncertainty and a growing trend of resource nationalisation. While policymakers have made efforts to adjust the regulatory regime, exploration hurdles remain in the form of divestment rules and a lack of coordination between central and regional governments. In addition to these constraints, the government’s move to nationalise…

Interview

Mine of opportunities: Arie Prabowo Ariotedjo, President Director, ANTAM, on the current outlook for the mining industry
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Interview:Arie Prabowo Ariotedjo How have recent legislative changes affected Indonesia’s mining sector? ARIE PRABOWO ARIOTEDJO: The current regulatory framework, notably Law No. 4 of 2009, focuses on strengthening Indonesia’s downstream capacities. Following the raw export ban in 2014, the government issued a relaxation for smelter-operating firms in 2017. ANTAM, for instance, annually produces 27,000 tonnes of nickel in ferronickel, a semi-finished mineral product. Nickel ore can be…