by: Tasnim IlmiardhiEnergy Legal Practitioners
Indonesia's economic growth in 2011 is estimated to reach 7.5%. Energy sector contributes a lot to the economic growth. However, the high energy needs, making the Indonesian government to invite foreign investment to cooperate in managing the energy sector. The discovery of oil and gas blocks are new, the exploration activities of oil and gas sector, the development of methane gas in coal and the use of renewable energy sources such as geothermal power plants, is highly prospective investment opportunity in Indonesia. Adopters renewable energy (including nuclear power plants), to reduce dependence on oil production and develop a number of initiatives taken towards the future that have a more healthy environment, and it is its own opportunity.
Opportunities for Oil and Gas Industry
Reduced oil fields capacity, lack of infrastructure, investment and identification of mines and Gas has forced Indonesia into oil importer since 2004. Another reason is the "restriction of cost recovery" schemes under the Production Sharing Contract (PSC), where the government plans to encourage investment. It is also accompanied by high energy consumption for various sectors, especially transportation, and manufacturing.
The Indonesian government offers incentives for the exploration and the other, with the aim of encouraging greater investment in this sector. For example, imposition of a favorable tax and production sharing better. In addition, oil and gas contractor has offered to invest $ 16 billion for exploration in order to promote production. The development of oil fields and Belanak Cepu viewed as attractive investment opportunities and potential for suppliers and manufacturers of heavy equipment in the future.
Indonesia also continues to focus on other energy sources, including geothermal, Coal Bed Methane (CBM), LNG and many others, as an alternative to reduce oil dependence. Indonesia is the country's third largest LNG exporter after Qatar and Malaysia, and have witnessed the decline in worldwide demand for LNG.
Various projects and export demand are:
Special attention to these issues will improve the efficiency of distribution and production in the domestic and export purposes. Pipeline project connecting West Java - South Sumatra is a promising potentials for future investment and will be a step to meet future natural gas.
Coal Bed Methane (CBM)
Indonesia has huge coal reserves, reaching 450 trillion cubic feet (TCF); put Indonesia into the country's second largest owner of coal after China.
However, due to environmental concerns, more focused on the development of Coal Bed Methane (CBM) gas , and will provide a large energy reserves for Indonesia. Large CBM reserves located in South Sumatra, Barito, Kutai and regions in central Sumatra, medium-sized basin in North Tarakan, Berau, and Jatibarang and small scale in South Sulawesi, Irian Jaya and Bengkulu.
CBM production is expected to begin in 2011 and the government encouraged its production by offering tax incentives. CBM can be used for natural gas production and electricity generation. Although not yet started commercial operations, to increase natural gas production in the country tax incentives are being offered.
The Project of Coal are :
Electricity Sector
Indonesia has other attractive sectors, such as improving power supplies, especially electricity in the interior. In 2011, the government plans to take several steps to find a solution to this problem, by developing power generation and distribution network extending to all regions of the country. Development of transmission lines, power plants and other facilities throughout the development of a potential area for investors. Establish laws and regulations on electricity prices and subsidies will increase the level of investment in the future.
In 2008, the average electricity supply is 65% and the government plans to increase it to 93% in 2025, improving access to public electricity. This country was facing power shortages in some areas due to lack of infrastructure for electricity transmission and distribution. To meet the increasing demand of power supply, Indonesia needs additional capacity and participation in development of Independent Private Powerplants (IPP).
PLN has formed a consortium with PGN and Pertamina to build LNG terminal, as a measure to reduce dependence on oil for electricity generation. Increased participation of private developers to accelerated not only production, but also reduce the power shortage.
The project of electricity are:
Indonesia had to choose more environmentally friendly energy and, at the same time, raise the level of domestic production to meet domestic demand. To overcome this situation, Indonesia is considering the use of nuclear energy, which will increase electricity production and also help Indonesia create environmentally friendly energy sources and reduce carbon emissions.
With 40% of the world's geothermal reserves, and is trying to increase their use in large scale. Geothermal and mining sector has a big opportunity for investors. Law issued in the mining sector is predicted can create legal certainty and this will encourage investor confidence. Besides, the government will also build more than five nuclear power plants.
In the oil sector, the government is focusing on the increased production of biofuels to reduce dependence on fuel and electricity for the future. Indonesia has a large LNG potential and become the second largest LNG producer in Asia. The government is building a 25 trillion cubic feet (TCF) of gas, particularly in Papua New Guinea. This initiative will increase the level of reserves to production and investment opportunities in the business.
Indonesia's cooperation with Japan is focused on increasing renewable energy share to the figure 17% in 2025. For Indonesia, this is a big advantage as well as a towing other investors. This collaboration can increase energy diversification and energy conservation measures, where government intensify and encourage the use of such measures. The focus also extended to the development of CBM and coal gasification.(*)
Indonesia's economic growth in 2011 is estimated to reach 7.5%. Energy sector contributes a lot to the economic growth. However, the high energy needs, making the Indonesian government to invite foreign investment to cooperate in managing the energy sector. The discovery of oil and gas blocks are new, the exploration activities of oil and gas sector, the development of methane gas in coal and the use of renewable energy sources such as geothermal power plants, is highly prospective investment opportunity in Indonesia. Adopters renewable energy (including nuclear power plants), to reduce dependence on oil production and develop a number of initiatives taken towards the future that have a more healthy environment, and it is its own opportunity.
Opportunities for Oil and Gas Industry
Reduced oil fields capacity, lack of infrastructure, investment and identification of mines and Gas has forced Indonesia into oil importer since 2004. Another reason is the "restriction of cost recovery" schemes under the Production Sharing Contract (PSC), where the government plans to encourage investment. It is also accompanied by high energy consumption for various sectors, especially transportation, and manufacturing.
The Indonesian government offers incentives for the exploration and the other, with the aim of encouraging greater investment in this sector. For example, imposition of a favorable tax and production sharing better. In addition, oil and gas contractor has offered to invest $ 16 billion for exploration in order to promote production. The development of oil fields and Belanak Cepu viewed as attractive investment opportunities and potential for suppliers and manufacturers of heavy equipment in the future.
Indonesia also continues to focus on other energy sources, including geothermal, Coal Bed Methane (CBM), LNG and many others, as an alternative to reduce oil dependence. Indonesia is the country's third largest LNG exporter after Qatar and Malaysia, and have witnessed the decline in worldwide demand for LNG.
Various projects and export demand are:
- Development in East Kalimantan, Kutai Basin are estimated to have reserves of about 3 trillion cubic feet (tcf) and this will meet 25% for domestic use.
- Block Development Natuna Alpha, has reserves estimated 222 trillion cubic feet (TCF), is looking for increased investment into $ 40 billion figure.
- Donggi-Senoro LNG plant in Sulawesi, developed by Pertamina and Japan's Mitsubishi Corporation, estimated completion in 2010, worth $ 1.4 billion with a capacity of 2 million tons per day.
Special attention to these issues will improve the efficiency of distribution and production in the domestic and export purposes. Pipeline project connecting West Java - South Sumatra is a promising potentials for future investment and will be a step to meet future natural gas.
Two Key Issues in Oil and Gas Policy :
On the Production Side, Policies Will Focus on:
On the Consumption Side, Policies Will Focus on:
- Securing economically optimum oil and gas production as part of total supply of energy for, first, fulfilling domestic needs (growth objective) and, second, exports (revenue objective).
- Ensuring pattern of energy consumption that supports maximum, cost efficient, “clean”, economic growth.
On the Production Side, Policies Will Focus on:
- Reviving and accelerating exploration activities by reviewing the incentives structure, streamlining regulations and eliminating implementation bottlenecks.
- Setting up an effective system for monitoring of the progress of the development of all significant fields in the national oil gas portfolio.
On the Consumption Side, Policies Will Focus on:
- Developing domestic infrastructure that will support optimum gas utilization by domestic industries, power, transport and households.
- Designing Multiyear Plans toward rational, sustainable pricing system for domestic fuels, gas, power and fertilizers. Hence, rational and sustainable subsidy system.
Coal Bed Methane (CBM)
Indonesia has huge coal reserves, reaching 450 trillion cubic feet (TCF); put Indonesia into the country's second largest owner of coal after China.
However, due to environmental concerns, more focused on the development of Coal Bed Methane (CBM) gas , and will provide a large energy reserves for Indonesia. Large CBM reserves located in South Sumatra, Barito, Kutai and regions in central Sumatra, medium-sized basin in North Tarakan, Berau, and Jatibarang and small scale in South Sulawesi, Irian Jaya and Bengkulu.
CBM production is expected to begin in 2011 and the government encouraged its production by offering tax incentives. CBM can be used for natural gas production and electricity generation. Although not yet started commercial operations, to increase natural gas production in the country tax incentives are being offered.
The Project of Coal are :
- PT Bukit Asam (PTBA) and Suid Afrikaanse Steenkool en Olie (SASOL) plans to build a coal-to-liquid-fuel or liquefaction plant in Indonesia.
- PT Bukit Asam (PTBA), PT Pertamina EP (PHE Metra Enim) and Arrow Energy International worked on the potential of coal bed methane (CBM) in Tanjung Enim.
Electricity Sector
Indonesia has other attractive sectors, such as improving power supplies, especially electricity in the interior. In 2011, the government plans to take several steps to find a solution to this problem, by developing power generation and distribution network extending to all regions of the country. Development of transmission lines, power plants and other facilities throughout the development of a potential area for investors. Establish laws and regulations on electricity prices and subsidies will increase the level of investment in the future.
In 2008, the average electricity supply is 65% and the government plans to increase it to 93% in 2025, improving access to public electricity. This country was facing power shortages in some areas due to lack of infrastructure for electricity transmission and distribution. To meet the increasing demand of power supply, Indonesia needs additional capacity and participation in development of Independent Private Powerplants (IPP).
PLN has formed a consortium with PGN and Pertamina to build LNG terminal, as a measure to reduce dependence on oil for electricity generation. Increased participation of private developers to accelerated not only production, but also reduce the power shortage.
The project of electricity are:
- 10.000 MW Phase I
- 10.000 MW Phase II
- 15.000 MW
Indonesia had to choose more environmentally friendly energy and, at the same time, raise the level of domestic production to meet domestic demand. To overcome this situation, Indonesia is considering the use of nuclear energy, which will increase electricity production and also help Indonesia create environmentally friendly energy sources and reduce carbon emissions.
With 40% of the world's geothermal reserves, and is trying to increase their use in large scale. Geothermal and mining sector has a big opportunity for investors. Law issued in the mining sector is predicted can create legal certainty and this will encourage investor confidence. Besides, the government will also build more than five nuclear power plants.
In the oil sector, the government is focusing on the increased production of biofuels to reduce dependence on fuel and electricity for the future. Indonesia has a large LNG potential and become the second largest LNG producer in Asia. The government is building a 25 trillion cubic feet (TCF) of gas, particularly in Papua New Guinea. This initiative will increase the level of reserves to production and investment opportunities in the business.
Indonesia's cooperation with Japan is focused on increasing renewable energy share to the figure 17% in 2025. For Indonesia, this is a big advantage as well as a towing other investors. This collaboration can increase energy diversification and energy conservation measures, where government intensify and encourage the use of such measures. The focus also extended to the development of CBM and coal gasification.(*)
1 comment:
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