Wednesday, May 29, 2024

Indonesia develops renewable energy, strategic petroleum reserve

Reading Time: 3 minutes
Gusty da Costa

Journalist

Editor

Interview

Indonesia needs to develop its renewable energy sources and form a Strategic Petroleum Reserve in order to achieve energy autonomy, according to National Energy Council.

The government established the Council in 2007, which comprises of seven ministers who are directly in charge of the supply, transportation, distribution and utilization of energy.

Satya Widya Yudha, a board member of the Council, said renewable energy source could replace fossil fuels and reduce the country ‘s dependence to importing oil and other fossil fuels.

“We hope to be able to use alternative primary energy sources such as geothermal and wind energy. If we still want to use fossil fuels, we can use clean fossil fuels such as natural gas. We should also develop electric vehicles (EV) and convert oil into gas since gas is abundant,” he told Indonesia Business Post on March 24, 2022.

Indonesia’s daily fuel consumption amounts to 1.6 million barrels oil per day. From that figure, around 650,000 to 700,000 barrels per day are produced domestically, while the rest is imported. Unfortunately, the portion of renewable energy in Indonesia’s total energy production is still low at 12 %. Indonesia is targeting 23% of renewable energy use by 2025.

Lawmaker Kardaya Warnika, a member of the House of Representatives (DPR) Commission VII overseeing energy, research and innovation and industry, said there were several advantages for Indonesia to develop renewable energy.

First, he explained, Indonesia would not run out of power by using renewable energy. Second, the cost of renewable energy will decline over time.

“On the contrary, the oil and coal prices will be more expensive in the long run due to their rarity,” he said.

Warnika explained that renewable energy in Indonesia was still deemed as a “step child”. In the first term of President Joko Widodo’s administration, the regulation stipulated that the price of renewable energy would be lower than non-renewable sources of energy. In reality, the opposite applies. The cost of green electricity is higher.

“Another issue is the lengthy process of negotiating electricity prices for renewable energy power plants,” he said.

Third, the government should develop renewable energy, instead of ordering state-owned enterprises, since it is a government matter.

Citing an example, Warnika said the government could not delegate the task of developing renewable energy to state-owned electricity company PT PLN as the company, as a business entity, should gain profit. It is more profitable for PLN to develop coal-fired power plant than renewable energy power plant.

“In their view, everything revolves around profit, financial matters and company profits, not the state. The state does not receive profits from the company if the company makes a profit. The state should be responsible for developing renewable energy sources,” he added.

Establishing Strategic Petroleum Reserve

Beside developing renewable energy for its energy independence, Indonesia is also establishing its owned Strategic Petroleum Reserve for its defense sectors. Strategic Petroleum Reserve is a stocks of petroleum that will be stored up for emergency use like in war time situation and disasters for defense equipment and emergency response.

Yudha said the Council has proposed to the President to issue a presidential decree on creating a Strategic Petroleum Reserve or a Buffer Reserve for Energy. By the presidential decree, government agencies can received funds from the state budget to establish the strategic reserve.

“The project has to be set up independently, since this involves national sovereignty, thus it has to be financed internally,” he said.

Yudha said that he was not comfortable to discuses the cost needed to establish a strategic petroleum  reserve in advance because the presidential decree was still on the drafting process.

“We are trying to figure out the extent to which the state can finance the project,“ he said , adding that he will inform more to the public once the decree has been issued by president.

Lt. Gen. (ret.) Kiki Syahnakri, former Army deputy chief of staff in 2000-2002, said Indonesia needed to established a Strategic Petroleum Reserve, because based on defense ministry data, “Indonesia’s petroleum reserve can only last three days in emergency situation like war or disasters.”

He cited the Russia-Ukraine war as an example. Russia decided to stop its gas supply to Western Europe after the latter imposed sanction to Russia’s invasion to Ukraine. It is not impossible that Indonesia will face the same situation in the future, so in his opinion energy resilience is quite important.

Big  countries like the US, Russia and China have their own petroleum reserve for several months or years. Even as a superpower country, the US must need enormous energy resilience to support its military to meet its vast hegemonic needs. That is why the US has interest to maintain its hegemony in the Middle East. Developing countries like Indonesia and other ASEAN countries need to increase their energy resilience to become energy independence.

Gusty da Costa

Journalist

 

Editor

 

Interview

SUBSCRIBE NOW
We will provide you with an invoice for your reimbursable expenses.

Free

New to Indonesian market? Read our free articles before subscribing to the premium plan. If you already run your business in Indonesia, make sure to subscribe to the premium subscription so you won’t miss any intelligence & business opportunities.

Premium

$550 USD/Year

or

$45 USD/Month

Cancelation: you can cancel your subscription at any time, by sending us an email inquiry@ibp-media.com

Add keywords to your market watch and receive notification:
Schedule a free consultation with us:

We’ll contact you for confirmation.

FURTHER READING

PT Medco Energi Internasional has announced the divestment of its stake in the oil and gas field Area 47 in Libya to the Libya National Oil Corporation (NOC).
Indonesia has harnessed less than 1 percent of its solar energy potential, lagging significantly behind neighboring countries as fossil fuels continue to dominate
CNGR, a major Chinese company in the nickel processing industry and a key supplier of battery components for US electric car producer Tesla, is aggressively increasing its investments in Indonesia.
PT Freeport Indonesia (PTFI) President Director Tony Wenas has confirmed that the copper smelter in the Java Integrated Industrial Port Estate (JIIPE) area in Gresik, East Java, is on track to start operations by June 2024.
Jakarta, May 27, 2024 − PT Perusahaan Gas Negara (PGN), a gas subholding of State energy company PT Pertamina, has paid off the remaining bonds worth US$396,709,000 in accordance to the maturity date as part of the repayment of the overall bond value of US$1.35 billion issued in 2014 and listed on the Singapore Exchange.
Coordinating Minister for the Economy, Airlangga Hartarto, met with Daisuke Arakawa, a senior executive at Nikkei Inc, in Tokyo on Friday, outlining the Indonesian government’s commitment to energy transition through collaboration with Japan. One key area of cooperation is investment in electric vehicles (EVs).