Download Indonesia Energy (In)security

Regional Workshop on Energy and
Non-Traditional Security
RSIS’s Center for Non Tradition Security Studies
Singapore, 28 – 29 August 2008
Fabby Tumiwa
Institute for Essential Services Reform
National Development
National
& Local
Revenue
Energy
and Fuels
for
Economic
Activities
Raw
Material
for
Industrial
Processes
Energy Resources
Stimulate
Multiplier
Effect
 Energy provision has worsened since the economic
crisis in 1997.
 Fuel shortage has occurred since 2000 and widespread
to all provinces.
 In the last 3 years, fuel shortages get more frequent and
often, including LPG.
 Demand for fuel increased rapidly, so does the energy
subsidy
 Problem with fuel supply management, fuel
distribution and fuel subsidy
 Emerging of “Energy Insecurity” throughout the
country
Fuel Shortage…..
 Power shortages have occurred more frequent and
widespread to all region since 1997 economic crisis.
 Increasing number of critical system (shortage of
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supply) areas
Power generation shortages: PLN is unable to make
sufficient investment in generation and T&D
infrastructures to cope the growing demand.
Fuel disruption and fuel shortages: Supply of primary
energy to PLN’s generators
Technical issues: power plant’s derating capacity,
maintenance & service problem, etc
Non-technical: seasonal, natural calamity, etc
APERC’s Energy Security Indicators:
Diversification of energy supply sources;
2. Net energy import dependency;
3. Non-carbon based fuel portfolio;
4. Net oil import dependency and Middle East oil
import dependency.
1.
Source: APERC, 2007
Derivative of issues:
 dependency on Fossil Fuel (Oil and Natural Gas)
 deteriorating energy infrastructure
 policy & institutional coordination to enhance energy
security in domestic level
 Climate change control: GHGs mitigation
1970
Oil : 88%
Natural Gas: 6%
Coal: 1%
Hydro: 5%
Geothermal: 0%
2006
Oil : 47%
Natural Gas: 22%
Coal: 23%
Hydro : 2%
Geothermal: 5%
Source: DGEEU, 2005, MEMR, 2007
Energy Sources
Potential Resources
Installed Capacity
75,670 MW
4,200 MW
450 MW
210 MW
Geothermal
27,150 MW
1,042 MW
Biomass
49,810 MW
445 MW
Solar Power
4.8 kWh/m2/day
12 MW
Wind Power
9,280 MW
3 MW
Hydro Power
Micro and Mini Hydro
Source: MEMR 2007
Energy
Resources
Potential
Resources
Proven
Reserve (R)
Production
(P)
R/P
Ratio (years)
Crude oil
56.6 billion
barrels
8.4 billion
barrels
348 million
barrel
24
Natural gas
334.5 TSCF
165 TSCF
2.79 TSCF
59
Coal
90.5 billion ton
18.7 billion ton
215 million
ton
86
Coalbed
Methane
453 TSCF
-
-
-
Source: MEMR (2008)
Source: EIA (2006)
Source: EIA (2004)
Source: Coal Business Association (2008)
Export of Primary
Energy
Export of Final
Energy
Source: MEMR 2007
Import of Final
Energy
Export of Final
Energy
Source: MEMR 2007
 Oil and Natural Gas dependent
 High dependency to oil, likely continue for the next two
decade.
 Domestic oil production can not supply domestic
demand.
 One-third of oil demand is supplied by import from
Africa, Middle East and Australia, both crude and refine
oil.
 Natural gas for petrochemical industry are imported
from middle east (Qatar).
 Insufficient and Deteriorating of energy infrastructure
 Oil infrastructure
 Lack of refinery capacity: aging refinery capacities, no
additional plant since mid 90s,
 Lack oil storage and distribution networks
 More than 40 percents import oil to supply domestic oil
demand.
 Unreliable distribution systems and expensive distribution
cost.
 Cont
 Natural Gas infrastructure
 Poor domestic gas infrastructure in Java
 Gas shortages for electricity and industry
 Coal infrastructure
 Insufficient coal terminal
 Deficiencies of coal transport system
 Electric power generation and T&D network
 Shortages in power generation
 Deteriorating condition of Java-Bali interconnection
 Bottleneck of transmission network
 Saturated distribution network (in Java)
 Policy framework and institutional coordination
 Decentralization makes policy coordination in local-national
level is more challenging. Similar to policy coordination
among ministries and agencies in higher level.
 Local government poor understanding on energy security
concern. Policy and actions based on high resources
exploitation to raise more revenue for local budget
requirement.
 The new law on Energy needs strong implementing
regulation to ensure energy security at local and national
level.
 Future energy policy will be determined by National Energy
Council
 Climate change control: GHGs mitigation
 External pressure to energy trading policy and priorities
 Voluntary commitment along with international
negotiation
 Opportunity from carbon market
 Dependent to foreign oil supply, vulnerable to oil
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market volatility, and price fluctuation
Increasing cost of supply and subsidy, adding to fiscal
burden.
Encourage smuggling and illegal deposit.
Creating vicious cycle on subsidy control that lead to
the scarcity of fuel.
Furthermore, creating energy insecurity, and political
instability, and economic downturn
 Establishment of a comprehensive energy policy
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framework & strengthening institution’s coordination
Long term energy resources management
Building sufficient and robust energy infrastructure to
enable domestic energy distribution and utilization
Enhancement of transfer of advance energy
technologies
Developing and enhance utilization of alternative
energy/fuels, improve non-carbon energy portfolio
Possible but……
 “my country first” paradigm
 Demanding costly physical infrastructure (e.g. trans
ASEAN natural gas pipeline, trans ASEAN electricity
grid)
 Different among countries:
 market mechanism (e.g. pricing policy)
 environmental standard
 energy technology deployment
 Who control the energy resources?
 Indonesia faces big challenges to ensure energy security from the
supply and demand side.
 Review of situation of energy provision for a decade suggested
that Indonesia is in situation of energy crisis that has dire
consequences to the economy.
 High dependency on oil and natural gas, and deteriorating in
energy infrastructure jeopardize energy security present and in
the near future.
 Immediate response by taking measures and action to reduce oil
and import of oil, improve non-carbon based portfolio to
diversify energy supply, develop critical infrastructure for
domestic energy distribution and utilization, and implement
integrated resource planning and long term energy
management, are extremely needed to avoid severe energy
insecurity in near future.
 Taking and applying measure to improve energy security of
Indonesia may have impact to energy security in other
country, in particular for those country that heavily
dependent on energy resources from Indonesia (Singapore,
Malaysia, China, Taiwan, South Korea).
 Energy interdependence concept in the region is possible
but with huge challenge: nationalism, infrastructure,
market harmonization.
 Financing and governance issues are needed to assess
further.
 Delaying in taking proper responses will result in
worsening energy supply that will effect future
development of the country.
Fabby Tumiwa is director of Institute for Essential Services Reform
(IESR), a non-profit, a public interest oriented think-thank for energy
and climate change, based in Jakarta, Indonesia. Email: [email protected], website: www.iesr-indonesia.org