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ENERGY MAP IN INDONESIA
By
Mr. Benny H. Harsojo
Diploma Kaufmann(Germany)
(Ex- Rabo Bank Hamburg & Jakarta)
Indonesia, with over 240 million people, has spurred economic growth during the two last decades that also further stimulates growth in the transportation and power generation sector which all together resulted growth in the usage of mix-fossil energy available in the country namely oil, natural gas and coal.
FOSSIL BASED ENERGY
OIL
The state owned oil company, PERTAMINA, is responsible for exploration, distribution and exports of crude oil and gas.
For the domestic market it controls distribution of petrol (Premium and high octane Bio-Pertamax), diesel fuel (Bio-Solar), gas (under the name of Elpiji) and various lubricants for cars, trucks and motor bikes under the name Fastron, Prima XP, Meditran, etc.
Prices for mass market Premium petrol, diesel fuel and gas (3kg/12 kg canisters) are subsidized. Exploration of oil and gas is under JO with overseas oil companies like Chevron, Exxon, Shell, BP,Total and others.
Due to natural declining rate, daily lifting dropped from about I.7 million barrels/day in 1997 to presently about 950,000 barrels/day during 2008 excluding own use of another 50.000-100.000 barrels/day by the JO operators (like Chevron) itself.
Presently Indonesia has become a net importer of crude oil and also buys over 2 million barrels of Premium petrol from refineries overseas.
NATURAL GAS
Natural gas is for domestic market and exports. There are three major fields i.e. ARUN (Aceh-North Sumatera), BONTANG (East Kalimantan) and TANGGUH (West Papua).The NATUNA project (Riau-Sumatera) is still under negotiation for development and so are some other projects.
The said production areas are in sparsely populated regions whereby domestic consumption is mainly in the densely populated islands like Java where about 70% of the population resides.
COAL
Coal reserves are estimated 9 billion MT mainly in the provinces of East and South Kalimantan as well as in South Sumatera (Bukit Asam).
Major exploitation is by large fully integrated miners, partly as public listed entities at the Jakarta stock exchange. Total annual exports in 2007: above 150 million MT mainly intended for regional buyers. For 2008 the figure is expected to surpass 200 million MT.
Carefully estimated, about 80% business of this industry is conducted by large fully-integrated-mining entities operating under long term contracts with overseas buyers. The remaining players are in the hands of numerous independent small and medium sized miners which partially operate on rather irregular basis.
The value of shares of the public listed miners is dented by the most recent index decline at the Jakarta stock exchange. This down slide was believed to be heavily influenced by the recent US financial crisis, further effecting major Asian stock markets. As a result the Jakarta stock market was suspended on 8th and 9th October 2008 as the index declined more than 10% on single day.
Coal domestic market obligation (DMO) is approximately 15% of total production for supply to coal power stations for electricity production. DMO quota will go up with more coal power stations coming on line in the next 5 years to generate at least 10.000 MW to overcome present electricity shortage fueled by growth of commercial and household consumers.
General Comments:
Up front financial requirement to enter in the energy sector is sizeable, so those with keen interest to enter the market must have solid financial back up and sufficient time to penetrate bureaucracy and legal procedures. A sudden exit will result in cut-loss scenario.
With rise in prices of coal and oil world wide, the respective players enjoy healthy profits, although due to commercial confidentiality, actual figures are unknown. This is indicated by the recent dispute during 3Q 2008, between 6 major coal miners and the government, regarding overdue royalty payments.
It is understood that coal may require the least complex investments as coal mining in the country is open pit system and coal can be transported as bulk freight by vessel or barge without the need of refinery.
Traditional coal production and shipping to end users may have in-house stiff competition. It is understood that this sector may enter a new chapter through the so called coal liquefying, turning coal into petrol through chemical process, to meet domestic or even regional demand in coal mining producing regions such as Kalimantan.
RENEWABLE ENERGY
WIND ENERGY
To tap into the potential of this sector, AUMRA ENERGY INDONESIA intends to develop a 100 MW capacity near shore wind farm on 3 locations of which two are located at the coastal waters of the island of Bali and one offshore location of Nusa Penida island in Indonesia.
With no track record of any wind farm development in the country, BCE has obtained a wind resource map, produced by a reputable company in this field in the USA, that show average wind strength of 5-6 m/s all year round on the respective potential sites suitable for low wind speed turbines with below 850 kW capacity.
So far the first ever wind energy farm in Indonesia may have taken place on the said island of Nusa Penida where nine 88 kW small onshore wind turbines have been erected jointly by local state electricity company and the Indonesian Ministry for Energy and Minerals during 2005-2007.
Produced electricity was intended for rural house holds however results were reportedly poor due to technical factors but the island is intended to be developed as a renewable energy park in future.
BCE has conducted negotiations with various parties such as:
* PLN-Indonesia Power, the sole state electricity body in Indonesia.
* Development banks based in Europe,
* Wind turbines manufacturers in Europe,
* Germany's largest energy provider company (45.000 MW) of which 1.400 MW is based on renewable energy (2007),
* Two reputable wind consultant companies,
* A number of CDM/CRE companies for future UNFCCC registration.
So far results were positive and aim is to develop initial 3-5 MW test bed on Nusa Dua prior to building a larger capacity.
Presently BCE is preparing a PPD to be submitted to a European development bank during 4Q 2008 in order to obtain a US$ 300 K funding for a comprehensive technical and commercial feasibility study which requires about 18 months to produce the deliverables.
OCEAN CURRENTS
Apart from wind energy, sufficient data has been compiled about ocean currents near Nusa Penida island, located at the exit site of the Bali-Lombok strait, which amounts to an immense of approximately 3 million cubic meter water flow per second.
This flow is part of a though-flow that originates from the western part of the Pacific Ocean, flowing to the Indian Ocean with a rate of about 22 million cubic feet per second (or 22 Sverdrups*), due to one feet difference in ocean surface. This massive water flow passes the Indonesia archipelago with only three breaks in the southern Indonesian island chain namely the Bali-Lombok strait, the Ombi strait and East Timor. * 1 Sv (Sverdrup) = 1 million meter cubic per second.
Studies revealed that 75% of these massive currents move in the upper few hundred meters whereby the rest is moving through the country's network of deep basins.
The patent holder of a marine current turbine in the UK has also indicated willingness to cooperate with BCE provided data on sea bed topography and current ocean strength are available.
In the Philippines, a government project is scheduled to start in 2008 to develop a US$ 2.8 billion tidal fence dam with a peak 2,200 MW capacity of which 1,100 MW is base line. This form part of a future massive 25.000 MW capacity valued at US$ 38 billion, of which US$ 8 billion is for grid connection. This project uses the same ocean current described above.
Ocean currents or sea power is believed to have at least 450,000 MW potential with a US$ 550 billion market value which is worth to develop.
This excludes the potential in generating CER-certificates for carbon trading.
The more if the basics are available in the country's waters, especially around Nusa Penida and Bali islands where it is suitable to develop the use of renewable energy like wind power, ocean currents and solar cell.
AUMRA ENERGY INDONESIA is open for initial discussion with serious investors willing and able to cooperate to tap into this sector. Meeting can be arranged to be held either in Denpasar Bali-Indonesia or Singapore.
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