• 35 mins Syrian Rebels Relinquish Control Of Major Gas Field
  • 2 hours Schlumberger Warns Of Moderating Investment In North America
  • 3 hours Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 4 hours Energy Regulators Look To Guard Grid From Cyberattacks
  • 5 hours Mexico Says OPEC Has Not Approached It For Deal Extension
  • 7 hours New Video Game Targets Oil Infrastructure
  • 8 hours Shell Restarts Bonny Light Exports
  • 9 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 16 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 21 hours British Utility Companies Brace For Major Reforms
  • 1 day Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 1 day Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 1 day Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 1 day OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 1 day London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 1 day Rosneft Signs $400M Deal With Kurdistan
  • 1 day Kinder Morgan Warns About Trans Mountain Delays
  • 2 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 7 days Trump Passes Iran Nuclear Deal Back to Congress
  • 7 days Texas Shutters More Coal-Fired Plants
Alt Text

Oil Prices Spike On Middle East Tensions

Oil prices jumped upwards on…

Alt Text

Are Combustion Engines Reaching Peak Demand?

As countries announce plans to…

Former OPEC Member Indonesia Diversifies its Energy Matrix

Former OPEC Member Indonesia Diversifies its Energy Matrix

Indonesia, which had begun producing oil in the early 20th century, had such substantial production that it was a major impetus for Japan invading the Dutch East Indies, as Indonesia was then known, in December 1941.

Over the last several decades the country has seen its production relentlessly slide, so much so that it left OPEC in 2008, seemingly confirming Marion King Hubbert’s “peak oil” theory.

But, rather than looking back, Jakarta is looking forward on a number of post-oil energy fronts. The archipelago is the biggest country in Southeast Asia and already a huge exporter of oil and liquefied petroleum gas (LPG) to Japan on long-term contracts, along with coal to China and India.

First, India’s leading private power producer Tata Power intends to invest heavily in a joint venture to develop a 240-megawatt geothermal project in Indonesia, along with its consortium partners, Australia's Origin Energy Ltd and PT Supraco Indonesia.

Despite the hazards of navigating Indonesian bureaucratic red tape geothermal energy is hardly a risky venture, as Indonesia has the world's highest number of volcanic hot spots.

Tata Power Managing Director Anil Sardana told reporters, "For the geothermal (project), the total cost is estimated to be about $850 million, out of which 30 percent is equity. So, it will about $240 million and out of that 50 percent will be from our side, the remaining 50 percent from Origin... So, it will be about $125 million (from Tata Power)."

And the Europeans are eyeing the world’s largest Muslim nation as well, beyond its traditional fossil fuels base.

According to Indonesian Trade Minister Gita Wirjawan, Germany is currently one of Indonesia’s biggest European export destinations. Indonesia’s exports to Germany during January-November 2011 were $4.2 billion, an increase of 19.6 percent compared to the same period in 2010. Most impressively, Indonesia runs a trade surplus with Germany, which in 2010 was $1.3 billion.

Which seems set to increase. During a recent meeting between Indonesian and German government officials, among the topics of discussion for future cooperation was the renewable energy sector. Among the Frankfurt presenters, representatives of several German and Hungarian energy businesses gave presentations on their work in Indonesia, including Benreg AG, which works with green energy and a Hungarian company collaborating with Indonesia’s state-run electricity company PT PLN to develop solar-generated electricity in remote regions of Indonesia.

And the government is strongly behind a transition towards renewable and cleaner energy. On 13 February President Susilo Bambang Yudhoyono said at a press conference that on 1 April, “We have to start the process toward energy conversion” from fuel oil to natural gas, a process that would unfortunately take some time.

On 13 February Salamander Bangkanai Energy, operator of the 1,750 square-mile Bangkanai Production Sharing Contract (PSC) on East Kalimantan, announced its plans to drill four development wells in its Kerendan natural gas field concession later this month. A drilling rig, having been refitted for high pressure-high temperature operations, is expected to be mobilized from Batam Island, Riau, to Kalimantan by the end of February and the development drilling will enable the Kerendan gas field to be put into production.

So, what does this mean for the future?

Last month Thomson Reuters StockReports+ reported that, “Indonesia's energy sector stocks look undervalued at current levels based on lowest Forward PGE (Price to Earnings Growth) data… Four out of the top five (Indonesian) companies with Forward PEG at discount to 5-year average are from the energy sector… Currently the energy stocks' forward PEGs are at huge discounts to their historical PEGs. If their forward PEGs return to historical form, the stock prices should increase.”

Apparently Wall St. is blessing Indonesia’s move away from a petroleum-based export economy to a more diversified energy export base, which includes renewables, including a field in which Indonesia could quickly be a world leader, given its geography – thermal power.

Accordingly, all that seems lacking to propel Indonesia’s transition to a post-petroleum energy economy is capital and some foreign expertise. It will be interesting to see who provides it.

By. John C.K. Daly of Oilprice.com




Back to homepage


Leave a comment
  • Ian Cooper on February 15 2012 said:
    Peak oil is not a 'theory'. It's a fact, and has been confirmed many times over the last few decades on the local, national and international levels.
  • fereydoun on February 17 2012 said:
    Indonesia left OPEC when it virtually turned a net importer of crude oil.It was a hard decision for the country to depart with OPEC.In recent years Mr.Subroto then his country's energy minister served the organization as president of the conference and the secretary general of the organization.Indonesia could still return to the organization once more oil is discovered and extracted.
    But the important part of Indinnesia's membership in OPEC is the lesson that we in OPEC learned from that country.Indonesia worked hard towards economic diversification.By the time Indonesia let OPEC it had the lowest percentage of oil and gas in its GDP.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News