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Jakarta Post

Energizing Indonesia's energy sector

If they are good regulations, they only need fine tuning, not rewriting.

George Barber (The Jakarta Post)
Premium
Jakarta
Mon, July 31, 2017

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Energizing Indonesia's energy sector A worker riding bicycle passes through an area at Balongan oil refinery facility owned by state-owned energy company PT Pertamina in Indramayu, West Java. (Antara/Rivan Awal Lingga)

T

here can be no doubt about the potential of Indonesia’s energy potential, although potential is exactly what it is. There can be no doubt either that there is a lot happening outside of the main energy sectors that are well known, i.e. oil, gas, geothermal, hydropower, some companies are going quietly about their business and trying to develop extremely complicated fields, not so much in the resource aspects, but in the geological and environmental aspects.

All resource developments have their own unique challenges, especially resources that are located offshore or in onshore remote parts of this hugely divest archipelago.

Most people in the resource industry accept these challenges, and these challenges can and must be met head on as part of the stages to reach the end goal, namely delivery of a resource to the end user which is commercially viable as well as ensuring that the local community and the county benefit.

There have been three news articles in The Jakarta Post recently that caught my eyes. “Rising fuel imports stifle Pertamina,” “RI lags behind peers in renewable energy,” “ExxonMobil exit warning of waning oil, gas industry.” Surely these three headlines alone say something? Another headline said “Geothermal power requires incentives.”

There was a publication from IPA for the 41st IPA that indicated that the number of licenses required for oil and gas development had increased from 341 in 2015 to 373 in 2017 with the main increases coming from the Energy and Mineral Resources Ministry 74 (52), Transportation Ministry 76 (58), Navy nine (2), only four ministries/agencies from 19 had decreased their requirements, some remained the same.

We have seen recently several companies that have decided enough is enough, such as Marathon, Anadarko, HESS and now ExxonMobil. All of these companies and more have worked in what is considered far more difficult countries to develop a business, such as Nigeria which appears to becoming more attractive than Indonesia.

Every country has its ups and downs, although in Indonesia we have been seeing a steady decline of the natural resource industry for many years. We can also argue the same for the mineral resource sector.

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