Pertamina committed to developing new and renewable energy
The Jakarta Post
State oil and gas company PT Pertamina recently held the two-day Pertamina Energy Forum (PEF) 2017 as part of its activities to celebrate the company’s 60th anniversary.
The Energy Forum, held on Dec.12-13 in The Raffles Hotel, Jakarta, carried the theme “Striving Towards Sustainable Energy,” which is highly relevant to the current situation, in which world energy utilization has started to shift from fossil fuels to sustainable energy. In Indonesia, domestic demand for developing the renewable energy resource potential is also on the rise, as fossil-based energy reserves continue to decline.
In his welcoming remarks, Pertamina’s president director and CEO Elia Massa Manik highlighted the company’s preparedness for developing other renewable energy resources beyond geothermal energy, which the company started to develop a long time ago.
When it comes to new and renewable energy (NRE) development projects, Pertamina does not only focus on geothermal energy, but also other energy resources including solar, wind, micro hydro, green diesel and even a storage business for the middle term. The company is open to collaboration with existing players, the government and other stakeholders to allow Pertamina to accelerate the company’s capability.
“We are ready to establish a partnership, invest, or chip-in with other companies that have or are developing technology. Through the Pertamina Energy Forum 2017, Pertamina wants to provide an opportunity for developing sustainable and renewable energy by learning, collaborating, exchanging views with experts and speakers in the forum,” he said.
According to him, there was a rising awareness in international circles about the importance of renewable energy. Pertamina ensures itself that the company is on the frontline of renewable energy.
From the international perspective, efforts to deal with the impact of climate change refer to the 2016 Paris Agreement. “Currently the Euro 4 and 5-standardized fuel has gained ground in several countries because the fuel is more environmentally friendly,” he said.
Under the leadership of President Joko “Jokowi” Widodo, the Indonesian government is committed to reducing emissions caused by greenhouse gases by up to 19 percent in 2030. The government is also striving to increase the contribution of renewable energy in the national energy mix to 23 percent in 2015, up from 7 percent in 2016. The government’s energy vision has also shifted from fossil fuels to clean and green energy to propel economic growth in the future.
“So this is our challenge because the Energy and Mineral Resources Ministry and the Environment Ministry consistently want to push the greater role that renewable energy will play in the future. We also welcome the government’s plan to use the Euro 4 standard in 2021. We have also started to upgrade our refineries to anticipate this challenge,” Massa explained.
Renewable energy business is predicted to grow, with bigger investment expected to be made in solar and wind-powered power plants.
“Renewable energy business has seen rapid growth. From the side of the upstream sector, renewable energy power plants will be increasingly cheaper. From the side of storage, there will be more players in battery business. The construction of a battery complex with a capacity of 100 MW was recently completed. In the downstream sector, electric or hybrid cars will also see significant growth in the future. This trend will continue exponentially in the future,” Massa said.
Partner and managing director of Boston Consulting Group (BCG) Singapore, Ashees Sastry, who spoke on “Energy Transition: Global Trends and Impact to Indonesia” said the economic growth in China, India and Southeast Asia since 2000 had pushed the demand for energy. “By far, oil and gas have become the primary energy source until the future, when renewable energy will play a more significant role.
The important role of renewable energy can be seen in the continued increase in investment and demand for renewable energy and greater attention from Asian countries paid to investment in renewable energy. Apart from that, globally, the growth of the renewable energy sector has surpassed the growth of the coal sector.
“Fossil-based fuel, especially oil, can still dominate the energy mix, but new policy initiatives have helped the region move toward a new energy era,” he said.
Toshiyuki Shirai, a senior energy analyst in the World Energy Outlook (WEO) team in the International Energy Agency, who delivered a topic on “Asia Renewable Energy, Trend,” said currently the energy demand from Southeast Asia continued to rise in parallel with global economic growth.
However, as time goes by, several countries in the region, especially China, India and Southeast Asia have started to realize the importance of using new and renewable energy in helping reduce the impact of global warming.
New policy initiatives
Several new policy initiatives have started to be set in order to implement the clean energy initiatives, one of which is the reduction of fossil fuel subsidies and an increased budget for new and renewable energy.
“Today, China contributes one quarter of investment in the renewable energy sector, while China, India and Southeast Asia contribute 40% investment in the renewable energy sector,” said Shirai.
At the same time, the impact of clean energy policy in China and the United States is projected to reduce the demand for fuel by 12 percent in 2140 globally, according to Nick Sharma, executive director of Asia Pacific, Upstream Research and Consulting, IHS Markit.
According to him, electric cars would become a logical option for the public in the future. Currently, more than 99 percent (1.28 billion units) of cars in the world use gasoline, while 0.2 percent use electric energy.
“In 2040, we project one-third from the sale of new cars in the world’s largest automotive and energy market – China, Europe and the United States – around 16 percent of cars on the road will shift to electricity,” Nick said.
Pertamina President Director Elia Massa acknowledged that the oil and gas sector remained the company’s primary business. “However, Pertamina is aware that the oil and gas resources are limited. That’s why Pertamina has started to take anticipatory measures to boost the contribution of renewable energy.
“Renewable energy is the energy of the future,” he said. Several big oil and gas companies, such as Saudi Aramco, have made huge investments in renewable energy. Pertamina itself has taken an active role in supporting the government’s efforts to increase the contribution of renewable energy to national energy consumption.
Meanwhile, Pertamina Gas director Yenni Andayani said that as a state company, Pertamina continued to increase the portion of NRE in line with the national target of 23 percent of the total national energy mix in 2025. One of the efforts that Pertamina has made is transforming business, including focusing on the development of NRE.
“This is Pertamina’s strong commitment to develop the NRE potential in Indonesia,” she said.
Pertamina sees two parameters in developing NRE, namely economic attractiveness or how attractive a project is in terms of economics and technology maturity or the provision of supporting technology.
“We take these two parameters into account in executing the business opportunity,” she said.
NRE sources considered to have high economic attractiveness and technology maturity and that have been developed by Pertamina include: geothermal, biodiesel, biomass, mini hydro and solar PV. Apart from that, there are several other NRE potentials subject to evaluation and which could be developed commercially, such as wind power, large-scale hydro, bio-aviation fuel and bioethanol.
“We are now developing PV panels. Currently, the PV installation in Pertamina’s central office and Cilacap refinery complex area has a capacity of 1 MW,” she said.
“This will continue to spread to other areas, units and Pertamina’s subsidiaries across Indonesia,” she explained.
Optimizing the use of NRE would usher Indonesia toward a sustainable economy, according to Montty Girianna, the deputy coordinating energy and mineral resources minister at the Office of the Coordinating Economic Minister.
“This means that the Indonesian economy will not only be strong, but will also sustain over the centuries to come,” he said.
He acknowledged that Indonesia still lagged behind other countries in utilizing NRE. India, for example, is developing an NRE project, called “Nehru National Solar Mission,” a solar energy-fueled power plant with a capacity of 200 GW. China has become a big player in NRE, with its solar energy-fueled power plant with a capacity of 78.1 GW and wind energy-fueled power plant with a capacity of 149 GW.
“In Indonesia itself, the use of NRE is low compared to the available potential. Currently, we utilize 8,216 GW of the total NRE potential of 443,208 MJW. However, given the positive impact of NRE on the economy, I think it is time for us to be serious about developing this sector,” she opined.
Meanwhile, in his welcoming address on the second day of PET 2017, Deputy Energy and Mineral Resources Minister Arcandra Tahar said the future direction of energy will be 1) increasing electrification, ensuring the provision of energy and the fulfillment of domestic energy needs; 2) ensuring fair and equitable energy access; 3) increasing efficiency in energy utilization; 4) ensuring self-sufficiency in energy management and 5) optimizing energy resources in an integrated and sustainable manner with the government’s support through energy policies.
The second day of the forum featured speakers including Pertamina’s SVP of Corporate Strategy Growth Daniel S Purba, Center of Waste Management Indonesia director Bayu Indrawan and Pertamina’s finance director Arief Budiman.
Daniel said the company in the last ten years had been developing several renewable energy resources. “The company has taken real action in doing this. This is our way of stepping out of our comfort zone and responding to changes in the global energy sector, which, as we see, are happening quickly.”
Furthermore, Daniel discussed multiple renewable energy projects Pertamina has conducted, namely 1-2 MW solar panel installations at several operational offices where access to power is limited and at the head office, as well as a bioethanol project using Napier grass.
The company is also studying other potentials, notably waste from plantations. As for the bio-aviation fuel and biofuel processing projects, the company uses its modified refinery facility, he said.
Also, Pertamina is working with several research institutes to develop hydrotreated biodiesel catalyst used to help convert crude oil and palm oil into good quality diesel oil.
“To support the development of new and renewable energy, Pertamina is open to collaboration and strategic alliances, be it in financing or in technology. We also continue to develop business models which work well with the company and look for potential business opportunities in the future,” Daniel said.
Meanwhile, Center of Waste Management Indonesia director Bayu Indrawan talked about the difficulty of raising funds from local investors for the development of renewable energy. “Investors in Indonesia are special. They believe a mere plan is not good enough. There must a pilot project in place with profit in sight. Only then will they believe and become interested in investing,” he said.
The first project the center has been working on, in collaboration with a developer in Tangerang city area, is the conversion of waste from the residential complex into a solid material, like coal, for a biomass fuel plant.
“There are two sources of income we can get from urban waste management. The first one is the collection of household waste and the electricity we generate. If the scale is big, we can use the common business model. But if it is smaller, we see it more as a public service cooperating with the local government,” he added.
Pertamina’s finance director Arief Budiman said with various advancement in technology, new and renewable energy resources would continue to grow.
“The power plant and vehicle industries, which all this time have relied on fossil fuels, continue to evolve. They have started to utilize sustainable energy sources. Oil and gas companies, including Pertamina, cannot just sit still. The Beyond Oil era is upon us,” said Arief in the closing speech of PEF 2017.
According to Arief, through the Pertamina Energy Forum, Pertamina aims to invite discourse and open insight into the challenges faced by the energy sector.
He expressed the hope that PEF 2017 could generate various new ideas and perspectives that Pertamina can capitalize on as a sustainable energy company.
“We can see from the best practices we’ve covered in the last two days, about how industry players and stakeholders can build synergy to realize the development of sustainable energy.
“And we also want to thank all parties who have been supportive of Pertamina, so that in the last 60 years the company has continued to grow in this country that we love,” he concluded.
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