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Jakarta Post

Indonesia's oil sector in decline, but options remain

  • Norman Harsono


Jakarta   /   Fri, August 14 2020   /  01:00 am
Pertamina president director Nicke Widyawati (left) and Industry Minister Agus Gumiwang Kartasasmita (right) visit the Dumai refinery in Riau on Wednesday, July 17, 2020, to observe a trial production of "D100" palm-oil based green diesel. (Courtesy of Pertamina/-)

The oil industry was once Indonesia’s growth engine, but conditions quickly went downhill starting in the late 1990s, as domestic production declined but consumption kept rising.   By around 2000, Indonesia’s domestic oil consumption had exceeded refining capacity, and by 2004, consumption had exceeded production, BP Statistical Review data show.   The country began importing crude oil and fuel, straining its trade balance, to meet domestic oil demand. Having become a net oil importer, Indonesia left the powerful Organization of the Petroleum Exporting Countries (OPEC) in 2009.   Meanwhile, state-owned oil giant Pertamina, the government’s cash cow during the industry’s golden years, is now operating aging refineries and depleting oil wells. Compared to the late 1900s, the company’s progress in the new millennium has been mod...