Realising Energy Security: Whose Responsibility?
Energy is not merely an economic commodity. Energy is the foundation of national stability. Therefore, the fundamental question is not how to manage energy, but who is responsible for ensuring that energy security truly materialises.
Since 2003–2004 Indonesia has been a net oil importer, when oil consumption far exceeded domestic production. In 2008 we formally left OPEC. Currently oil consumption stands at approximately 1.5 million barrels per day, whilst domestic production is less than half that figure. This means more than half of requirements are met from overseas and dependence on imports is unavoidable.
This dependence makes national economic stability vulnerable to global price fluctuations, geopolitical conflicts, and logistical disruptions such as war, disasters, or pandemics like Covid-19. Tensions in the Middle East can drive up market risk costs.
Herein lies the critical role of national oil reserves. The terminology used must be understood precisely. Operational reserves managed by Pertamina, approximately 15 to 25 days, are stocks to maintain daily distribution, not a buffer against long-term crises. Storing large stocks over lengthy periods will tie up a company’s working capital with very substantial value.
Therefore, tasking corporations with such responsibilities must be accompanied by clear allocation of risks. Energy security is a matter of public policy, not purely a business decision. If the state mandates Pertamina to act, the financing design and compensation mechanisms must also be clear, particularly when price volatility occurs or subsidy obligations arise.
Following the 1973 Yom Kippur War, which was followed by an oil embargo by Arab nations against Western countries, the world experienced a major energy shock. That crisis made many nations realise that dependence on imports without buffer reserves was extremely risky. Since then, various countries have built Strategic Petroleum Reserves (SPR) as protection against supply disruptions and geopolitical upheaval.
As an institutional response, the International Energy Agency (IEA) was established in 1974. Member nations are obligated to maintain reserves equivalent to a minimum of 90 days of net imports as a measure of energy resilience. This standard has become the international reference point for building strategic buffer reserves.
At the regional level, ASEAN once had the ASEAN Petroleum Security Agreement (APSA) which prepared a supply-sharing scheme during crises. However to this day APSA remains largely a formal umbrella, and has yet to become an effective operational emergency response mechanism.
Confusion over terminology also frequently muddies public discussion. Reserves on the upstream side are not ready-to-use stocks. Energy security is determined by the readiness of production, storage, processing, and distribution. According to Law Number 30 of 2007 on Energy, an energy crisis is a condition of energy shortage, whilst energy emergency is a disruption to supply caused by damage to infrastructure and facilities.
Because the energy sector is vital, capital-intensive, and full of uncertainty, its management must be professional and proportionate. Oversight and accountability must be enforced, but business risks cannot be assessed solely through a right-or-wrong approach.
The Business Judgement Rule as well as the framework of the Limited Liability Company Law and State-Owned Enterprise Law must be understood in their entirety. If every decision in a volatile situation is perceived as an error, directors will choose safety over strategic action. Yet energy security demands measured courage.
We must also be alert to global market dynamics. The development of strategic reserves such as an SPR can attract the interests of international business actors. We must ensure risks are not transferred to state-owned enterprises through an obligation to become offtakers so that projects become bankable.
The state must ensure its objective is to strengthen national energy security, not to lock in long-term contracts that burden state-owned enterprises amid changes in technology and consumption patterns, including electric vehicles.