RI looks to China for billion dollar energy projects
RI looks to China for billion dollar energy projects
The Jakarta Post, Jakarta
Indonesia hopes to further tap the expansion drive of Chinese
investors with a list of 25 energy related projects worth more
than US$2.8 billion that it has proposed to a Chinese business
delegation here.
The projects cover the oil, gas, electricity and coal sectors
and were presented to the delegation during the China-Indonesia
Energy Forum in Bali from Sept. 25 to 27.
On top of the list is the additional sale of liquefied natural
gas (LNG) from the as yet undeveloped Tangguh LNG project in
Papua.
China has already confirmed its intent to purchase Tangguh's
LNG in a deal the government hopes to sign sometime this week.
The deal may generate $10 billion in revenue over the next 20
years or more, yet is seen as a consolation prize after Jakarta
lost a much larger Chinese LNG contract last month to an
Australian company.
Chinese investors also offered to finance the construction of
gas pipelines linking gas producing East Kalimantan with markets
in West and East Java under a project worth $1.7 billion.
In Central Tapanuli, North Sumatra, state electricity company
PT PLN is seeking investors to build a $217 million coal-fired
power plant.
Another project is a joint investment scheme involving state
oil and gas company Pertamina for the exploration and production
of oil fields in China and Indonesia. The investment size is
projected at $530 million.
Indonesia is in dire need of the energy projects to serve
soaring power demands at home and arrest declining oil revenues.
The bipartite energy forum follows a recent visit by a Chinese
delegation of businessmen and officials led by its Parliament
Speaker Li Peng to East Java.
Both countries have seen their business ties strengthen over
the past few years, marked by the growing presence of Chinese-
made products in Indonesia.
Imported Chinese products have eaten into the market shares of
Japanese, European and American products that have turned more
expensive with the steep fall of the rupiah against the U.S.
dollar since the 1997 economic crisis.
Despite the increase in trade, investment from mainland China
has been relatively minimal. The country has just begun to expand
its investments to Indonesia and neighboring countries.
But given China's fast growing economy, there is potential for
it to rival Taiwan's long-standing position in the region.
So far, it is the energy sector that is leading Chinese
investments here. The country's biggest international expansion
has been the purchase of Indonesian assets from Spanish oil
producer Repsol-YPF in cash for $585 million earlier this year.
For its part, Taiwan has responded to China's inroads with
offering Indonesia yet another LNG deal valued at $11.5 billion.
There has been no follow-up as yet on the proposal presented
by visiting Taiwan Vice President Annette Lu last month.
Politically, Jakarta does not recognize Taiwan as a
government, and may not want to further upset Beijing following
Lu's surprise visit.