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.