RI to rely more on natural gas, coal to cut oil dependence
RI to rely more on natural gas, coal to cut oil dependence
Rendi A. Witular, The Jakarta Post, Jakarta
The declining oil production in the past decade has prompted the
government to encourage local industrial plants to prepare to
start largely depending on natural gas and coal for energy needs
within the next few years.
Coordinating Minister for the Economy Aburizal Bakrie
announced during a press conference on Tuesday at the State
Palace that the government expected an increase in demand for
coal and natural gas once it began cutting petroleum-based fuel
subsidies.
"We want companies like cement makers to use alternative
sources of fuel, such as natural gas and coal, which are
abundant," he said. "In the future, all gas and coal production
should be supplied primarily to the domestic market. As for
exports, the government will only supply to buyers, who have
signed deals for the product."
The gradual slashing of petroleum-based fuel subsidies will
eventually lead to increased prices for diesel fuel and gasoline,
forcing consumers -- both companies and individuals -- to seek
alternative energy sources, such as gas and coal, which are
generally less expensive, Aburizal said.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said the first concrete action to support the push toward
alternative fuels was by giving U.S. energy giant ConocoPhillips
(COP) the green light to develop gas field "A" in Aceh.
Gas from the Aceh field would be entirely allocated for
supplying state-owned fertilizer companies PT Asean Aceh
Fertilizer and PT Pupuk Iskandar Muda I and II, as well as other
industrial plants in Sumatra, he added.
Field A is expected to be fully operational by 2008.
"Production from the field will not be allocated for export.
We will negotiate with COP so the government can ensure that over
55 percent of the field's output goes to fertilizer companies,"
said Purnomo, adding that the natural gas sold to the companies
was still subject to government subsidies.
The government will also rely on natural gas supplies from
Bontang, East Kalimantan, to supply industrial plants in Java,
the country's main business island, and to its nearby industrial
areas.
Purnomo said the country's natural gas reserves (proven and
potential) currently stood at 188 trillion cubic feet (TCF), but
these were still largely untapped due to limited supporting
infrastructure, including distribution and transmission lines.
In 2003, Indonesia's total natural gas output by state oil and
gas company Pertamina and production sharing contractors reached
a mere 3.3 TCF, some 90 percent of which was exported.
As for the country's coal reserves, Purnomo said it had
reached more than 100 years at present, with most of the high-
calorie coal exported.
"With the use of natural gas and coal by domestic industry and
households, we expect the use of petroleum-based fuels by the
domestic market to be significantly reduced, thus allowing the
government to increase its oil exports for higher revenues," said
Purnomo.
Indonesia's crude oil exports dropped to 30,000 barrel per day
(bpd) in 2004 compared to 100,000 bpd in 2003. The Central
Statistics Agency (BPS) said oil and gas imports -- including
both crude oil and oil products -- increased sharply by 52.36
percent in 2004.
The increasing imports were due to declining oil production
from the country's aging oil fields and rising domestic demand of
up to 7 percent per year.
Such a condition has called into question the government's
membership within the influential Organization of Petroleum
Exporting Countries (OPEC) as it is closer to being a net oil
importer.