Satya Hangga Yudha Widya Putra is an MSGA student in the Environment & Energy Policy concentration.
This semester I made a great decision by staying in Jakarta, Indonesia to work on my thesis. Throughout my time in Indonesia I was able to work at the country’s largest State-Owned Enterprise (SOE) on Oil and Gas, Pertamina, do research for my thesis, travel around Indonesia learning more about our diverse cultures and languages, visit LNG facilities, expand my networks and connections, and build my Non-Governmental Organization (NGO) called Indonesian Energy and Environmental Institute (IE2I).
IE2I (www.ie2i.or.id) is an NGO and think tank that raises awareness about energy and environmental related problems with a focus on Indonesia. We undertake research by hosting focus group discussions (FGDs), meetings, summits, and conferences where we participate as panelists. We highlight key points and issues to be further analyzed and studied, and ensure that we follow them up with solutions. We implement an interdisciplinary and multifaceted approach by collectively gathering influential policy makers, business leaders, NGOs, universities, and society to discuss global warming and its negative consequences, which is climate change. We cooperate with ministries, SOEs, and companies to visit rural areas and create climate villages to educate and change lifestyle norms for the betterment of the environment. IE2I just recently co-hosted the 1st Indonesia Energy Conference (IEC) 2017 at Hotel Mulia in Jakarta, Indonesia on April 11, 2017 (www.indonesiaenergyconference.com). Our event was titled, “Powering Indonesia’s Economy: Reshaping the Energy Sector.”
The 1st Indonesia Energy Conference (IEC) 2017 was opened by our Guests of Honor, Minister of Energy and Mineral Resources of Indonesia (Ignasius Jonan) and Speaker of the House of Indonesia (Setya Novanto). It was attended by prominent Parliamentarians from Commission VII, which deals with Energy, Mineral Resources, and Research and Technology. Others include President Director of Perusahaan Gas Negara (PGN), President Director of Pertamina, Chairman of SKK Migas, Director Generals from the Ministry of Energy and Mineral Resources of Indonesia, Directors from Perusahaan Listrik Negara (PLN), Presidents of Multinational Oil and Gas Companies (MOGCs) such as ExxonMobil, British Petroleum (BP), and ConocoPhillips, Indonesian Chamber of Commerce (KADIN), President of the Indonesian Petroleum Association (IPA), partners at McKinsey & Company, Young Members of Golkar Party, environmentalists, NGOs, and universities.
The conference had 4 panel discussions, which were Oil and Gas Policy and Regulation, Renewable Energy and the Environment, Natural Gas, and Mineral and Coal.
I was given the opportunity to speak on the 3rd panel with 250 energy stakeholders in attendance where I highlighted the state of Indonesia’s natural gas sector. I was on the same panel with Danny Praditia (Commercial Director of PGN), Sampe Purba (Senior Vice President of Gas Commercialization in SKK Migas), Bara Ilmarosa (General Manager of LNG Commercial at Pertamina), and Vishal Agarwal (Partner at McKinsey and Company).
As a panelist, I mentioned that Indonesia is a country that is rich in natural gas, however, our lack of infrastructure is what prevents our country from maximizing our natural gas potential. Indonesia’s growth in the demand for natural gas has exceeded the growth in the supply of natural gas due to an expanding economy, a rising middle class, and rapid urbanization. Indonesia is not experiencing a shortage of natural gas in terms of volume, but our gas output is lagging because of infrastructure, and committed export demand. 55% of natural gas demand comes from the western part of Indonesia while our reserves are located in the eastern part of Indonesia. The reserves are situated in Natuna, South Sumatra, East Kalimantan, Masela, and West Papua.
Being an archipelagic nation with over 18,000 islands, Indonesia must accelerate the availability of needed infrastructure so we can utilize our future natural gas production. The majority of our country’s transmission network has been built to cover 2/3 of Java and Sumatra, but we need to connect our nation’s economic centers in Java, Sumatra, and Kalimantan. As a nation, we must also build more liquefaction and regasification terminals. The Indonesian government has to provide conducive regulations and policies that allow energy players to produce efficiently and have a greater return on investment, increasing our country’s ease of doing business. If we are able to produce gas at a cheap price, it will make industries more competitive, which will generate economic growth. Gas is no longer seen as a revenue generator but a prime mover of the economy.
As a country, Indonesia has been focusing more on utilizing its natural gas for domestic purposes. When it comes to the production of natural gas, Indonesia is leading towards energy security instead of self-sufficiency. Although we should lead to self-sufficiency where we solely rely on national production, if the price of imported LNG is cheaper than domestically produced LNG, we should import LNG. However, based on Ministerial Decree NO. 11/2017 there may be a potential challenge if the price of imported or domestically produced LNG for electricity cannot be equal to or less than 11.5% of ICP. Thus, if Indonesia wants to import LNG, it should have a free destination clause so the country can divert its contracted LNG to other nations in cases where the intended imported LNG turns out to be expensive. In order to reduce the price of natural gas the Indonesian government should control the whole value chain from upstream, midstream, downstream, and up to the customer. The challenge ahead is for us to use our natural resources and produce gas at a competitive price.