Regional Workshop on Energy and Non-Traditional Security

RSIS’s Center for Non Tradition Security Studies

Singapore, 28 – 29 August 2008

Fabby TumiwaInstitute for Essential Services Reform

National & Local Revenue

Energy Resources

Energy and

Fuels for

Economic

Activities

Raw Material

for Industri

al Process

es

Stimulate

Multiplier Effect

National Development

Energy provision has worsened since the economic crisis in 1997.Fuel shortage has occurred since 2000 and

widespread to all provinces.In the last 3 years, fuel shortages get more

frequent and often, including LPG.Demand for fuel increased rapidly, so does the

energy subsidy Problem with fuel supply management, fuel

distribution and fuel subsidyEmerging of “Energy Insecurity” throughout

the country

Fuel Shortage…..

Power shortages have occurred more frequent and widespread to all region since 1997 economic crisis.Increasing number of critical system (shortage of

supply) areasPower generation shortages: PLN is unable to

make sufficient investment in generation and T&D infrastructures to cope the growing demand.

Fuel disruption and fuel shortages: Supply of primary energy to PLN’s generators

Technical issues: power plant’s derating capacity, maintenance & service problem, etc

Non-technical: seasonal, natural calamity, etc

APERC’s Energy Security Indicators:

1. Diversification of energy supply sources;2. Net energy import dependency;3. Non-carbon based fuel portfolio;

4. Net oil import dependency and Middle East oil import dependency.

Source: APERC, 2007

Derivative of issues:dependency on Fossil Fuel (Oil and Natural

Gas)deteriorating energy infrastructurepolicy & institutional coordination to enhance

energy security in domestic levelClimate change control: GHGs mitigation

1970Oil : 88%Natural Gas: 6%Coal: 1%Hydro: 5%Geothermal: 0%

2006Oil : 47%Natural Gas: 22%Coal: 23%Hydro : 2%Geothermal: 5%

Source: DGEEU, 2005, MEMR, 2007

Energy SourcesPotential

Resources

Installed

Capacity

Hydro Power 75,670 MW 4,200 MW

Micro and Mini Hydro 450 MW 210 MW

Geothermal 27,150 MW 1,042 MW

Biomass 49,810 MW 445 MW

Solar Power 4.8 kWh/m2/day 12 MW

Wind Power 9,280 MW 3 MW

Source: MEMR 2007

Energy Resources

Potential Resources

Proven Reserve (R)

Production (P)

R/PRatio

(years)

Crude oil56.6 billion

barrels8.4 billion

barrels348 million

barrel24

Natural gas 334.5 TSCF 165 TSCF 2.79 TSCF 59

Coal 90.5 billion ton18.7 billion

ton215 million

ton86

Coalbed Methane

453 TSCF - - -

Source: MEMR (2008)

Source: EIA (2006)

Source: EIA (2004)

Source: Coal Business Association (2008)

Export of Primary Energy

Export of Final Energy

Source: MEMR 2007

Export of Final Energy

Import of Final Energy

Source: MEMR 2007

Oil and Natural Gas dependentHigh dependency to oil, likely continue for the

next two decade. Domestic oil production can not supply

domestic demand.One-third of oil demand is supplied by import

from Africa, Middle East and Australia, both crude and refine oil.

Natural gas for petrochemical industry are imported from middle east (Qatar).

Insufficient and Deteriorating of energy infrastructureOil infrastructure

Lack of refinery capacity: aging refinery capacities, no additional plant since mid 90s,

Lack oil storage and distribution networksMore than 40 percents import oil to supply

domestic oil demand.Unreliable distribution systems and expensive

distribution cost.

ContNatural Gas infrastructure

Poor domestic gas infrastructure in JavaGas shortages for electricity and industry

Coal infrastructureInsufficient coal terminalDeficiencies of coal transport system

Electric power generation and T&D networkShortages in power generationDeteriorating condition of Java-Bali interconnectionBottleneck of transmission networkSaturated distribution network (in Java)

Policy framework and institutional coordinationDecentralization makes policy coordination in local-

national level is more challenging. Similar to policy coordination among ministries and agencies in higher level.

Local government poor understanding on energy security concern. Policy and actions based on high resources exploitation to raise more revenue for local budget requirement.

The new law on Energy needs strong implementing regulation to ensure energy security at local and national level.

Future energy policy will be determined by National Energy Council

Climate change control: GHGs mitigationExternal pressure to energy trading policy and

prioritiesVoluntary commitment along with international

negotiationOpportunity from carbon market

Dependent to foreign oil supply, vulnerable to oil market volatility, and price fluctuation

Increasing cost of supply and subsidy, adding to fiscal burden.

Encourage smuggling and illegal deposit.Creating vicious cycle on subsidy control that

lead to the scarcity of fuel.Furthermore, creating energy insecurity, and

political instability, and economic downturn

Establishment of a comprehensive energy policy framework & strengthening institution’s coordination

Long term energy resources managementBuilding sufficient and robust energy

infrastructure to enable domestic energy distribution and utilization

Enhancement of transfer of advance energy technologies

Developing and enhance utilization of alternative energy/fuels, improve non-carbon energy portfolio

Possible but……“my country first” paradigmDemanding costly physical infrastructure

(e.g. trans ASEAN natural gas pipeline, trans ASEAN electricity grid)

Different among countries:market mechanism (e.g. pricing policy)environmental standardenergy technology deployment

Who control the energy resources?

Indonesia faces big challenges to ensure energy security from the supply and demand side.

Review of situation of energy provision for a decade suggested that Indonesia is in situation of energy crisis that has dire consequences to the economy.

High dependency on oil and natural gas, and deteriorating in energy infrastructure jeopardize energy security present and in the near future.

Immediate response by taking measures and action to reduce oil and import of oil, improve non-carbon based portfolio to diversify energy supply, develop critical infrastructure for domestic energy distribution and utilization, and implement integrated resource planning and long term energy management, are extremely needed to avoid severe energy insecurity in near future.

Taking and applying measure to improve energy security of Indonesia may have impact to energy security in other country, in particular for those country that heavily dependent on energy resources from Indonesia (Singapore, Malaysia, China, Taiwan, South Korea).

Energy interdependence concept in the region is possible but with huge challenge: nationalism, infrastructure, market harmonization.

Financing and governance issues are needed to assess further.

Delaying in taking proper responses will result in worsening energy supply that will effect future development of the country.

Fabby Tumiwa is director of Institute for Essential Services Reform (IESR), a non-profit, a public interest oriented think-thank for energy and climate change, based in Jakarta, Indonesia. Email: fabby@iesr-indonesia.org, website: www.iesr-indonesia.org