1. Indonesia Energy (In)security
Regional Workshop on Energy and Non-Traditional Security
RSIS’s Center for Non Tradition Security Studies
Singapore, 28 – 29 August 2008
Fabby Tumiwa
Institute for Essential Services Reform

2. Role of Energy Resources
National Development
National & Local Revenue
Energy and Fuels for Economic Activities
Raw Material for Industrial Processes
Stimulate Multiplier Effect
Energy Resources

3. Fuel Shortages……
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 subsidy
Emerging of “Energy Insecurity” throughout the country

4. Fuel Shortage…..
People are in long line to buy kerosene in Surabaya (East Java), Solo (Central Java) and Pontianal (West Kalimantan).
Picture for Surabaya and Pontianak was taken on August 24, 2008, and for picture for Solo took in 2006.

5. People in lining for LPG in Bangka island (Sumatra) (taken 18 June 2008).
Thousands of motor bike are in lining in the pump in Banjarmasin (South Kalimantan), in lining to fill gasoline (16 June 2008)

6. Lights Out….
Power shortages have occurred more frequent and widespread to all region since 1997 economic crisis.
Increasing number of critical system (shortage of supply) areas
Power 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

7. Policemen are installing generator set for traffic light in Jogjakarta to anticipate rolling blackout (taken in 24 July 2008)
A primary school student in Banjarmasin (South Kalimantan) is studying under kerosene lamp. PLN had rolling blackout in Banjarmasin (taken in 12 Feb 2008)

8. Measuring Energy Security (1)
APERC’s Energy Security Indicators:
Diversification of energy supply sources;
Net energy import dependency;
Non-carbon based fuel portfolio;
Net oil import dependency and Middle East oil import dependency.
Source: APERC, 2007

9. Measuring Energy Security (2)
Derivative of issues:
dependency on Fossil Fuel (Oil and Natural Gas)
deteriorating energy infrastructure
policy & institutional coordination to enhance energy security in domestic level
Climate change control: GHGs mitigation

10. Primary energy dominates by fossil fuel
1970
Oil : 88%
Natural Gas: 6%
Coal: 1%
Hydro: 5%
Geothermal: 0%
2006
Oil : 47%
Natural Gas: 22%
Coal: 23%
Hydro : 2%
Geothermal: 5%
Between 1970 – 2006, primary energy grow by 8% in average
Oil is no longer dominate primary energy supply but it share still consider high and likely to continue in the next few decade
Both natural gas and coal shares have increased drastically in last two decades
Non-fossil energy grow very modest
Source: DGEEU, 2005, MEMR, 2007

11. Huge potential of renewables but….
Energy Sources
Potential 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
Traditional biomasss placed second in the final energy consumption. Modern biomass for fuel has not yet well developed.
Geothermal potential can be reached up to 100,000 MW in addition to current potential resources, if medium and low temperature geothermal are counted.
Source: MEMR 2007

12. Conventional energy resources are limited
Potential
Proven
Reserve (R)
Production (P)
R/P
Ratio (years)
Crude oil
56.6 billion barrels
8.4 billion barrels
348 million barrel 24
Natural gas
334.5 TSCF
165 TSCF
2.79 TSCF 59
Coal
90.5 billion ton
18.7 billion ton
215 million ton 86
Coalbed Methane
453 TSCF -
Source: MEMR (2008)

13. Becoming net oil importer
Source: EIA (2006)

14. Leading in natural gas export
Source: EIA (2004)

15. The world's no. 1 coal exporters
Source: Coal Business Association (2008)

16. Energy exporter and importer
Export of Primary Energy
Export of Final Energy
Source: MEMR 2007

17. Import of Final Energy
Export of Final Energy
Source: MEMR 2007

18. Challenge to Energy Security (1)
Oil and Natural Gas dependent
High 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).

19. Challenge to Energy Security (2)
Insufficient and Deteriorating of energy infrastructure
Oil infrastructure
Lack of refinery capacity: aging refinery capacities, no additional plant since mid 90s,
Lack oil storage and distribution networks
More than 40 percents import oil to supply domestic oil demand.
Unreliable distribution systems and expensive distribution cost.

20. Challenge to Energy Security (3)
Cont
Natural Gas infrastructure
Poor domestic gas infrastructure in Java
Gas shortages for electricity and industry
Coal infrastructure
Insufficient coal terminal
Deficiencies of coal transport system
Electric power generation and T&D network
Shortages in power generation
Deteriorating condition of Java-Bali interconnection
Bottleneck of transmission network
Saturated distribution network (in Java)

21. Challenge to Energy Security (4)
Policy framework and institutional coordination
Decentralization 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

22. Challenge to Energy Security (5)
Climate change control: GHGs mitigation
External pressure to energy trading policy and priorities
Voluntary commitment along with international negotiation
Opportunity from carbon market

23. Some implication
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

24. Enhancing Energy Security
Establishment of a comprehensive energy policy framework & strengthening institution’s coordination
Long term energy resources management
Building 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
nerg

25. energy Inderdependence in the region
Possible but……
“my country first” paradigm
Demanding costly physical infrastructure (e.g. trans ASEAN natural gas pipeline, trans ASEAN electricity grid)
Different among countries:
market mechanism (e.g. pricing policy)
environmental standard
energy technology deployment
Who control the energy resources?

26. Conclusion (1)
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.

27. Conclusion (2)
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.

28. Thank You
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. indonesia.org, website: