Global Business Guide Indonesia

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Joint Ventures | Business Services
RMI Group
Mr Rohmad Hadiwijoyo

Mr Rohmad Hadiwijoyo

gbg

PT RMI was established in 1970 initially in the oil and gas industry. The company now focuses on geothermal energy drilling and CO2 purification. What have been the main strategies behind the development and diversification of the company?

Mr Rohmad Hadiwijoyo

The past three decades I consider to be made up of three eras. From 1980-90 it was the trading era, 1990-2010 it was the era of information technology such as the iPad, blackberries whereby information has become king. I foresee that 2010-2025 is the era of global warming as people are talking about the environment and recycling. So this is why at RMI we changed our strategy in 2005 from oil services to clean renewable energy. I was one of the first companies in the country to convert the smoke of the steel mill industry by capturing and purifying it to use it for carbonisation of soft drinks. Coca-Cola now buys 33MET per day of this. We also provide dry ice for cold storage using the CO2 from the purification process. This is the future for Indonesia and the world as there are so many factories burning waste CO2 while there are so many useful applications for it.

In terms of geothermal energy, Indonesia has 27,000 MW of potential, but has only 1,100 MW in operation under Star Energy, Chevron and Pertamina Geothermal. With 26,000 MW still to be exploited, RMI can provide the latest technology for the rigs; we already provide it to Star Energy. The sector holds huge potential and the future is there.

gbg

Despite Indonesia’s potential in geothermal energy, its development has been slow with government regulations cited as the obstacle. In light of the Power Purchasing Agreement with PLN, what more needs to be done to attract investment to the sector?

Mr Rohmad Hadiwijoyo

The problem is that the initial investment is very high, but once you invest it is a one off large scale investment. When you run a power plant using fossil fuels or coal; when the oil price goes up, the price of the energy goes up. With geothermal energy the price remains flat so political issues in countries in the Middle East do not impact on your pricing. Yet, the banks are only looking at conventional energy methods that they are familiar with. They are not putting sufficient investment into renewable energy. The local government and the banks do not want to finance the exploration to test the wells and see if they can find sustainable sources of steam. We still need investors in the geothermal sector, as locals here are not prepared to put in the investment. At RMI we offer support to this sector through offering drilling services and being prepared to cover the initial risk.

The synergy between PLN and the local government is also very difficult. Local government regulations have become a nightmare for investors as there is so much bureaucracy and the laws are not always clear.

gbg

PT RMI is an example of a successful technological cooperation between an Indonesian company and foreign counterparts. What else can you tell us about how you cooperate as a local partner?

Mr Rohmad Hadiwijoyo

We have been partnering with international companies for over 25 years, for drilling we have a partnership with Parker drilling. This partnership is necessary as they are more advanced than us in terms of technology and financing. We provide the local support and knowledge of how to put the right people in the right projects. We have also partnered with Talis of France and McConnaught from Australia in the field of construction. For the future we believe that by staying local you cannot advance, so partnerships will always be a necessity.

gbg

What new services does RMI Group plan to offer in the future?

Mr Rohmad Hadiwijoyo

There are numerous uses for the CO2 that we purify. For example, when you drill for oil, afterwards there is left over residue and in order to extract this oil a steam injection is often used. However, by injecting CO2 into the oil, the gas burns off and you are left with only the oil. It can also be used as dry ice for cold storage and this is useful for urban storage in the seafood trade for example. Previously, selling Indonesian shrimp to Japan was a problem as normal ice was being used that would then melt and damage the product. With dry ice you do not have this problem. Considering the huge potential for seafood exports from Indonesia, cold storage facilities are needed in the country’s secondary cities such as Surabaya and our technology is planned to be used there.

Global Business Guide Indonesia - 2011

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