Foreign investors seeking to operate in Indonesia’s oil and gas sector are exposed to certain conditions and requirements. This section provides a brief explanation of the permits, joint cooperation contracts and the tendering process involved.
As it seeks to reduce Indonesia’s dependence on fossil fuel imports, the government has little choice but to rewrite some of its rules in the oil and gas sector. Companies offering equipment and services are set to be among the main beneficiaries.
Growing energy demand and manufacturing activities are creating investment opportunities in Indonesia’s downstream oil and gas sector. This section looks at the latest development within the downstream sector of the industry.
President Joko Widodo on 17th November 2014 formally implemented his government’s much-anticipated plan to raise the price of subsidized fuel by 2,000 IDR per litre. Attention is now rightly being paid to industries most affected by this reform and its impact on the business landscape.
Underinvestment has hampered progress in Indonesia’s oil and gas industries since the Asian financial crisis in 1998. This section looks at the ongoing challenges as well as opportunities being faced in the upstream sector.
The notion that Indonesia could become a net importer of natural gas by 2020 may seem absurd because it has the eighth largest proven gas reserves in the world. Despite this rich endowment, Indonesia could yet be facing net gas shortages by the end of the decade.
Indonesia since 2009 has required contractors of energy service projects to source a proportion of its components from local manufacturers. This policy has over the years been subject to revision and supplementary regulations that now place an even greater onus on companies to work with domestic providers of engineering services
Contribution to GDP: 11% (Q3 2015)
Oil & Gas Imports: $22.8 billion USD (Jan-Nov 2015)
Proven Oil Reserves: 3.7 billion barrels (2015)
Proven Gas Reserves: 101 trillion cubic feet (2015)
Proven Coal Reserves: 28 billion tonnes total reserves (2015)
Proven Potential in Geothermal Energy: 29 GW
Proven Potential in Hydropower: 75 GW
Other Energy Sources: Coal Bed Methane, Biomass, Waste, Ocean Current, Solar, Wind.
Current Energy Mix: Petroleum 41%, Coal 30%, Natural Gas 23%, Renewables 6% (2014).
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Bahana Securities Analysis: Indonesia Macro: Oil Boon