By George Barber
This is an article that I wrote recently that was published in the Jakarta Post on 31 July 2017.
There can be no doubt about the potential of Indonesia’s Energy Potential, although potential is exactly what it is. There can also be no doubt that there is a lot happening outside of the main energy sectors that are well known, i.e., oil, gas, geothermal, hydropower, some companies are going quietly about their business and trying to develop extremely complicated fields, not so much in the resource aspects, but in the geological and environmental aspects as well as the community and battling away at the regulations.
All resource developments have their own unique challenges, especially resources that are located offshore or in onshore remote parts of this divest archipelago, most people in the resource industry accepts these challenges, these challenges can and must be met head on as part of the stages to reach the end goal, which is delivery of a resource to the end user which is commercially viable as well as ensuring that the local community’s and the county benefits.
There have been three articles published in the Jakarta Post recently that have caught my eye as follows: “Rising fuel imports stifle Pertamina”, “RI lags behind peers in renewable energy”, “ExxonMobil exit warning of waning oil, gas industry”. Surely these three headlines alone say something? Another headline stated, “Geothermal power requires incentives”. There was a publication from the Indonesian Petroleum Association (IPA) for the 41st IPA that indicated that the number of licenses required for oil and gas development had increased from 341 in 2015 to 373 in 2017 with the main increases coming from MEMR 74 (52), Transportation Ministry 76 (58), Navy 9 (2), only 4 ministries/agencies from 19 had decreased their requirements, some remained the same.
We have seen recently several companies’ that have decided enough is enough, company’s such as Marathon, Andarko, Hess and now ExxonMobile, all of these companies and more have worked in what is considered far more difficult countries to develop a business, such as Nigeria which appears to be coming more attractive than Indonesia. Every country has its ups and downs, although in Indonesia we have been seeing a steady decline of the oil & gas industry in Indonesia for many years, we can also argue the same for the mineral resource sector, the geothermal sector is struggling to gain momentum. Why is this when a country has such potential, not just with its abundance of natural resources, but also human resources?
I was making a presentation the other week to an Indonesian oil company where I was asked what is delaying you getting projects in Indonesia, my answer was, “Do you really want to know”, he said yes, I mentioned several points which included acceptance of new technology, regulations, afraid to make decisions, other comments I cannot mention in the media, they returned my reply with agreement and also added a few other comments which were not complimentary to the regulators. It appears that Indonesian companies also have difficulties working in their own country.
Therefore, the question that has to be asked is: does Indonesia want to develop its own resources? We can see in some areas they do, such as wind and tidal power, solar power not so much, in other areas such as oil & gas it appears that the easy way is to import, which appeared to be the scenario given at the opening ceremony of the 41st IPA conference in May, hence the headline “Rising fuel imports stifle Pertamina”.
A recent study by The Habibie – Center said that the region lacks experience and expertise in capital-intensive renewable energy projects; maybe this is true, although you only gain experience by doing. Believe it or not, there are a lot of companies and people that want to help Indonesia, (not all for financial gain only), with the intent of doing business professionally and fairly, which also involves helping to solve the problem of expertise. All projects have to have local content, training must be given and allowed for in the cost of a project, not driving the price down so much that this area is reduced where the first thing that is cut when something goes wrong is training. Indonesia is extremely blessed with human resources, which in my experience, they are very efficient and in many cases can stand side-by-side with s other countries who claim to be experts at everything. So what is the problem, is it regulations?, partly yes, if we look at the intended Production Sharing Contract (PSC), it appears that very few investors and people in the industry are jumping over the moon about this, we all know that industries do not like change, but what is known, if the change is outstanding, the vast majority of industry leaders would accept this as a good idea, which makes one wonder if the PSC is a good idea in its current form, does it need more work on this to make it attractive?
The following statements were made by Pak Arie Rahmadi (BPPT), “Inconsistent regulations combined with long payback periods”; and “we change regulations on renewable energy quite often”. Why are regulations inconsistent and changed quite often? If they are good regulations, they only need fine tuning, not re-writing. Regulations should move with the times, we should not be making regulations for change sake, although this appears to be a worldwide problem with people in power at this time. If it is not broken, why fix it, preventive maintenance is needed only.
A headline in the Jakarta Post 25 July, “The President tells ministers to support business”, this article was prepared before this date. What the President stated is what is being stated in this article He also stated that the gross-spilt scheme lacks incentives, companies have said it does not have clear tax calculations.
Decision makers need to make decisions that are beneficial for the country and the investors, not be afraid to make decisions that may make them unpopular, after all, life is not a beauty contest.
*This article was first published by George Barber and is reprinted here with full permission from the writer.
**About the Writer:
George, Director at PT Indonesia, has lived and worked in South East - Indonesia for the past 24 years, and is presently involved with innovative exploration for natural resources throughout South East Asia.
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The global oilfield scale inhibitor market was valued at USD 509.4 Million in 2014 and is expected to witness a CAGR of 5.40% between 2015 and 2020. Factors driving the market of oilfield scale inhibitor include increasing demand from the oil and gas industry, wide availability of scale inhibitors, rising demand for biodegradable and environment-compatible scale inhibitors, and so on.
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The oilfield scale inhibitor market is experiencing strong growth and is mainly driven by regions, such as RoW, North America, Asia-Pacific, and Europe. Considerable amount of investments are made by different market players to serve the end-user applications of scale inhibitors. The global market is segmented into major geographic regions, such as North America, Europe, Asia-Pacific, and Rest of the World (RoW). The market has also been segmented on the basis of type. On the basis of type of scale inhibitors, the market is sub-divided into phosphonates, carboxylate/acrylate, sulfonates, and others.
Carboxylate/acrylic are the most common type of oilfield scale inhibitor
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RoW, which includes the Middle-East, Africa, and South America, is the most dominant region in the global oilfield scale inhibitor market
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Major players in this market are The Dow Chemical Company (U.S.), BASF SE (Germany), AkzoNobel Oilfield (The Netherlands), Kemira OYJ (Finland), Solvay S.A. (Belgium), Halliburton Company (U.S.), Schlumberger Limited (U.S.), Baker Hughes Incorporated (U.S.), Clariant AG (Switzerland), E. I. du Pont de Nemours and Company (U.S.), Evonik Industries AG (Germany), GE Power & Water Process Technologies (U.S.), Ashland Inc. (U.S.), and Innospec Inc. (U.S.).
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Headline crude prices for the week beginning 9 December 2019 – Brent: US$64/b; WTI: US$59/b
Headlines of the week
In the U.S. Energy Information Administration’s (EIA) International Energy Outlook 2019 (IEO2019), India has the fastest-growing rate of energy consumption globally through 2050. By 2050, EIA projects in the IEO2019 Reference case that India will consume more energy than the United States by the mid-2040s, and its consumption will remain second only to China through 2050. EIA explored three alternative outcomes for India’s energy consumption in an Issue in Focus article released today and a corresponding webinar held at 9:00 a.m. Eastern Standard Time.
Long-term energy consumption projections in India are uncertain because of its rapid rate of change magnified by the size of its economy. The Issue in Focus article explores two aspects of uncertainty regarding India’s future energy consumption: economic composition by sector and industrial sector energy intensity. When these assumptions vary, it significantly increases estimates of future energy consumption.
In the IEO2019 Reference case, EIA projects the economy of India to surpass the economies of the European countries that are part of the Organization for Economic Cooperation and Development (OECD) and the United States by the late 2030s to become the second-largest economy in the world, behind only China. In EIA’s analysis, gross domestic product values for countries and regions are expressed in purchasing power parity terms.
The IEO2019 Reference case shows India’s gross domestic product (GDP) growing from $9 trillion in 2018 to $49 trillion in 2050, an average growth rate of more than 5% per year, which is higher than the global average annual growth rate of 3% in the IEO2019 Reference case.
Source: U.S. Energy Information Administration, International Energy Outlook 2019
India’s economic growth will continue to drive India’s growing energy consumption. In the IEO2019 Reference case, India’s total energy consumption increases from 35 quadrillion British thermal units (Btu) in 2018 to 120 quadrillion Btu in 2050, growing from a 6% share of the world total to 13%. However, annually, the level of GDP in India has a lower energy consumption than some other countries and regions.
Source: U.S. Energy Information Administration, International Energy Outlook 2019
In the Issue in Focus, three alternative cases explore different assumptions that affect India’s projected energy consumption:
EIA’s analysis shows that the country's industrial activity has a greater effect on India’s energy consumption than technological improvements. In the IEO2019 Composition and Combination cases, where the assumption is that economic growth is more concentrated in manufacturing, energy use in India grows at a greater rate because those industries have higher energy intensities.
In the IEO2019 Combination case, India’s industrial energy consumption grows to 38 quadrillion Btu more in 2050 than in the Reference case. This difference is equal to a more than 4% increase in 2050 global energy use.