Easwaran Kanason

Co - founder of NrgEdge
Last Updated: September 14, 2018
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Business Trends

The Indonesian state oil firm now has its third CEO in two years, as Nicke Widyawati was confirmed as the new CEO and President Director of the company last week. Widyawati – the second female head of Pertamina after Karen Agustiawan – replaces Elia Massa Manik, who himself replaced Dwi Soetjipto in February 2017. In ascending to the top post, Widyawati is an example of female empowerment in Indonesia, but the position itself is a bit of a poisoned chalice. How long will she last?

Widyawati’s predecessor Manik came in with the best of intentions – promoting transparency and promising to overhaul Pertamina’s creaking upstream and downstream operations. He mostly failed, perhaps not through a lack of willpower but political reality, where the government is caught between a quixotic need to promote a nationalistic policy on resources yet in dire need of foreign investment. Worse, the state has no patience, demanding immediate results. An energy industry in terminal decline requires a long time to turnaround, and balancing that with the government’s demands will be Widyawati’s greatest challenge.

What has Pertamina achieved over the past week years? Well, there is some sign of progress – after repeatedly reaching out and rebuffing investors over refining downstream investments aimed to reducing a chronic dependence on fuel imports, some small steps forward seem to be emerging in the Bontang, Cilacap and Tuban projects, partnering with Saudi Aramco, Rosneft, Oman Oil and Cosmo Oil. That isn’t enough to please the government, though, which is dealing with a downward spiral of the Indonesian rupiah that has prompted several dramatic measures – including the immediate adoption of a hard B20 biodiesel mandate to reduce imports of gasoil and boost consumption of domestic palm oil.

In upstream, however, the trajectory is definitely backwards. Indonesia is moving in an alarming direction of resource nationalisation, scuppering plans to make its upstream sector friendlier to foreigners. Since 2015, any PSC involving international companies have been handed back to Pertamina, or at the very least seen Pertamina’s share increased. The government believes that by increasing Pertamina’s share, more crude will be made available for domestic refining. That logic works in the short term, but in the long term is scaring off firms like Total, Chevron and ExxonMobil, who not only contribute valuable capital, but also the technical know-how that Pertamina lacks.

The Rokan and Mahakam blocks have already been handed back to Pertamina and last week, the state announced that all oil contractors must sell their entire crude output to Pertamina, effectively blocking them from exporting any oil. The aim is to support the weakening rupiah and reduce imports, but the longer term damage to the confidence and health of the industry could be affected badly. Nicke Widyawati may be proving that the Indonesian glass ceiling has been smashed through, but expectations are high and demands unrealistic. Don’t be surprised if Pertamina receives another CEO next year.

A recent timeline of Pertamina CEOs:

- September 2014: Karen Agustiawan resigns as CEO

- November 2014: Dwi Soetjipto appointed CEO for the period 2014-2019

- February 2017: Dwi Soetjipto fired as CEO, Elia Massa Manik appointed interim CEO

- Marchj 2017: Elia Massa Manik confirmed as CEO

- April 2018: Elia Massa Manik sacked, Nicke Widyawati appointed interim CEO

- August 2018: Nicke Widyawati confirmed as CEO

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CEO pertamina Nicke Widyawati Elia Massa Manik indonesia leadership management
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EIA analysis explores India’s projected energy consumption

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.

gross domestic product of selected countries and regions

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.

total energy consumption in selected 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:

  • Composition case: EIA assumes India’s economy shifts toward further growth in manufacturing, which increases energy consumption.
  • Technology case: EIA assumes India’s industrial technology does not advance as quickly as in the IEO2019 Reference case, resulting in greater energy use.
  • Combination case: EIA combines the assumptions in the Composition and Technology cases.

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.

December, 13 2019
U.S. onshore wind capacity exceeds 100 gigawatts

Cumulative U.S. installed onshore wind capacity exceeded 100 gigawatts (GW) on a nameplate capacity basis as of the end of September 2019, according to the U.S. Energy Information Administration’s (EIA) Preliminary Monthly Electric Generator Inventory. More than half of that amount has been installed since the beginning of 2012. The oldest wind turbines still operating in the United States came online as early as 1975.

installed wind capacity by state

Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory

As of the third quarter of 2019, 41 states had at least one installed wind turbine. Texas had the most capacity installed, at 26.9 GW, followed by Iowa, Oklahoma, and Kansas. These four states accounted for half of the total U.S. installed wind capacity.

In the United States, wind turbines tend to come online late in the year. Based on information reported in the Preliminary Monthly Electric Generator Inventory, EIA expects that an additional 7.2 GW of capacity will come online in December 2019. EIA also expects that another 14.3 GW of wind capacity will come online in 2020. If realized, the United States would have about 122 GW of wind capacity by the end of next year.

December, 13 2019
U.S. coal production employment has fallen 42% since 2011

The U.S. Energy Information Administration’s (EIA) Annual Coal Report shows that coal mining employment has declined in the past decade as coal demand has decreased. Most U.S. coal is consumed in the electric power sector and has faced increased competition from electricity generation from natural gas and renewable technologies. U.S. coal mining employment fell from a high of 92,000 employees in 2011 to 54,000 employees in 2018, with the most dramatic decrease in the Appalachian region.

Annual U.S. coal production peaked in 2008, three years before coal mining employment reached its record high. In 2008, the United States produced 1.2 billion tons of coal from 1,458 mines. Since then, coal production has fallen and many mines have closed: in 2018, U.S. coal production was 756 million tons from 679 mines. As was the case with employment, much of coal’s production decline was concentrated in the Appalachian region. More than half of the region’s mines have closed since 2008, and production has fallen from 390 million tons in 2008 to 200 million tons in 2018.

U.S. coal production by region

Source: U.S. Energy Information Administration, Annual Coal Report

Appalachian mines tend to be smaller than mines in the Interior and Western regions and to use labor-intensive underground mining techniques, as opposed to machinery-intensive longwall mining and surface mining operations. A slight increase in coal mining employment in the Appalachia region from 2016 to 2018 corresponded to an increase in coal exports because this region is the dominant source of coal shipped overseas.

The decline in operating mines has been steeper than the changes in employment and production. EIA’s review of operating mines showed that smaller mines have had greater difficulty competing in the current market and have been the first to close.

U.S. coal mining labor productivity

Source: U.S. Energy Information Administration, Annual Coal Report

As smaller, less productive mines were idled or closed, overall coal labor productivity, measured in tons per labor hour, gradually increased from 5.2 tons per labor hour in 2011 to 6.2 tons per labor hour in 2018. The large surface mines in the Powder River Basin (PRB) in Wyoming and Montana have much higher productivity, but even PRB productivity has declined as the region’s producing coal seams become deeper and the amount of overburden, or top soil and rock above the coal seam, increases.

In contrast, the Appalachia and Interior regions both have shown improvements in labor productivity between 2011 and 2018, largely because they are increasingly relying on less labor-intensive longwall and highwall mining systems and closing or idling the least productive mines.

Data from EIA’s Annual Coal Report are available in EIA’s Coal Data Browser. In addition to data from the U.S. Mine Safety and Health Administration, EIA’s Annual Coal Report also includes mine-level data from EIA’s Survey of Coal Production and Preparation and coal exports data from the U.S. Department of Commerce.

December, 12 2019