indonesia

Nonetheless, the energy sector will continue to play an important role in the Indonesian
economy. Despite declining oil production, 4 Indonesia remains a net energy exporter and is a
large producer and exporter of natural gas, coal, and palm oil, with its largest export markets
including China, Japan, Singapore, South Korea, and the United States. Increasingly, however,
these resources are being routed for the domestic market to keep pace with rising domestic
demand for energy, which is projected to triple by 2030. 5
Current Energy Supply and Demand Picture
As noted above, Indonesia remains a major fossil fuel producer and net exporter of energy.
In 2013, it was the 24th-largest crude oil producer in the world, accounting for 1% of global
production. 6 Indonesia is also a significant global producer and supplier of coal, natural gas, and
palm oil:
• Coal. Indonesia is currently the largest exporter of thermal coal and the fourth-largest coal
producer globally. 7 In 2013, it produced 489 million tonnes (Mt) of coal and exported 329 Mt. 8
• Natural gas. In 2013, Indonesia was the fourth-largest exporter of liquefied natural gas (LNG)
and the tenth-largest producer in the world. In 2013, it produced 78.8 billion cubic meters
(bcm) of LNG and exported 34.8 bcm. 9
• Palm oil. Indonesia is the largest producer and exporter of palm oil in the world. In 2014,
it produced 31 million metric tons (mmt) of palm oil and exported 20 mmt. Indonesian
production of crude palm oil represents approximately 50% of total global production. 10
Energy and mining commodities constitute a significant percentage of export revenue, with
coal and gas being the largest contributors, accounting for approximately 27% of total export
revenue. 11 Indonesia’s role as an energy supplier has begun to shift, however, as the country
increasingly directs more resources toward domestic consumption to meet rising demand. This
trend could affect future supply to energy trading partners.
According to a recent report by the International Energy Agency, the power sector will be the
major driver of energy demand growth in Indonesia. 12 Despite having an abundance of different
energy sources, Indonesia currently has an electrification ratio of only 80%, which means that
20% of the population lives without access to electricity. To put this in context, Indonesia’s
neighbors in the Association of Southeast Asian Nations (ASEAN)—namely Singapore, Malaysia,
Brunei, Thailand, and Vietnam—all have 100% electrification. The next section will examine the
government’s plan for addressing this gap between electricity supply and demand, as well as the
overall challenge of rising domestic energy demand.
4 Indonesia became a net importer of oil in 2004 and suspended its membership in the Organization of the Petroleum Exporting Countries
(OPEC) in 2008.
5 IEA, Indonesia 2015, 26.
6 Ibid., 19.
7 Thermal coal or steaming coal is burned for steam to run turbines to generate electricity.
8 IEA, Indonesia 2015, 71.
9 Ibid., 39.
10 “Palm Oil,” Indonesia Investments, October 15, 2015, http://www.indonesia-investments.com/business/commodities/palm-oil/item166.
11 Edi Saputra, “The Real Cost of Indonesia’s Commodity Export Restrictions,” Jakarta Post, June 8, 2015.
10
NBR
12 IEA, Indonesia 2015, 40.
SPECIAL REPORT u DECEMBER 2015