indonesia

f i g u r e 1
Indonesia’s energy security challenges
Negative impacts to the environment
Low reliability of services
Low fuel quality
Acceptability
Declining oil production
Low reserves replacement ratio
Increasing imports (crude, products, LPG)
Limited exploration in foreign countries
Energy prices are not
affordable for some people
The government complains
about energy subsidies
Affordability
Energy equity problems
Sustainability
Under threat
due to dominance
of fossil fuels and
poor energy
conservation
Accessibility
Low electrification ratio
Access to natural gas is limited
Strong regional demand for fossil fuels
Export of coal is still increasing fast
Availability
Poor access to energy for people
living in remote areas, on small
islands, and near national borders
Long-term LNG and gas export contracts
No strategic reserves
s o u r c e : Ministry of National Development Planning (Indonesia), “Memperbaiki ketahanan energi
Indonesia: Rekomendasi strategi dan analisis” [Improving Indonesia’s Energy Security: Recommendations
for Strategy and Analysis], 2014, 6.
Availability
Given that Indonesia is considered to have some of the largest energy reserves in Asia, some
might find it surprising that the country has a severe availability challenge. Its availability problems
include rising import dependence, a low reserves replacement ratio, and limited exploration in
foreign countries.
Indonesia imports approximately one-third of its domestic refinery intake, and imports of
liquefied petroleum gas (LPG) are skyrocketing. According to forecasts, the country will become
the world’s largest importer of gasoline by 2020. 4 Indonesia was once the world’s largest exporter of
liquefied natural gas (LNG) and is still locked into long-term contracts to serve its LNG customers,
in addition to its exports of piped natural gas to Singapore and Malaysia. 5 The percentage of
50
NBR
4 Hanan Nugroho, “Indonesia: Asia’s Growing Energy Market,” Jakarta Post, February 11, 2014, http://www.thejakartapost.com/
news/2014/02/11/indonesia-asia-s-growing-energy-market.html.
5 International Energy Agency (IEA), “Southeast Asia Energy Outlook,” World Energy Outlook Special Report, September 2013, https://www.
iea.org/publications/freepublications/publication/SoutheastAsiaEnergyOutlook_WEO2013SpecialReport.pdf.
SPECIAL REPORT u DECEMBER 2015