Investing in Indonesian Oil and Gas!
Indonesia is facing an energy crunch! a look at the issues facing investors in the country’s oil…
- Is Indonesia running out of oil?
Current trends are suggesting that all Indonesian crude oil production could cease by 2020, if no new fields are found. In 2007, BP estimated that the country had proven oil reserves of 4.37 billion barrels and potential reserves at 4.5 billion barrels, with a similar quantity still to be discovered.
- Indonesia’s Oil Consumption
Indonesia is facing a widening gap its domestic oil production and consumption, despite government efforts to reverse this trend. Oil consumption has jumped from 1,045,000 barrels per day in 2004 to 1,564,000 in 2010. As a result, Indonesia since 2004, has become a net importer of oil, which led it to suspending its membership of OPEC.
- Indonesian Refinery Pipedreams
Indonesia’s refinery and pipeline network has for over a decade, faced an investment drought. Its state operated refinery and pipeline network had seen little significant investment in the years between 1994 and 2006. It was 1994, that Pertamina opened its last new oil refinery.
- Indonesian Gas to Peak in 2012
Indonesian gas production is set to grow from 72bcm in 2009 to a peak of 89bcm by 2012, before slipping back to 87bcm by 2019. It has been estimated by Ministry of Energy and Mineral Resources that total proven gas reserves are put at 94 trillion cubic feet, with a similar quantity still to be discovered. At present rates of production, industry insiders are estimating that natural gas resources could be exhausted by 2030, unless new gas fields are discovered.
- Domestic Gas Market Changes
Despite gas output expected to climb from 72bcm in 2009 to 87bcm by 2019, Indonesian gas exports are set to decline. This is because of increasing domestic gas usage. Domestic demand is planned to grow, because of the implementation of a government oil substitution policy, which seeks to reduce oil usage in the Indonesian economy.
- Indonesia Gas Exports
In 2005, Indonesia was the world’s leading LNG gas exporter, today it is the third largest behind Malaysia, with Qatar in first place. Today, gas exports share is 48% of total gas output. It is expected that gas exports are set to climb from 35.67 bcm in 2009 to 46.0bcm in 2012, before dropping to 24.2bcm by 2019.
- Java’s Gas Supply Problems
Java is the economic heartland of Indonesia and it is where vmost of the demand for domestic gas is located. The island only has 8 TCF of gas reserves, insufficient to meet Java’s growing needs.