Exploration for oil in Indonesia dates back to 1871, with the first commercial production beginning in 1885, although most of its natural resources remained untapped until Indonesia gained its independence and became a Republic in 1945.
In the first half of the 20th century, three groups of merged companies under foreign ownership dominated exploration and production: Shell/BPM, STANVAC, and Caltex.
With independence following WWII, the oil, oil fields, refineries and supplies seized by the Japanese invasion force were returned to the Indonesian Government, and the new era of Indonesian energy exploration and production began.
The State Constitution of 1945 decreed that "All of Indonesia's land, water and natural resources are controlled by the State and will be utilized for the greatest benefit and welfare of its people."
In the Asia Pacific region, Indonesian oil production is second only to China, and its gas production is second to none.Indonesian oil production is second only to China in the Asia Pacific region. Hold that thought.
Bloomberg/Rigzone is reporting that Indonesia is a) now ready to re-join OPEC after voluntarily leaving the organization many years ago; and b) hopes the price of oil stays low. Say what? Indonesia hopes the price of oil stays low, and yet Indonesian oil production is second only to China.
It turns out that Indonesia consumes twice as much oil as it produces:
Indonesia is projected to produce 850,000 barrels a day this year, according to a Nov. 13 report from the International Energy Agency. That’s about 789,000 less than it consumed last year. Only Libya, Ecuador and Qatar produce less among OPEC’s member states.
In October 2014, Indonesia gave up on a target of restoring output to 1 million barrels a day. Crude output has dropped more than 50 percent since the mid-1990s as shifting regulations and complicated permits deter investments in new fields.Despite all the verbiage, I was unable to follow the reasoning why Indonesia returned to OPEC.
So, now let's take a more in-depth look at Indonesia's energy situation, going from a net exporter to a net importer in s a very short period of time. Some data points from the EIA:
Population -- 4th most populous nation in the world:
- of inadequate infrastructure; and,
- a complex regulatory environment
- matching energy supply in the eastern provinces with demand centers in Java and Sumatra;
- urbanization and demand in other areas of the country are rising at a faster pace than energy infrastructure development
After suspending its OPEC membership seven years ago, Indonesia is scheduled to rejoin the cartel by 2016 as the country attempts to secure more crude oil supplies for its swiftly rising demand and greater investment from Middle Eastern members in its downstream infrastructure projects.So, in the meantime:
- world's largest exporter of coal by weight
- 5th-largest exporter of LNG (2014)
- grew by 43% between 2003 and 2013, according to the Indonesian government
- the country's petroleum share, although decreasing, continues to account for the highest portion of Indonesia's energy mix at 38% in 2013
- in the past decade, coal consumption more than doubled, surpassing natural gas consumption and becoming the second most consumed fossil fuel as Indonesia turned to less expensive sources of indigenous fuels
It's somewhat "funny" to re-read the EIA note about Indonesia -- many of their problems sound similar to those of the US (and many of them are self-imposed)
- geographical challenges of getting production from the west to consumers in the east
- inadequate infrastrucutre
- complex regulatory environment (tell me about it -- the US "regulatory" environment killed the Keystone, and will probably kill the Sandpiper)
- China: 1.4 billion and growing slowly
- India: 1.3 billion and growing quickly
- US: 320 million and growing
- Indonesia: 250 million and growing quickly
- Russia: 143 million, leveling off
- Turkey: 75 million
- France (66 million), Germany (80 million), England (53 million): 200 million