Indonesia: The future lies in energy

Indonesia: The future lies in energy

Lello Stelletti
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The country is increasingly turning to explorations in the gas sector, the construction of refineries and power plants, the development of energy infrastructure and the promotion of renewables. Discussing this with us is Indonesia's Deputy Minister for Infrastructure, Ridwan Djamaluddin

Energy is a priority industry for Indonesia. Indonesia’s Deputy Minister for Infrastructure, Ridwan Djamaluddin, in fact ensures us that the country has intensified its exploration activities in the gas sector and is increasingly focusing on renewables, to the point of bringing them into the national industrial program. Energy, explained Djamaluddin, "is the main tool for ensuring development. This means that our government will focus resources deriving from the exploitation of natural resources in order to achieve an increase in production." Moreover, with funds of approximately €2 billion from the Asian Development Bank, obtained for the construction of infrastructure, Indonesia aims to "promote the construction of power plants, since we realize that the development of the sector is of prime importance to the country."

The Pacific region is one of the "new frontiers" in the development of the energy industry, especially for the oil and gas industries. What is Indonesia's role?

The development of the Pacific region is one of Indonesia’s priorities. Precisely for this reason, my country has intensified its exploration activities in the gas sector, calculating the availability and cost to the industries that the development of this sector entails. For us, however, the entire energy industry is a priority and, for this reason, Indonesia has also started to promote the renewable energy sector, in order to add it to the center of the national industrial program.

Indonesia is a member of OPEC, the Organization of Petroleum Exporting Countries which, as demonstrated by the summit held on June 2, 2016 in Vienna, has been unable to reach an agreement to regulate oil prices. How does your government plan to deal with this situation?

Firstly, I would like to emphasize that Indonesia has done its best to deal with the fluctuations in the energy market prices. Energy is the main tool for ensuring development, meaning that, in the current situation, our government will focus its resources deriving from the exploitation of natural resources in the industrial sectors, especially in the manufacturing sectors, in order to achieve an increase in production. I would however like to mention that Indonesia represents a market of 260 million people and can rely on an abundance of natural resources. The country in fact ranks eleventh in the world in terms of natural gas reserves, and first in terms of geothermal sources.

Which, in your opinion, are the most interesting opportunities that the country offers foreign investors, particularly in the energy infrastructure sector? And in which sectors?

The government in Jakarta has adopted new priorities focused precisely on infrastructural development and on the need to encourage investments. Our hope is to be able to make it more convenint for those interested in investing in Indonesia to do so. The government is focused on creating jobs and infrastructure, to solve the problem of the major differences that our country has within it, on both a demographic and social level. The refineries sector is, currently, the most interesting sector in terms of development. Indonesia has set a plan for the construction of a new refinery and for the restructuring of another 2 that already exist. However, it is necessary to improve the ability of companies to build new plants. The government promotes the participation of local and national companies in these projects, in order to then also generate opportunities for development at a local level. It is clear that, in a context of uncertainty caused by the fall in the costs of raw materials, we are also focusing on renewable energies. The goal is to reach a share of 23% of production, by investing in projects in the alternative sources branch. Next year, the focus will be on gas and energy savings, but for the future we hope for a greater development of these new types of energy sources.

Liquefied gas is currently exported to Japan, South Korea and Taiwan: what are the possibilities of further developing the infrastructure in this sector?

A country like Indonesia offers great opportunities for the development of energy infrastructure, not only along the coasts of the province of East Kalimantan, but also in other regions of the country. Currently, most of the investments - both domestic and foreign - are focused on the island of Java and, therefore, we are committed to redistributing resources, in order to ensure a balanced development of the country as a whole. We are advancing the efficiency of existing structures, while at the same time promoting greater attention to the companies willing to invest in our country.

Over the course of this year Indonesia will receive funding of approximately €2 billion from the Asian Development Bank (ADB) for the construction of infrastructure. To which projects will these funds be allocated?

I think that the main thing is to promote the construction of power stations, since we realize that the development of the sector is of primary importance to the country. Companies, in this sense, are interested in carrying out projects in the sector and the government will push new plans to increase the development of infrastructure.

Indonesian President Joko Widowo last year launched a fiscal policy program aimed at creating jobs, building infrastructure and accelerating investments for development. What opportunities does this plan provide for the energy industry?

The government is implementing a fiscal policy plan aimed at creating new jobs, developing infrastructure and improving investments: a plan that Indonesian President, Joko Widowo, launched in 2015. The most interesting opportunities are, perhaps, those offered by the renewable energy sector, which may undergo a major development, ensuring the creation of new jobs. The funds provided by the national program can then be used for producing energy and for developing the industry’s infrastructure.