The Coordinating Minister for Maritime Affairs, Luhut Binsar Panjaitan, has spoken about his Ministry’s project blueprints after he assumed the position in the Ministry – which ranges from the sea tollways, as well as several energy-related projects.
“We have to set our priorities straight – if we’re not careful than there is a real chance that Indonesia will suffer from an energy shortage in the next few years,” said Luhut following his speech at an energy security seminar at Bandung’s Institute of Technology in Bandung, on Saturday, August 13, 2016.
Luhut explained that the government is preparing a series of projects which aims to prioritise Indonesia’s domestic energy security. “We are exporting a vast amount of gas, it is as if that we have forgotten that the demand for gas in our domestic market is just as high,” said Luhut. “Perhaps, there was a mistake in calculating the demands, so an re-evaluation is definitely necessary.”
Luhut also said that the government is preparing a masterplan to reduce Indonesia’s gas exports to enable the government to meet its’ domestic demand better – which is hoped to create a spillover effect on Indonesia’s domestic industrial development. Existing, expiring contracts will be subject to a more stringent review, with priorities given to enable Indonesia to increase the volume of gas that is available for use within the domestic market.
Among the series of action plan that has been prepared is the construction of additional gas pipelines from the Natuna Bloc to Singapore, to enable regulators to divert some of the gases towards Batam. “We will be negotiating these proposals with the project’s stakeholders – including the authorities in Batam,” said Luhut.
Luhut also said that the development of other gas fields – such as the Masela Bloc – will also be re-oriented to allow more natural gases to prioritise domestic use. “There are no significant obstacles – that said, we want the stakeholders to know that domestic demands should be prioritised,” he said.
The President, continued Luhut, has instructed all parties should do their best to accelerate the construction and finalisation of new oil-and-gas refineries to decrease Indonesia’s dependence on imported fuel. “The President has quite angry by the fact that in the past two years, not a single oil refinery has been finished,” said Luhut. “I want these refineries to be up and running as soon as possible.”
According to Luhut, the lack of Indonesian oil-and-gas refineries has a domino effect on the prices of other commodities, principal among which are jet fuel – which is much cheaper to purchase in other ports such as Singapore. “There’s a multiplier effect. Indonesian jet fuel are so expensive that it acts as a disincentive for airlines to open up new routes,” he said. “Cheaper jet fuel has allowed Singaporean carriers to service as much as 300 destinations – at present, Indonesian carriers have only managed to serve around 50 destination due to the high cost of fuel,” he said.
The government is also planning to continue the 35.000 Megawatt Electricity Project, said Luhut – before adding thaf the details of the project are currently being discussed by the newly-apppinted Minister for Energy and Mineral Resources.
“We have instructed the Minister for Energy and Mineral Resources to look into the way the project is going to be completed,” said Luhut. “For example, should the government develop three separate blocs in the west, central, and the east – or should the government concentrate on the development of one bloc and construct transmission lines towards other areas like a hub and spokes model.”
“The quicker these details are set in stone, the better it will be for businesses,” added Luhut.
Furthermore, added the Minister, the President has instructed that powerplants with a production capacity lower than 50 mW must be built entirely within Indonesia. “It is possible – what’s needed is a more thorough evaluation about how the project will be carried out,” finished Luhut.