The Energy Balance is Very Important for the National Energy Grand Strategy

JAKARTA. The government is currently preparing a National Energy Grand Strategy focusing on strengthening energy policies for the welfare of the people. Indonesia as a developing country requires enormous energy.

Oil and gas are still the dominating energy sources in Indonesia, in addition to coal and renewable energy. Moreover, the government will develop natural gas as a clean energy source to balance the policy of reducing carbon emissions and increasing oil and gas production.

The Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif conveyed that apart from being an energy producer, the upstream oil and gas industry is also a driver of the national economy.

“The presence of the oil and gas industry in various places in Indonesia has encouraged the emergence of other economic activities in the region,” he explained in his remarks at the Opening of the 45th IPA Convention and Exhibition of 2021 titled “Realizing Indonesia’s Energy Vision – Post Pandemic”, Wednesday (1/9).

He said that the Government is finalizing the preparation of the National Energy Grand Strategy in which the two important agenda items, namely increasing oil and gas production and reducing carb on emissions, must be able to work in synergy.

Arifin also said that the government is optimistic about increasing oil and gas production through more massive and aggressive exploration and production activities, with a target of oil production of 1 million BOPD and gas of 12 BSCFD by 2030.

To achieve this target, all upstream oil and gas industry players are required to carry out extraordinary strategies as follows:

1. Maintaining the current production level through optimization of production in the existing field with good management practices; effective and efficient work program; the fast and effective transition of management of Work Areas, as well as reactivation of non-productive fields;
2. Transformation of Resources to Production, through monitoring and controlling of field development plan implementation, accelerating monetizatio
   n of undeveloped fields and non-conventional oil and gas development;
3. Acceleration of production in advanced stages, both secondary and tertiary recovery. The government encourages K3S to establish strategic cooperation with other parties who have competence and experience in the development and implementation of EOR;
4. Improvement and acceleration of exploration. The government continues to encourage increased acquisition and improvement of oil and gas data quality in an integrated manner, to support upstream oil and gas exploration and investment activities.

To support this energy balance, the government has a strategy by developing natural gas production for various sectors including the electricity sector, gas pipelines, increasing LPG production, and strengthening natural gas terminals and infrastructure. “The oil and gas industry must be able to become an economic locomotive,” he explained.

He said natural gas will be a new energy source, along with others. The government is currently encouraging the use of natural gas by constructing pipelines in various regions including Sumatra and converting power plants to natural gas with a capacity of 1.6 GW in several locations. In addition, the government encourages the development of Chevron IDD and the Masela Block Abadi Field.

There are indeed some prevailing challenges to produce in oil and gas fields, so the government is making policies with incentives in several fields to encourage production. In addition, field expansion will also receive incentives.

Arifin emphasized that modeling processing technology can also increase oil and gas production. Equally important is the issue of mitigation and data integration with SKK Migas and the Ministry of Energy and Mineral Resources to obtain new resources that can be exploited later. Therefore, the government will auction six new work areas. In the future, the contract schemes will be more flexible and supportive of oil and gas investment.

That support will be applicable for contracts with cost recovery schemes, and also aggressive schemes, signature bonuses, and work commitments that will be supportive to investment. With these incentives, which are also supported by the Ministry of Finance and other ministries, it is hoped that the production target of 1 million BOPD and gas of 12 BSCFD by 2030 will be achievable.

Indonesia Gives Signals

Meanwhile, Deputy Minister of Finance, Suahasil Nazara views fossil energy and new renewable energy as going hand in hand aiming at the welfare of the Indonesian people. That Indonesia is currently discussing the issue of the carbon tax, it is not just a matter of increasing state revenue. “Indonesia wants to give a signal to the international community and the world about Indonesia’s new perspective in improving the welfare of the people,” he explained.

With the carbon tax, there will be discussions about trade and products, differentiating between low-emission and high-emission products. Of course, if a vehicle emits low carbon emissions, the tax structure will be different. “It will be based on emissions,” he said.

Meanwhile, Deputy Minister of the Minister of Environment and Forestry (LHK) Alue Dohong assessed that the Ministry of LHK and the Ministry of Energy and Mineral Resources already have a master plan for a national energy policy that is based on environmental resilience in 2050. “This has been established and this must be supported,” he said.

He said, his Ministry also has an annual emission target which will be realized in policies in the energy sector, while at the Ministry of Finance there will be fiscal policies to support this target.