
Power grid, Jakarta, Tanjung Priok, 2008
The Hawaiian Islands are one of the most geographically isolated island groups in the world. Though Hawaii is rich is sun, beaches, and tourists there are very few natural resources in the islands. There is no coal and no oil. In Hawaii to drive your car, to turn on the lights, to cool your home, to refrigerate your food means to be dependent on petroleum imports. From shirts to shoes, from pans to pantyhose, there is nothing here which is not touched by fossil fuels.
When I wake up and turn on my coffee maker or my computer I am immediately connected to Indonesia. How is that? And it is not because my wife is Indonesian.
According to Hawaiian Electric Company 29.8% of petroleum imported to Hawaii is used to make electricity. Out of the total petroleum imported to Hawaii, 30.7% comes from Indonesia.
To give you an idea of the energy costs here I pay about $128.00 US a month for electricity. Under the current exchange rate at the time I am writing that translates to about 1,179,775 IDR(rupiah) per month. Gas, bensin, is sold here by the gallon. Current prices at the pump in Hilo, Hawaii, are running about $4.50 a gallon or 41,475 IRD per gallon. There are 3.7 liters to the gallon so the price translates to about 11,209 IDR per liter. Not subsidized.
The current price of a twenty pound (9 kilos) bag of jasmine rice imported from Thailand is $47.00 US or just under 500,000 IRD.
Oil in Indonesia
From Indonesia Energy Data
During 2006, Indonesian oil production averaged 1.1 million barrels per day (bbl/d), of which 81 percent, or 894,000 bbl/d, was crude oil. Indonesia’s total oil production has dropped by 32 percent since 1996, as many of the country’s largest oil fields continue to decline in output. Indonesia’s current OPEC crude oil output quota is set at 1.45 million bbl/d, well above the country’s production capacity. During 2006, Indonesia’s oil consumption reached 1.2 million bbl/d, making it a slight net importer of oil for the year. 
Indonesia’s two largest oil fields are Minas and Duri, which are operated by Chevron and located along the eastern coast in Sumatra. However, the Minas and Duri fields are mature and production at these locations has been on the decline. Various oil exploration projects are underway in Indonesia. However, to date, these projects have not brought sufficient new oil resources onstream to offset the declining production levels at older fields.
One of Indonesia’s last undeveloped oil fields is the Cepu block, located in East and Central Java. ExxonMobil’s local subsidiary discovered 250 million barrels of proven oil reserves in the Cepu Contract Area in 2001, and today the company estimates the area could hold up to 600 million barrels of recoverable oil reserves. ExxonMobil hesitated to develop the promising oil resource, however, because the company’s contract for the area was set to expire in 2010. After several years of negotiations, in March 2006 ExxonMobil and PT Pertamina signed a joint operation agreement (JOA) for the Cepufield. Each company will have a 45 percent stake in the project, with the remaining 10 percent held by provincial governments in East and Central Java. The project is scheduled to begin production in 2008, with peak production expected to reach 180,000 bbl/d.
Coal
From World Coal Institute
Coal reserves
Indonesia has 4968Mt (metric tonnes) of proven coal reserves.
Indonesia has the 4th largest coal reserves in the Asia-Pacific behind Australia, India and China.
Coal Production and Consumption
In 2005 Indonesia produced 152.2Mt of hard coal, making it the 7th largest producer in the world.
Coal Production & Consumption (Mt)
‘96 ‘97 ’98 ‘99 ‘00 ‘01 ‘02 ‘03 ’04 ‘05
Production 48.8 53.9 60.6 72.2 75.6 91.5 102.5 114.3 132.4 152.2
Consumption 10.9 13.2 15.4 19.0 22.1 27.3 29.2 30.7 37.1 41.3
According to these statistics (2005) Indonesia exports over twice the amount of coal it consumes.
From Financial Times of London
Energy demand boosts Indonesian coal mines
By John Aglionby in Jakarta
Published: July 3 2008 03:00 | Last updated: July 3 2008 03:00
Bayan Resources yesterday highlighted the interest investors are taking in Indonesia, the world’s largest thermal coal exporter, when it announced plans to raise up to $695m by floating 25 per cent of its shares on the country’s stock exchange next month.
With countries including China looking for alternatives to oil, global demand for Indonesia’s largely low-grade thermal coal, used mostly in power stations, is surging, helped by the fact that suppliers, including Australia and South Africa, can no longer meet demand.
The price of thermal coal has climbed more than 160 per cent in the last 12 months. Power station coal prices at Australia’s Newcastle port, a benchmark for Asia, jumped to a record $172.10 a metric tonne in the week ended June 27.
“Momentum is still very much in favour of coal, ahead of other commodities,” says James Bryson of HB Capital Partners in Jakarta.
On the back of the rise in prices and demand Bumi Resources, Indonesia’s largest coal miner, has seen its share price climb 922 per cent in the last 18 months. …> go to article
SE Asian Stocks-Indonesia leads losses as coal firms tumble
Thu Jul 3, 2008 3:38pm By Yvonne Cheong SINGAPORE, July 3 (Reuters) -
Indonesian stocks slumped nearly 4 percent on Thursday, their biggest one-day fall in fourth months, after a drop in world coal prices hit miners PT Bumi Resources BUMI.JK and PT Indo Tambangraya Tbk Megah ITMG.JK. Markets in much of the rest of Southeast Asia also fell on fears that slowing global economic growth and rising oil and raw material prices would erode company profits and consumer confidence. …> go to article
Such is the volatility of global energy markets. But if you follow the money the big players for Indonesian energy resources are India, China, and Australian investors. Indonesia itself is in a bit a quandary with market rumors that Indonesia will set export quotas on coal to protect its own domestic use.
There is also the looming and real possibiltyof global economic recession with high inflation rates starting to appear in Asian economies and the US economy choking on debt, a weak dollar, and high energy costs.
Jakarta goes black (again)
From Asia News Network
Editorial Desk
The Jakarta Post
Publication Date : 04-07-2008
The Indonesian government seems increasingly unable to cope with the acute power shortage that has gotten worse over the past three years. Power blackouts have hit more areas and happen more often. There is almost no improvement in the supply-capacity ratio, in sharp contrast to high growth in power consumption, generated by comparatively strong economic growth (5.5 to 6.3 per cent).
The reserve margin of supply capacity of the state electricity company (PLN) is now so low, at just half of the recommended minimum 30 per cent required to ensure supply stability (above the demand during peak-load period), that a stoppage at just one major power station could cause a massive blackout.
Another major blackout hit Jakarta and parts of Java last week because the 600-megawatt Cilacap power station on the southern coast of Central Java stopped operations due to shortage of coal.
In February, PLN was forced to impose rolling blackouts in Java because four power plants could not operate at full capacity, causing a deficit of 1,000 megawatts in the Java-Bali electricity grid. …> go to article
Jakarta to Have Blackouts as BP Cuts Java Gas Supply
From Bloomberg.com: Energy
By Bambang Dwi Djanuarto and Leony Aurora
July 4 (Bloomberg) — Jakarta will experience intermittent blackouts for two weeks as BP Plc, Europe’s second-biggest oil company, suspends gas supplies to two power plants in Java.
State utility PT Perusahaan Listrik Negara will operate its Tanjung Priok and Muara Karang power plants that feed electricity to the capital below full capacity during the gas- supply cut, Widodo Budi Nugroho, the utility’s Jakarta distribution manager, said today.
Power outages are becoming more frequent on Java island as growthin generation capacity fails to keep pace with demand while the state utility lacks funds to upgrade its aging network. Listrik Negara plans to add 10,000 megawatts of coal-fired capacity, most of which will come into operation in 2010.
BP is halting operations in offshore gas fields near Java between July 11 and July 25 to conduct scheduled maintenance on a pipeline, said Ida Yusmiati, finance and commercial manager at BP’s unit in West Java.
The company will suspend supplies of 135 million cubic feet of gas a day to Listrik Negara and 65 million cubic feet a day to PT Perusahaan Gas Negara, the country’s biggest distributor of the fuel, Ida said.
Listrik Negara will buy an additional 150,000 kiloliters of diesel and 100,000 kiloliters of fuel oil to keep the two power plants running, Nugroho said.
Jakarta will face a 150-megawatt deficit while the gas pipeline is being repaired, he said. …> go to article
What strikes me about all this is that Indonesia does not lack the resources to power its cititesand economy. However, it does appear that there is weakness in the infrastructure which delivers that energy. That could be remedied with a coherent energy plan and strategic investment in energy infrastructure.
I say, Indonesia for the Indonesians, and I would advocate a move toward developmental economy, and strategic nationalization of the energy sector.
The other side of the coin is that Indonesia pays a high price socially and politically if people must burden the current market price of energy. In the mean time global energy speculators drive the market prices ever higher.
The third side of the coin is the poltical and business corruption which is rife in these markets as they pertain to Indonesia.
From Reuters
Japan firms may quit Indonesia over power crisis
Sat Jul 5, 2008 12:06pm
By Telly Nathalia
JAKARTA, July 5 (Reuters) – Several Japanese firms have threatened to pull out of Indonesia unless the government fixes electricity supplies, as power cuts have caused production and financial losses, a business association said on Saturday.
Indonesia urgently needs to invest billions of dollars in improving its infrastructure in areas such as power and transportation.
PT Perusahaan Listrik Negara (PLN), the monopoly power supplier, has 24,000 MW of generating capacity but daily output is well below capacity due to old and inefficient plants, and parts of Java, Bali and Sumatra islands suffer frequent outages.
Japan’s ambassador to Jakarta sent a letter of complaint to the Indonesian government on behalf of about 400 Japanese firms operating in Indonesia, Mohammad Hidayat, chairman of the Indonesian Chamber of Commerce and Industry (KADIN), told Reuters. …> go to article
The urban future

Taking oil to market in the Cepu fields (see photo essay at At US$130 a barrel there must be a cheaper way to get fuel. )
In the meantime…
Oil markets are such that the slightest upset in the status quo, say an attack on Iran by the United States or Israel, or a terrorist attack on Saudi oil facilities, would almost certainly more than double the current price of a barrel of oil.
In contrast, with some political will, Indonesia could make itself relatively immune from the larger economic impacts geopolitcal events have on the price of oil. But finally, this is a Faustian bargain at best largely because of of the looming global climate change crisis.
From AFP
Only seven years left for global warming target: UN panel chief
1 day ago
PARIS (AFP) – The head of the UN’s Nobel-winning panel of climate scientists on Friday said only seven years remained for stabilising emissions of global-warming gases at a level widely considered safe. …> go to article
Seven years.
Building Energy Efficiency: Why Green Buildings are Key to Asia’s Futureby Wen Hong / Madelaine Steller Chiang / Ruth A. Shapiro / Mark L. Clifford / Margarethe P. Laurenzi (editor)
From Asian Review of Books, Doug Ogden
“BUILDING ENERGY EFFICIENCY: WHY GREEN BUILDINGS ARE KEY TO ASIA’S FUTURE, an Asia Business Council book, is an excellent, comprehensive primer on Asia’s green building trend. More than half the world’s new construction is underway in Asia, and the boom is accelerating: China plans to shift from 30 percent urban today to 70 percent urban by 2050, and will build some 400 new cities to house 600 million rural-to-urban migrants over that period. That is, China alone plans to construct new buildings equivalent to two Americas by 2050.Up to 50 percent of all energy is consumed by buildings, including the lifecycle of developing the materials, constructing, and operating them. If the world is to have any hope of mitigating greenhouse gas emissions, maximizing building energy efficiency and shifting toward zero-energy and ultimately plus-energy buildings is imperative.” …> go to review
We are clearly at the crossroads.
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