Looming Oil Situation Confronts New Government

http://katadata.co.id/riset-analisis/2014/05/30/looming-oil-crisis-confronts-new-government
Looming Oil Situation Confronts New Government
The new government that will take office after July's presidential election, will deal with an overwhelming job and a hefty problem. They will have to take care of substantial workloads left by President Yudhoyono's government in the power sector.

Indonesia is currently on the brink of an oil situation. Indonesia's crude oil reserves is not appropriate to satisfy its demand, as it just has 14 percent of its oil reserves left. Within 30 years, Indonesia's oil reserves has dropped 68 percent. This is the fastest and the steepest fall in oil reserves in Asia.

The country's big and leading oil blocks that up until now contribute substantially to its overall oil production are aging and their efficiency levels have minimized. Different techniques and innovations, including improved oil rehabilitation, have been carried out to overcome this problem. Nevertheless, usually, the outcome of 10 big oil areas handled by multinational business have dramatically declined.

On the many others hand, Indonesia's oil usage is rising to keep speed with its economic growth, along with the boosts in earnings and new automobile demand. At the time when the industry sector seeks to minimize its reliance on costly fossil energy, the transportation sector, in comparison, is thirsty for even more oil. As a matter of fact, the transportation sector's oil usage growth reaches 6 percent annually usually. Because of this, the transportation sector ends up being the most dominant sector or eats 75 percent of Indonesia's oil usage.

The issue is that the effect of the expanding gap between Indonesia's oil outcome and usage does not end in the surge in oil or energy import. The gap has severe, subsequent effect on the state's economic climate.

In addition to creating profession balance shortage, the boost in oil and energy usage and import is damaging to the nation's financial wellness, rising oil and gas shortage, along with imposing a problem on forex reserves and Rupiah exchange rates.

To show this point, when oil and gas shortage reached its highest level of minus US$ 1.85 billion in July 2013, the profession balance shortage likewise reached its highest level ever taped in Indonesian past of minus US$ 2.3 billion. The substantial demand for forex to cover oil and gas import has drained the country's forex reserves that reached its least expensive record of US$ 92 billion in August 2013. During the exact same period, Rupiah exchange rates plunged by 7 percent to IDR 10,900 per US dollar usually.

The upward trend in oil usage and the downward trend in oil production are expected to extend up until the next five years, when the new government is in power. The boost in automobile sales by 7 percent annually during the period 2012-2018 will stimulate the boost in energy usage.

When the new government is in power, Indonesia is not simply an influential oil importer. A report from Timber Mackenzie in 2013 exposed that Indonesia is expected to end up being the world's largest energy importer by 2018 and the largest contributor to fuel shortage in Asia Pacific region. In 2019, the gap forecast between oil usage and production will reach 1 million barrels.

As a result, the new government will have to face the difficulty along with the danger of an oil situation. The hefty problem imposed by the surge in oil and energy imports will position a severe danger to the country's profession balance, repayment balance, forex reserves and Rupiah exchange rates.


Indonesia's crude oil reserves is no longer appropriate to satisfy its demand, as it just has 14 percent of its oil reserves left. The country's big and leading oil blocks that up until now contribute substantially to its overall oil production are obtaining older and their efficiency levels have minimized. As a result, the transportation sector ends up being the most dominant sector or eats 75 percent of Indonesia's oil usage.

When the new government is in power, Indonesia is not simply an influential oil importer.