Ika Krismantari, The Jakarta Post, Jakarta
In his speech during the Society of Petroleum Engineers Asia Pacific Oil & Gas Conference and Exhibition in October, President Susilo Bambang Yudhoyono put the emphasis on the government's policy of developing renewable energy to replace oil and gas.
The President even implicitly told hundreds of participants at the conference, mostly representing oil and gas companies, that it was about time for them to get out of the industry as the government's policy to prioritize the development of renewable energy would make the oil and gas sector less important.
It might have upset them, but with the persistent increase in oil prices and rising environmental concerns on the use of fossil fuels, the President's remarks appeared to be quite apropos.
It is widely believed that the world is heading for an energy crisis if people continue to rely on conventional fuels.
Aside from energy crisis, the environmentalist push for cleaner energy also leaves governments around the world with no other option but to gradually decrease the utilization of fossil-based fuels, which have been blamed for causing global warming.
The surge in oil prices, which almost reached US$100 over the past few months, has also made the shift from fossil-based fuels to alternative energy more attractive, given the severe impact of higher fuel prices on the global economy.
Therefore, the world is racing to develop alternative energy, whether derived from hydrocarbon resources or renewable resources, in the hope of overcoming the energy crisis and environmental challenges, and also to help ease demand for oil and eventually lower the price of oil.
And Indonesia does not want to be left behind in this global movement.
Blessed with vast natural resources, the country has many options to be choose from, such as biofuel and geothermal energy, and even wind and solar power.
Aware of the potential, the President issued a decree on National Energy Policy in 2006 setting out guidelines for the development of alternative energy.
The new policy endorses the reduction of oil's share of the national energy mix from 52 percent currently to about 20 percent by 2025 through increasing the share of gas and renewable energy along the way.
Under the policy, the country is aiming to increase the share of other fuels, such as coal and gas to 30 percent each by 2025, from 15 percent and 28 percent, respectively, at present.
By then, biofuel is also expected to account for 5 percent of the renewable energy share, geothermal 5 percent, liquefied coal 2 percent and other renewable energy sources up to 5 percent.
Based on these guidelines, the government has laid the foundations for the country's future energy security. As part of the program, the government began the year in early January with a giant step forward in the renewable energy sector by signing 58 agreements worth $12.4 billion with 59 local and overseas energy firms and institutions.
Aside from renewable energy, the government has also been intensifying its efforts this year to promote the utilization of gas as an alternative fuel so as to reduce the use of highly subsidized kerosene by households.
Under this program, the government wants to reduce the cost of its subsidy on household kerosene by reducing the fuel's use by some 10 million kiloliters a year.
Kerosene sold the households is the most highly subsidized fuel, with the government paying about Rp 4,500 (48 U.S. cents) a liter.
The government is also intensifying its promotion of coal, not only coal for power plants, but other derivative coal products, such as coal-bed methane (CBM) and liquefied coal.
The government has conducted a lot of research to prove that the country has the potential to develop such fuels.
In May, the government announced an ambitious plan to build the country's first coal liquefaction plant with a production capacity of 13,500 barrels per day by 2009.
To realize the plan, a consortium made up of coal mining firms has been established to conduct a feasibility study on the plant, which will be located in Satui, South Kalimantan.
The price of the liquefied gas output will be quite competitive at an average of $35 per barrel, compared to crude oil, whose price is expected to reach $150 per barrel next year.
As regards, CBM, Indonesia also has abundant resources, with the country having the world's second largest CBM reserves after China at 453 trillion cubic feet, or about 81.5 billion barrels of oil equivalent.
Energy and Mineral Resources Minister Purnomo Yusgiantoro has issued a number of invitations to oil companies to start investing in CBM in Indonesia, as the country's oil production declines from year to year.
Indonesia's oil production has consistently shown a downward trend in recent years, with production falling from 1.3 million barrels of oil per day in 2001 to 950,000 barrels this year.
The government's target of 1.034 million barrels per day next year will be a hard task to achieve as the development of new oil fields has been delayed, partly due to the high duties levied on the importation of drilling equipment, particularly drilling rigs.
