The announcement on Feb. 19 that the integrated oil and gas firm Repsol Worldwide had found the biggest natural gas deposit in 18 years in Indonesia could play a major role in Jakarta’s plans for converting its 150 million-odd vehicles from gasoline-based to natural gas.
But problems need to be addressed first. Critics have described the government’s goals as vague and questioned its commitment to meeting them, pointing out that the government is deeply committed to increasing fossil fuel exploration and discovery at the same time it is seeking to cut emissions.
President Joko Widodo has instructed the government to keep fuel prices stable for the next two years – via fuel subsidies, which does nothing to discourage the use of motorized transport. Thus, by one estimate, Jakarta alone is adding an average 4,000 new motorcycles and 15,000 new cars a day, an increase of 12 percent annually.
The discovery, at the Sakakemang block in South Sumatra, is estimated as the world’s fourth largest. It is estimated to contain at least 2 trillion cubic feet of natural gas and, according to Arcandra Tahar, Indonesia’s Deputy Energy and Mineral Resources Ministry, is expected to begin production over the next five years. It is projected to help Indonesia avoid a gas deficit by 2025 when it comes onstream.
The government under former President Susilo Bambang Yudhoyono in 2014 set out to reconfigure its energy industry, seeking to re-establish energy independence by redirecting resources to the domestic market and rebalancing the energy mix, minimizing oil consumption, aiming at a 2025 energy mix of 30 percent coal, 22 percent oil, 23 percent renewables and 25 percent natural gas, doubling the use of natural gas, tripling coal use and growing renewables by more than 11-fold with a focus on energy efficiency.
The new discovery is expected to play a major role in its ongoing policy in converting to natural gas-based fuel. Having become a net fuel importer as long ago as 2004, Indonesia currently still needs to import fuel and suffers from problems of increasing air pollution caused by petrol-based transport as its fleet grows rapidly. As long ago as 2013, Indonesia’s fossil fuel consumption was increasing at a rate twice the world average.
As the price of natural gas-based fuel is much lower than that of gasoline, the discovery could save consumers millions and more significantly eliminate the need by the government to subsidize oil prices while cutting import demand. Indonesia has been a net oil importer since 2004.
As almost 50 percent of energy consumption in Indonesia comes from the transport sector, which is estimated to be driven 99.93 percent by petrol usage. Thus the sector is a priority candidate for conversion to natural gas.
However, Indonesians are still afraid of using gas as their transportation fuel, as many incidents happen due to gas explosions. In 2007, the government embarked on the world’s largest household fuel program for cooking, phasing out the domestic use of kerosene and replacing it with liquefied petroleum gas, an abundant, clean-burning, nonpolluting byproduct of oil refining. The program reduced domestic kerosene use by 92 percent in less than a decade. However, the occasional explosions of LPG cannisters have led to public apprehension.
Although the transport sector is free of such incidents, the fear of using gas as a fuel is difficult to erase. A massive campaign is necessary to educate the populace on the safe use of natural gas as a transport fuel. Another problem is the introduction of converter kits to the vehicle fleet. That includes 2.4 million buses, 15 million cars and 7.2 million trucks as of 2017. There are another 105 million motorcycles.
Then there is the problem of infrastructure. Filling stations and Mobile Refueling Units (MRUs) exist only in only big cities. Without such infrastructure, conversion of the vehicle fleet is not possible. In 2017, the government provided 5,000 conversion kits for public buses and official government vehicles. It is urging private gas stations to provide at least one dispenser for natural gas to go with those already provided by government-owned filling stations.
For this problem, Indonesia’s government must encourage the construction of new gas stations to all of Indonesia’s cities, and to continue to urge them to provide natural gas dispensers. If the new infrastructure construction is hampered by land acquisition problems, the government might collaborate with the providers.
A new hope of abundant gas resources is thus one of the advantages supporting the government’s fuel conversion policy. However, a new and substantial commitment to the policy is necessary, along with cleaning up the government’s plans on how to get there. A massive campaign appears necessary to encourage construction, along with renewed pressure on the country’s vehicle industries to produce cars and trucks that can use natural gas. With 26 million-odd cars and trucks on the road now along with 105 million motorcycles that are unlikely to be converted, it is a program that appears in trouble, massive new gas discovery or not.
Muhammad Zulfikar Rakhmat writes frequently on social issues in Indonesia. He co-authored this with Affan Firmansyah, who studied Chemical Engineering at The University of Manchester