JAKARTA, Dec. 14 (Xinhua) -- Indonesia is Southeast Asia's only OPEC member but falling oil production and surging imports make it vulnerable to global oil shocks as non-oil exporting countries.
With imposing another hike in domestic fuel price very unlikely, President Susilo Bambang Yudhoyono's government, which already doubled prices in October 2005, has to find ways other than pricing to deal with the oil woes.
Indonesia's oil production is officially governed by the Organization of Petroleum Exporting Countries (OPEC) with a quota at 1.4 million barrels per day (bpd), but it has failed to meet the quota since 2002.
In fact, it already becomes a net oil importer judged by the October data.
In 10 months ended by October 2007, the export of crude and refined oil valued at 9.60 billion U.S. dollars while its import totaled 16.95 billion dollars, according to a Central Statistics Agency report issued this month.
In the same period, daily oil production averaged 952,771 bpd, below the government target of 1.03 million bpd and nowhere near its peak production of 1.7 million bpd in 1977.
However, the Indonesians can still buy among the cheapest gasoline in the world at 4,500 rupiah (around 48 U.S. cents) per liter. It is because the government allocates massive fuel subsidy in the state budget to make fuel prices artificially low to maintain political stability.
Fuel price rises usually spark nationwide protests or even political unrest, such as the one in 1998 that led to the ouster of long-serving president Soeharto.
But the subsidy is proved very costly to the budget with global oil prices approaching the 100 dollars level.
The government has warned that fuel subsidy could skyrocket to 91 trillion rupiah (9.78 billion dollars) from the official allocation of 56 trillion rupiah (6.02 billion dollars) in the 2007 state budget because of sharp volatility in global oil prices.
BIGGER USE OF COAL AND GAS
The Indonesian government is strongly promoting the use of natural gas and coal for households and industries in its present oil saving policy.
The project to provide 6 million gas cylinders and stoves to replace kerosene for cooking has been launched earlier this year.
Under the program, the government targets to replace 428 million liters of kerosene with some 181,000 tons of liquefied petroleum gas (LPG) this year alone.
Kerosene sells at a mere 2,000 rupiah (21 cents) per liter with subsidy, and it is "a very unnecessary waste to use jet fuel for cooking," as Vice President Jusuf Kalla once said.
By 2009, the government expects to distribute 40 million gas cylinders to replace kerosene stoves.
The country has decided to either reduce liquefied natural gas (LNG) exports or not to extend gas supply contracts with many traditional buyers in Asia to secure domestic supplies.
Indonesia this year began the construction of 35 coal-fired power plants that together will have the capacity of 10,000 megawatts, with an aim that most of oil-thirsty power plants will be replaced by coal-fired generators.
When completed in 2009, coal demand from the state-run electricity company PLN will soar to 70 million tons a year. Indonesia is one of the world's largest coal producers with production estimated at some 215 million tons this year. But export sales account for about 70 percent of output.
Simon Felix, director general of coal industry, said on Dec. 4 that the government will limit the export of coal to 150 million tons a year from 2009 to 2025 to ensure availability for local demand.
ALTERNATIVES TO FOSSIL FUEL
Indonesia has been joining the global race for alternative fuel over the last two years.
The government is drafting the budget and plan for the mass production of biofuel, fuel made of vegetable oils such as palm oil and jatropha.
The state-run oil firm Pertamina has introduced biofuel in its outlets but is still mixed in much smaller quantity with fossil-based gasoline and diesel fuel.
State Minister for Research and Technology Kusmayanto Kadiman said the country needs 4.4 million tons of crude palm oil to make a sound biofuel project.
Together with Malaysia, Indonesia controls over 80 percent of the world's crude palm oil markets, with production reaching 17.44million tons last year.
But since palm oil is largely exported on current high prices, palm oil-based biofuel is increasingly unfeasible.
The government might turn to jatropha using unused or critical lands across the huge archipelago for massive plantations. The jatropha oil project may also redevelop the plantations grown by Japan during World War II to fuel their war machines.
The minister said producing 2.5 billion liters of biofuel a year could cut Indonesia's diesel fuel import by a quarter.
The government has approved a budget of 1 billion dollars for the alternative fuel project.
FUEL RESTRICTION
Under pressures not to impose another fuel hike, the government plans a policy that will bar private cars from using subsidized cheap gasoline.
The government will oblige private cars to use gasoline with octane number 90 or above, while 88-octane gasoline that gets subsidy is sold to public transport vehicles and motorcycles only.
The restriction policy will undergo trial in the Greater Jakarta, the biggest gasoline consumer with annual consumption of 3.5 billion liters, as soon as next year, but a specific time frame is yet to be announced.
"Raising fuel price is not the option," President Susilo said last month.
"We are looking for other ways, the effective ones that can reduce the impacts without adding to the suffering of the people," he said.
With imposing another hike in domestic fuel price very unlikely, President Susilo Bambang Yudhoyono's government, which already doubled prices in October 2005, has to find ways other than pricing to deal with the oil woes.
Indonesia's oil production is officially governed by the Organization of Petroleum Exporting Countries (OPEC) with a quota at 1.4 million barrels per day (bpd), but it has failed to meet the quota since 2002.
In fact, it already becomes a net oil importer judged by the October data.
In 10 months ended by October 2007, the export of crude and refined oil valued at 9.60 billion U.S. dollars while its import totaled 16.95 billion dollars, according to a Central Statistics Agency report issued this month.
In the same period, daily oil production averaged 952,771 bpd, below the government target of 1.03 million bpd and nowhere near its peak production of 1.7 million bpd in 1977.
However, the Indonesians can still buy among the cheapest gasoline in the world at 4,500 rupiah (around 48 U.S. cents) per liter. It is because the government allocates massive fuel subsidy in the state budget to make fuel prices artificially low to maintain political stability.
Fuel price rises usually spark nationwide protests or even political unrest, such as the one in 1998 that led to the ouster of long-serving president Soeharto.
But the subsidy is proved very costly to the budget with global oil prices approaching the 100 dollars level.
The government has warned that fuel subsidy could skyrocket to 91 trillion rupiah (9.78 billion dollars) from the official allocation of 56 trillion rupiah (6.02 billion dollars) in the 2007 state budget because of sharp volatility in global oil prices.
BIGGER USE OF COAL AND GAS
The Indonesian government is strongly promoting the use of natural gas and coal for households and industries in its present oil saving policy.
The project to provide 6 million gas cylinders and stoves to replace kerosene for cooking has been launched earlier this year.
Under the program, the government targets to replace 428 million liters of kerosene with some 181,000 tons of liquefied petroleum gas (LPG) this year alone.
Kerosene sells at a mere 2,000 rupiah (21 cents) per liter with subsidy, and it is "a very unnecessary waste to use jet fuel for cooking," as Vice President Jusuf Kalla once said.
By 2009, the government expects to distribute 40 million gas cylinders to replace kerosene stoves.
The country has decided to either reduce liquefied natural gas (LNG) exports or not to extend gas supply contracts with many traditional buyers in Asia to secure domestic supplies.
Indonesia this year began the construction of 35 coal-fired power plants that together will have the capacity of 10,000 megawatts, with an aim that most of oil-thirsty power plants will be replaced by coal-fired generators.
When completed in 2009, coal demand from the state-run electricity company PLN will soar to 70 million tons a year. Indonesia is one of the world's largest coal producers with production estimated at some 215 million tons this year. But export sales account for about 70 percent of output.
Simon Felix, director general of coal industry, said on Dec. 4 that the government will limit the export of coal to 150 million tons a year from 2009 to 2025 to ensure availability for local demand.
ALTERNATIVES TO FOSSIL FUEL
Indonesia has been joining the global race for alternative fuel over the last two years.
The government is drafting the budget and plan for the mass production of biofuel, fuel made of vegetable oils such as palm oil and jatropha.
The state-run oil firm Pertamina has introduced biofuel in its outlets but is still mixed in much smaller quantity with fossil-based gasoline and diesel fuel.
State Minister for Research and Technology Kusmayanto Kadiman said the country needs 4.4 million tons of crude palm oil to make a sound biofuel project.
Together with Malaysia, Indonesia controls over 80 percent of the world's crude palm oil markets, with production reaching 17.44million tons last year.
But since palm oil is largely exported on current high prices, palm oil-based biofuel is increasingly unfeasible.
The government might turn to jatropha using unused or critical lands across the huge archipelago for massive plantations. The jatropha oil project may also redevelop the plantations grown by Japan during World War II to fuel their war machines.
The minister said producing 2.5 billion liters of biofuel a year could cut Indonesia's diesel fuel import by a quarter.
The government has approved a budget of 1 billion dollars for the alternative fuel project.
FUEL RESTRICTION
Under pressures not to impose another fuel hike, the government plans a policy that will bar private cars from using subsidized cheap gasoline.
The government will oblige private cars to use gasoline with octane number 90 or above, while 88-octane gasoline that gets subsidy is sold to public transport vehicles and motorcycles only.
The restriction policy will undergo trial in the Greater Jakarta, the biggest gasoline consumer with annual consumption of 3.5 billion liters, as soon as next year, but a specific time frame is yet to be announced.
"Raising fuel price is not the option," President Susilo said last month.
"We are looking for other ways, the effective ones that can reduce the impacts without adding to the suffering of the people," he said.
