Infrastructure Development Challenges of The Oil and Gas Downstream

Komaidi Notonegoro

Director of Executive ReforMiner Institute

Based on the analysis, revision of the Oil and Gas Law which is currently being rolled in Parliament set out with a relatively different paradigm. If the previous grounding oil and gas concession regulated in the Oil and Gas Law is to dredge foreign and state budget revenues. Currently the government and parliament perspective in this case is no longer to extract oil and gas exchange, but prioritized as the carrying capacity (energy source) for national development.

The consequences of the paradigm change is changing the structure of the arrangement article by article in its own oil and gas law. If the previous law most of the settings in the upstream sector is more dominant than the downstream (70: 30), in the new draft is likely to be strived for more balanced. This is partly because of the influx of a number of points (the idea) that need to be setup in the new Oil and Gas Law as funding problems of energy security, agragator gas, as well as the allocation policy and gas prices.

ReforMiner assessing and projecting the development of oil and gas infrastructure will be a major challenge in the development of national oil and gas downstream industry in the foreseeable future. The record of ReforMiner towards oil and gas downstream infrastructure nationwide is as follows:

1. In terms of durability oil supply (BBM), currently Indonesia basically facing serious problem. Existing conditions is that Indonesia does not have a strategic reserve or buffer to oil reserves as most countries in the world which on average have a strategic reserve of more than 3 months. Currently the oil reserves (BBM) Indonesia is only limited of operational reserve, which is the Pertamina oil reserves stock (as a corporation) and not specifically prepared by the government.
2. From the search, the main problem of the absence of oil stocks (BBM) is due to lack of infrastructure. In this case is the lack of storage tank infrastructure which currently only enough to accommodate 4.8 million kiloliters of oil (BBM). it is equivalent to 23 days. In this case the storage tank infrastructure is also largely owned by Pertamina. With the growth of fuel consumption asis today, the need for a storage tank until 2020 at least 7.3 million KL.
3. Indonesia’s current refining capacity is also recorded in deficit conditions. Information available suggests that Indonesia’s oil refining capacity is currently at 1,043 thousand barrels per day more than 90% of which are Pertamina refinery. While Indonesia needs at this time is approximately 1,578 thousand barrels. Challenges ahead for the provision of the refinery will be even greater. Based on projections that do not depend too much towards imported products (fuel) needs of the refinery capacity in 2030 of at least 2.6 million barrels per day.
4. In addition to problems of refinery capacity and fuel storage tanks, in the near future Indonesia will also be faced with the problem of availability of fuel distribution infrastructure. With the condition of Indonesia as a maritime state, the fuel distribution infrastructure will be a challenge and a problem in itself. In the near future, fuel distribution infrastructure choice whether to use the mode of land, sea, or the pipeline is likely to be a discussion that can not be avoided.
5. It is relatively similar to the fuel, Indonesia is also facing problems in the availability of gas infrastructure. Both anomalous conditions are reflected in the national gas balance and cases in the field mostly the problem of limited gas infrastructure. The gas crisis that occurred in some areas largely not due to a lack of production, but because of the lack of infrastructure so that the gas produced can not be distributed to users
6. The condition of Indonesian archipelago is also a problem in itself in terms of model selection of gas infrastructure and distribution mechanisms. Gas options will be distributed directly using a pipe or melted into a discussion of the possibility of LNG will continue to grow both from technical, business, economic value added, or political.
7. Government policies that will increase the use of gas for industry, transportation, and households will have consequences towards the development of gas network infrastructure to be more massive. Network of gas for households that are currently being implemented in some areas (cities), are likely to be increasingly expanded its reach. It basically has also been reflected in roadmap of gas infrastructure development 2015-2030 set by the government.
8. Based on existing conditions, fuel and gas infrastructure development in recent years built from the state budget and non-state budget. For the period 2014, 2015 and 2016 oil and gas infrastructure development budget allocated from the state budget -through the Ministry Energy & Mineral Resources, that has increased significantly. While the construction is done from non budget state by SOE (Pertamina and PGN) which is also significant.
9. The portion of infrastructure development plan of fuel storage tanks in the next few years more than non state budget. For the period 2016-2020 the construction of storage tanks of non state budget is around 2.40 million KL. While that would be built from the state budget for the period 2016-2017 amounted to 69 thousand KL.
10. The ReforMiner projecting, with a number of limitations in the state budget and in line with efforts to increase the role of state-owned enterprises, infrastructure development of oil and gas will most likely be assigned (charged) to Pertamina. Establishment plan of Buffer Agency of fuel and Buffer Agency (Aggregator) of gas that is currently being rolled in the revision of oil and gas law is also likely to be handed over to Pertamina.

_Sunandar_