SOCIETY PETROLEUM ENGINEERING ASIA PACIFIC OIL AND GAS CONFERENCE AND EXHIBITION 2007 (APOGCE 2007)

 
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Selasa, 30 Oktober 2007
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REMARKS
BY
H.E. DR. H. SUSILO BAMBANG YUDHOYONO
PRESIDENT OF THE REPUBLIC OF INDONESIA
AT
SOCIETY PETROLEUM ENGINEERING ASIA PACIFIC OIL AND GAS CONFERENCE AND EXHIBITION 2007 (APOGCE 2007)
AT JAKARTA CONVENTION CENTER, JAKARTA
30 OKTOBER 2007


Bismillaahirrahmaanirrahiim,

Assalaamu’alaikum Warahmatullaahi Wabarakaatuh,

Peace be upon you,

His Excellency Minister Khaled Mahfoud Bahah,

The Honourabre President of BSP International,

Excellencies Ministers, Ambassadors, members of the Parliament, Governors,

Distinguished Business Leaders and Participants,

Ladies dan Gentlemen,

It is my pleasure and honor to be here this morning to address the oil and gas community at this important conference, the Society Petroleum Engineering Asia Pacific Oil and Gas Conference and Exhibition. Let me begin by bidding all of you, specially our friends who have come from overseas, a warm welcome to Indonesia.

We meet today in the mids of a difficult time for the world economy. The oil proce is going to the roof again, reaching US $ 92 plus per barrel today, and this is higher than the last price-hike in early 2005. for many of you in this room who produces and sell oil, this might be good news. But to the world economy in general, it is certainly not. IMF has predicted a slowdown of the global economy next year, from 5.2 to 4.8%. Many countries that are dependent on oil experience a budget crunch, with tangible impacts on social and economic policies.

Our biggest worry is the oil price will reach the US $ 100 per barrel mark, which has never happened before. But whatever the prospects, it seems clear that the economies of the world must brace themselves for tougher times, which have not been helped by continuing geopolitical uncertainties.

We all therefore face a common challengge, namely the challenge of how to add to the world oil reserves, and also how to increase exploration and production of oil and gas. The fact is, for all the talk about hydrogen cars, clean coal, solar panels, wind turbines, and nuclear plants, fossil based fuel will likely continue to be the highest source of energy worldwide for the short and medium terms.

Against this backdrop, the theme of your conference is very timely: “Resources, Professionalism, Technology: Time to Deliver�. Now is the time to deliver on the many opportunities that the energy sector has to offer. Resources are abundant, professionalism is plenty and technology is there. Combine the three, add the necessary element of conducive government policy, and we will see great delivery.

We in Indonesia wish to see much more investment coming into energy resource projects. We invite all visitors, both domestic and overseas, to develop our energy industry. And we will do all we can to make your investment grow.
 
The Indonesian Government has developed a package of investment incentives and established a prudent fiscal policy. We are finding ways to overcome tax problems in oil and gas resources investment. We have made vigorous efforts to ensure legal certainty and effective regulation.
 
We have also reformed and restructured the regulatory framework for the energy industry. We expect this regulatory framework to achieve many things, including for the oil and gas sector.
 
The framework seeks to promote a favorable business climate and efficient oil and gas market, as well as equal opportunity for all investment. The framework seeks to ensure that oil and gas resources are managed properly for the benefit of the nation and investors. The framework to promote safe, efficient, and environmentally friendly operation as well as ensuring transparent business practices. And it also seeks to provide access to energy for the poor.

Excellencies, ladies and gentlemen,
 
The oil and gas industry has been a key part of Indonesia’s growing economic development, and it will remain so. Oil and gas business activities presently account for one-fourth of the country’s GDP, one-fourth of total merchandise exports, or almost half of total government revenues.
 
The Indonesian Government intends to enhance our oil and gas production, which also means we must make serious efforts to extend exploration. Indonesia’s oil reserves are now placed at 9.1 billion barrels, a 5.5% increase from 2005. We certainly need to do more explorations and enhance oil recovery in mature areas to avoid the depletion of Indonesia’s oil reserves in 23 years, as some have predicted.
 
The prospects for gas are more promising. Indonesia’s gas reserves in 2006 were about 187 TCF. On top of this, there are huge natural gas resources waiting to be developed. The Indonesia Government has just announced today that 26 new block areas have been offered to existing and new contractors, and I am sure that more will join the act.
 
So this is the first challenge for all of us, namely how to increase our oil and gas production and how to invest more in exploration activities.
 
There is second challenge which is equally, if not more, important. That is the challenge of how we all can work together to produce cleaner energy for our clean green future.

We are now entering into a new era in the politics of climate change. The Fourth Assessment report of the IPCC has made it scientifically clear that human activities in the past 200 years, since the industrial era began, have been responsible for global warming. 
 
It is clear, unless humankind change how we use energy in the way we live, work, travel, and play; our planet will be more much warmer with average world temperature rising between two to five degree Celsius. A rise of two degree Celsius will be significant but probably still tolerable. But a rise of degree Celsius will be catastrophic for mother earth and for the human race.
 
So now individuals, communities, companies, and nations around the world have become common stakeholders in the same cause: namely, the imperative of how to slow, stop, and reverse global greenhouse gas emissions. In no other time in the history of humankind has there been an enterprise similar to what we are trying to achieve now through global action on climate change.
 
The energy industry is a key part of this great big project of humankind to save our planet. We all know this, but what we are still trying to figure out, is how to effectively achieve this goal and, more specifically, how the energy industry can adapt and transform itself in the grand scheme of such global efforts.
 
Indonesia, as well as the rest of the world, is already taking steps to reduce greenhouse gas emissions, by protecting our forests which serve as the world’s great carbon sinks, and also by developing a more sustainable and clean source of energy.
 
Under Indonesia’s new energy policy, we aim to reduce oil share in the national energy mix from 52% to about 20% in 2005. Meanwhile, we will increase the percentage of gas coal, and renewable energy for domestic consumption. The share for gas is projected to reach 30%, coal 33%, and renewable energy 17% by 2005. Bio-fuels will account for 5% of renewable energy share, while geo-thermals will share 5%, liquefied coal 2%, and other renewable up to 5%. 
 
We currently have eleven Clean Development Mechanism projects underway that deal with waste management and renewable energy, and we aim for many more.

We also recently introduced a program encouraging people to quit using kerosene, and instead use LPG, a cleaner fuel. With this kerosene-LPG conversion program, it is expected that 52 million household, or 70% of total household in Indonesia, will consume LPG. This program will shift Indonesia’s natural gas consumption and trade. Recently, 46% of natural gas was consumed domestically. With the new energy policy and the kerosene-LPG conversion program, domestic gas consumption will reach 70% of Indonesia’s total gas production.

To meet increasing demand, Indonesia is also developing Coal-Bed Methane to produce more gas. Indonesia’s CBM resources total 450 TCF and are located in 12 basins. Investors will play a very important role in CBM extraction, and I hope you will seize this opportunity.

I am glad to see that many energy companies are already playing an important role in the race towards cleaner energy.

For example, Norwegian Statoil and Indonesia’s Pertamina are exploring ways to cooperate of carbon capture and storage, and as of now there is a group of Pertamina officials in Norway studying Norwegian know-how and innovation on this subject.

I am encouraged also that big oil companies such as BP has launched BP alternative Energy, and is now developing wind farms, solar power, hydrogen power, and carbon capture and storage technology. And I commend BP for setting emission reduction targets to 10% below 1990 levels by 2010.

Mitsubishi has also set up a target of reducing emissions based on net sales by 25% below 1990 levels by 2010. Meanwhile, Shell has pledged to cut carbon emissions to 5 per cent below 1990 levels by also 2010.

We need more companies to do the same, and we need them to reach more ambitious carbon emission targets. There is still an abundance of opportunities left to explore.

The potential for geothermal energy is as much as 27 Giga Watts, and currently only 817 Mega Watts have been exploited, very small.

Solar power is a huge and untapped potential for energy in Indonesia, with 1 square meter of solar panel capable of generating 4500 Watts per hour.

Indonesia also produces a potential 404 million cubic meters of methane a year from waste, which could generate 79 Mega Watts of electricity.

The wind that passes through several potential regions in Indonesia can be harnessed to generate an estimated 9.29 Giga Watts of electricity. The potential for micro-hydro is also promising.

Excellencies, ladies and gentlemen,

We have plenty of room to explore other technologies to convert emissions, such as the Carbon Capture and Storage that is now being used in some developed countries. With the right technology, small gas flares can also be converted to generate electricity and for city gas.
There is therefore an urgent need to cooperate together, governments and companies, in exploiting these potentials. There is a more compelling case today for companies to invest more in the R and D for clean energy, and also to share their technology with others. When the world runs on clean energy, we all win.

We can no longer afford to be trapped in our old ways and our old sources of energy or ignore the emissions that we create. The climate is changing for the worse, and therefore we must also change. The difference is, if we can spot and take advantage of the huge investment opportunities that climate change brings upon us, our change will be a change for the better.

So our great test lies in whether we can successfully answer the difficult challenges of both increasing fossil fuel energy supply and developing cleaner energy at the same time. I say it can be done. I trust that this audience feels the same, and will discuss these important issues during the deliberations of this conference.

Finally, it is therefore with great delight, by saying Bismillaahirrahmaanirrahiim, I declare this SPE Asia Pacific Oil and Gas Conference and Exhibition 2007 officially opened.

I thank you. Wassalaamu’alaikum Warahmatullaahi Wabarakaatuh

 

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