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Energy Outlook 2017: Do We Need to Learn from the Interpretation of Prophet Joseph's Dream Again?

28

Dec

Energy Outlook 2017: Do We Need to Learn from the Interpretation of Prophet Joseph's Dream Again?

The interpretation suggests the need to save and manage harvest or production while there is a surplus, to anticipate future needs, which may not be [...]

Energy Outlook 2017: Do We Need to Learn from the Interpretation of Prophet Joseph's Dream Again?. The interpretation suggests the need to save and manage harvest or production while there is a surplus, to anticipate future needs, which may not be good again. Without it, crisis is inevitable. Nevertheless, facts often forget the story that has been passed down for thousands of years. For years, `lullabied` by the story of a country rich in natural resources—including oil and gas—Indonesia is now threatened by an energy crisis. (Also read: Myth or Fact, Indonesia Rich in Oil and Gas?) Facts find that the ratio between the discovery of new proven reserves and the ones already in production (replacement reserve ratio or RRR) of Indonesian oil and gas continues to drop from the standard 100 percent. Data from the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) as of 23 December 2016, mentions that the average Indonesian oil and gas RRR is only 35.8 percent. To be exact, the RRR for oil is 47.99 percent, while for gas is 27.24 percent. If this condition continues, it is not impossible that Indonesia will truly `run out` of domestic oil and gas reserves. Moreover, most of Indonesia's oil and gas supply still relies on old wells. Right now, Indonesia has been a net oil importer since 2004, and is likely to become a net gas importer in the near future, if no new proven oil and gas reserves are discovered soon. (Also check out: VIP `Debunking the Myth of Indonesia being Oil and Gas Rich`) Then, what are the challenges of the national upstream oil and gas industry in 2017? `To be able to increase (oil and gas) production, we need support from reliable technology,` Deputy Energy and Mineral Resources Minister Arcandra Tahar said on Monday (19/12/2016), as quoted by Antara. The need for this technology has been getting urgent, ever since the effort to find new oil and gas reserves. According to the Head of Public Relations of SKK Migas, Taslim Z. Yunus, the exploration trend will increasingly point towards the eastern region of Indonesia, and will be located in deep sea. `We need increasingly higher technology and higher costs, therefore, because of it,` Taslim said, in mid-June 2016, and repeated on several separate occasions. This is where, he continued, the role of investors in the oil and gas investment scheme currently in effect in Indonesia comes to play. The Energy and Mineral Resources Minister Ignasius Jonan said that at the moment, oil and gas production within the country is assumed to not be efficient. `Therefore, the first oil and gas policy going forward is about production efficiency,` Jonan said, as quoted by Antara. Aside from issues with guaranteeing supply, production efficiency is also related to the competitiveness of the national upstream oil and gas industry globally. Referring to a survey held by the Fraser Institute in 2015, Indonesia's competitiveness in this industry ranks 113 out of 126 countries. Global vs Real Trends World oil prices are slowly rising, after the organization of oil producing and exporting countries (OPEC) reached an agreement to cut production quotas on Wednesday (28/9/2016). Bloomberg mentions that the price of `black gold` has gone up around 17 percent until the second week of December 2016. Although, the price increase is still far below the level it was in June 2014, which was still well above US$ 100 per barrel. The closest projection is that the oil price could go up to around US$ 65 per barrel—and even that could happen at the earliest in May 2017—if all OPEC members follow the quota agreement. In 2017, global investment in the world's upstream oil and gas sector is estimated to grow by 3 percent compared to 2016, reaching around US$ 450 billion. `However, even that is still 40 percent below the investment in 2014,` said Andrew Harwood, Asia Pacific Research Director for Wood Mackenzie in this industry, as quoted by The Jakarta Post on Wednesday (14/12/2016). In addition to that, Indonesia has other challenges, namely `guarantees` of an investment-friendly bureaucracy. `By any way, investors are looking for legal certainty and policies that stimulate investment. I think, Indonesia is lacking in these areas,` Harwood said. If these factors are addressed, Indonesia's potential to attract investors—as an answer to the need for costs and high technology—in the upstream oil and gas sector ought to expand. Several policies have already been issued by the government for this. (Also check out: VIP `Cost Recovery, Indonesia's Oil and Gas Dilemma`) Again, facts tell a different story. Data from SKK Migas as of the end of November 2016 found that investment in the upstream oil and gas sector is recorded at US$ 10.43 billion. However, most of that investment is still for continued production in work areas which are already in production.  `The nonexistence of new discoveries is reasonable in the midst of low oil prices,` said the Executive Director of the ReforMiner Institute, Komaidi Notonegoro, as quoted in the daily newspaper Kompas, on Saturday (24/12/2016). In a situation where the price of oil is still below US$ 60 per barrel, he continued, oil and gas companies tend to do more well maintenance activities (well service) and work overs on existing production wells, rather than increasing exploration. Of course, investment will become even more unattractive if the price is still low, the risk of exploration failure is also high, in addition to the challenges of bureaucracy. Harwood does not deny that bureaucratic reforms have occurred, but not as fast as expected. Agreeing with Harwood, the Chair of the Special Committee for Institution Relations and Regulations in the Energy and Oil and Gas Feild of the Indonesian Chamber of Commerce and Industry (Kadin), Firlie Ganinduto, said that investment in this sector will continue to be bleak without any certainty of law and policy. `Basically, all of them (investors) want to invest in long-term plans, at least for around 10 to 20 years. But it's difficult to convince them if we change the regulations every time there's a new president or even a new minister,` Firlie said, as quoted in The Jakarta Post. A Glimmer of Hope In the midst of all the projections above, a glimmer of hope comes from data on Indonesian oil and gas production ready for sale (lifting). As of 30 November 2016, average oil lifting reached 821,800 barrels per day, while gas is recorded at 6,643 MSCFD. Both of those numbers surpass the target set in the Revised State Budget (APBN-P) 2016, which is 820,000 barrels per day for oil and 6,438 MSCFD for gas. The good news for oil lifting primarily comes from contributions from the production results of the Cepu Block managed by ExxonMobil Cepu Ltd. `Train B in the Banyu Urip Project has begun producing at full capacity of 185,000 barrels per day since January 2016,` Taslim said. Other big contributors to that achievement are the Rokan Block by Chevron, the Mahakam Block managed by Total, and the Offshore Northwest Java Block by Pertamina Hulu Energi. At the moment, referring to data from SKK Migas, there are 67 oil and gas work areas in Indonesia that are in production. `Most of them are old fields with natural production decline,` Taslim said. Despite this, several efforts continue to be made in those fields, to reduce the pace of production decline. These efforts include 212 exploration well drilling, 1,055 work overs, and 33,925 well treatments. `If it is for a significant increase in reserves, the only way is to explore and develop new reserve sources,` Taslim said. As quoted in the Kompas newspaper edition of Saturday (24/12/2016), this year there was also a discovery of new oil and gas reserves in the Sidayu Field, Pangkah Block, operated by Saka Indonesia Pangkah Ltd. That field has oil and gas reserves of 300 million barrels of oil equivalent, and is a big discovery after the Banyu Urip Field, Cepu Block. Its location is offshore in the Java Sea, to be exact in the north of Gresik Regency, East Java. `If there is an application for a field development plan next year, at the earliest the field could begin oil extraction in 2019,` Taslim said. Throughout 2016, SKK Migas has approved of 28 development plans which are expected to add oil reserves of 142.45 million barrels and gas reserves of 0.645 TSCF. All of those plans require investment funds of US$ 2.94 billion and a target of state receipt of US$ 6.85 billion. Referring to a scheme which was once published by the National Energy Board, oil and gas will continue to be Indonesia's main energy source up to 2050. The question is, without any discovery of new proven oil and gas reserves—with support from investors in a scheme with tight supervision—what about fulfilling energy needs within the country? (Also read: If the Prophet Joseph were Alive during the Oil Era, How would he Interpret his Dreams?) Should

Coffee Plants, from Economic Value Improvement to Flood Prevention in West Java

28

Dec

Coffee Plants, from Economic Value Improvement to Flood Prevention in West Java

"This can be a trigger for our farmers' well-being. The second, it can be for conservation. We encourage people who usually grow seasonal plants on [...]

Coffee Plants, from Economic Value Improvement to Flood Prevention in West Java. `This can be a trigger for our farmers' well-being. The second, it can be for conservation. We encourage people who usually grow seasonal plants on sloping land to now grow conservation plants. One type of conservation plant is the coffee plant,` said the Governor of West Java (Jabar) Ahmad Heryawan (Aher) when giving coffee seeds bantuan to 130 farmer groups from 11 districts in West Java, on Monday (27/12/2016).
Aher gave out coffee seeds that had been certified beforehand on 22 December 2016 to the Regent or Head of the Plantation Office of the receiving district in Gedung Pakuan, Bandung City.
A total of two million coffee seeds were distributed by the West Java Provincial Government through the Plantation Office at the end of this year. Bandung District received 457,750 seeds, West Bandung 183,500 seeds, Garut 349,900 seeds, Tasikmalaya 112,500 seeds, Ciamis 52,000 seeds, Majalengka 111,250 seeds, Sumedang 428,100 seeds, Subang 12,000 seeds, Cianjur 113,500 seeds, Sukabumi 84,800 seeds, and Bogor District 94,700 seeds.
Aher added that in the future, development must also be carried out on this type of coffee plant. For example, a coffee plant that is combined with bee keeping.
`There's no coffee honey yet, even though we harvest our coffee twice a year. It would be very good if coffee is then combined with bee keeping to produce honey,` Aher said.
Previously, in 2014, the West Java Provincial Government had also given one million coffee seeds to farmer groups in six districts. In 2015, the West Java Provincial Government also gave out two million coffee seeds to 65 farmer groups in 11 districts.
This year, there has also been a 100 percent increase in the number of receiving groups. In 2017, the West Java Provincial Government targeted to distribute five million coffee seeds, so that the total from 2014-2017 would be 10 million coffee seeds.
The coffee distributed this year is a type of superior Arabica coffee with two types of varieties. First, Sigara Lembang coffee seeds can be planted at an altitude of 1,200 meters above sea level (asl). Second, the Lini S795 variety is a type of coffee plant intended to be planted at an altitude of 700 - 1,200 meters asl.
On that occasion, the Head of the Jabat Provincial Plantation Office, Arief Santosa, was also present and explained that activities like this can improve productivity, the quality of the plant yield, and the competitiveness of its products.   Not only planting, but it must also be supported by good cultivation techniques by providing the right production facilities in accordance with the implementation of a good farm management system.
With the addition of 2 million tree seeds, it is estimated that the area of coffee plants in West Java will be 37,265 hectares. Meanwhile, the potential land suitable for coffee plants in West Java can reach 50,000 or a maximum of 200,000 hectares.
To support the achievement of the potential land area, the central government will budget Rp 280 billion for the conservation of the Citarum and Cimanuk river upstream areas.
`The Central Government has a program to conserve the Citarum and Cimanuk areas. As far as I know, there is Rp 280 billion in funds provided by the 2017 State Budget for the conservation of these areas,` Aher said after the event.
Aher also said that the people and government should be able to make good use of the State Budget, `Hopefully, when we want to regreen, re-conserve the upstream Citarum and Cimanuk areas, through conservation. And at the same time there is economic value, namely the coffee plant,` he added.
Coffee plants can provide benefits to conservation areas. Coffee can be planted interspersed with conservation plants, which are usually standing plants.
In addition to being able to increase the economic value of the West Java community, coffee plants can be a way to preserve the forest, improve water absorption, and reduce flooding.

Oil prices rise amid expectations of OPEC production cuts

28

Dec

Oil prices rise amid expectations of OPEC production cuts

Oil prices hovered near their highest since mid-2015, underpinned by a deal between the Organization of the Petroleum Exporting Countries (OPEC) and [...]

Stable economic growth due to investment-consumption factors

28

Dec

Stable economic growth due to investment-consumption factors

"One thing that we cannot deny is that the stable growth is attributed to the biggest contribution from the consumption sector of 53.8 percent and [...]

Stable economic growth due to investment-consumption factors. `One thing that we cannot deny is that the stable growth is attributed to the biggest contribution from the consumption sector of 53.8 percent and investment at 31.6 percent,` said MPR Deputy Chairman Taufik Kurniawan in Jakarta on Tuesday.According to the politician from the National Mandate Party, these two things were the biggest contributors to growth in 2016.However, he continued, at the same time the tightening and reduction in government spending this year will have an impact on the 2017 growth target.He also reminded that looking at the global economic trend, China and the United States are both considered to be in the process of revising their respective economic policies. `China and the US are also experiencing a movement to revise economic policies that at any time can affect the domestic economy, particularly the rupiah exchange rate,` he said.Previously, Bank Mandiri Chief Economist Anton Gunawan judged that the Standard and Poors (S&P) rating agency should already have rewarded Indonesia with an investment grade rating, but it was hampered by internal mechanisms at that New York-based agency. `S&P is always trying to add assessment factors that sometimes appear, such as political problems, that ultimately prevent them from being increased. So the problem is more with S&P,` he said in Jakarta on Thursday (Dec. 22).Another important thing is a guarantee of the security and order of a country.
Editor: Ade Marboen
http://www.antaranews.com/berita/603784/pertumbuhan-ekonomi-stabil-karena-faktor-investasi-konsumsi

23

Dec

2016 Tea Closing Auction

The event was quite lively, since it was a closing auction for the 2016 tea season. The auction room was decorated properly and even featured [...]

U.S. third-quarter economic growth revised up to 3.5%

23

Dec

U.S. third-quarter economic growth revised up to 3.5%

Real gross domestic product (GDP) advanced at an annual rate of 3.5 percent in the third quarter of this year, the fastest quarterly growth since [...]

U.S. third-quarter economic growth revised up to 3.5%. Real gross domestic product (GDP) advanced at an annual rate of 3.5 percent in the third quarter of this year, the fastest quarterly growth since 2014. The growth rate was revised up from the second estimate of 3.2 percent. In the second quarter, the economy grew by 1.4 percent.`In this third estimate for the third quarter, nonresidential fixed investment, personal consumption expenditures (PCE), and state and local government spending were revised up from their previous estimates,` Xinhua reported the Commerce Department as saying.Consumer spending, which accounts for about 70 percent of the U.S. economy, increased 3.0 percent in the third quarter, stronger than the previously reported 2.8 percent increase, but moderated from a 4.3 percent surge in the second quarter.Nonresidential fixed investment rose 1.4 percent in the third quarter, faster than a 1.0 percent increase in the second quarter. It contributed 0.18 percentage point to economic growth in the third quarter.The solid economic expansion, coupled with improvement in labor market and inflation conditions, encouraged the U.S. Federal Reserve to raise interest rates this month after a near one-year pause.Fed officials projected that the U.S. economy will grow 1.9 percent this year and 2.1 percent next year, both up by 0.1 percentage point from their September forecast.With the election of Donald Trump, U.S. economic policies are likely to see significant changes, which could have substantial impact on the U.S. and global economies.Despite the uncertainty over the president-elect's policies, markets now expect tax cuts and increased government spending from the new administration, which could push up inflation and longer-term interest rates in the United States.Fed officials are now seen hiking interest rates three times next year, compared with only twice in 2017 in their September projection.   (A026)
Editor: Unggul Tri Ratomo
http://www.antaranews.com/berita/603071/pertumbuhan-ekonomi-as-kuartal-ketiga-dirivisi-naik-jadi-35-persen

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