indonesian oil & gas sector and the role for indonesian development
TRANSCRIPT
Oil and GasAnindya Sharani 350276Muhammad Bima Samudera 350244Muhammad Heickal Pradinanta 350168Rozano Aulia Imansyah 350282Valdo Dellazepta 350096
OIL
Exporter Period
●Indonesia’s oil industry is one of the oldest, discovered in 1883○ Koninklijke Nederlandsche Maatschappij tot Exploitatie van Petroleum-bronnen in
NederlandschIndië, 1890
●Royal Dutch Shell, 1907○ In 1911, Indonesia contribute to 4% of World’s oil production
●government control of oil increases post-independence, creating contract with foreign oil companies and long term planning
○ Indonesia joined opec in 1962
●Pertamina was founded in 1968 from the merging of Pertamin, Permina, and Permigan
○ The production-sharing contract, among the toughest in the world
Exporter Period
Exporter PeriodAnnual oil production in Indonesia peaked in 1977 at over 600 million
barrelsPrice of crude oil was $14 per barrel, significant increase since 1973
Prices reached $35 per barrel in 1981oil exports skyrocketing at $15 billion (70% of total export earnings)
However, production decreases starting 1982, down to 460 million barrels
Crude oil price was decreased to $29 per barrel
Market collapse in 1986, OPEC production plummeted from 50% to 29%
Crude oil price tumbled to $10 per barrel
The oil industry recover slowly but never catch up to the previous condition
Importer Period
http://www.indexmundi.com/energy.aspx?country=id&product=oil&graph=imports
Importer Period
https://edorusyanto.wordpress.com/2014/09/08/fakta-pertama-jumlah-motor-terus-meningkat/
Importer Period
Importer Period
http://marketrealist.com/2015/01/crude-oil-market-key-overview/
Importer Period
Oil Subsidy- Oil subsidy was implemented on the beginning of the new order era
- Based on the low purchasing power of indonesia people and at that time indonesia still had many oil reserve
- Crude oil was used as the main source of national income
- The presence of VAT took over the main source of national income
- in 2015 Indonesian government spent Rp. 291.1 Trillion (+- $23 Billion) for oil subsidy
Subsidy trend
Why the subsidy was getting higher?
Triggered by the failure of the government to make a convenient public transportation
Vehicle boom in Indonesia
Increased in the price of the imported oil
Subsidy AnalysisThis past 10 years the government has spent approx Rp. 1,635
trillion for oil subsidy
Oil subsidy is for the rich people
Rather than oil subsidy the government should use the money to productive sector
Infrastructure development would be more appropriate rather than the oil subsidy
Where the subsidy goes?On the beginning of Jokowi era he took a brave action by cutting the
budget for oil subsidy and increasing it price
ConclusionThe Royal Dutch Shell bring about the start of Indonesia’s oil export
eral
Oil production growth in Indonesia was supported by the dependency of other nations to OPEC.
Oil industry had its peak performance back in the mid 20th century
Oil subsidy since the beginning of the new order era was proven unappropriate to continue in this present condition
Money from oil subsidy should be transferred to the productive segment
GAS
The role of gas for Indonesian Development
Energy Sector (Oil and Gas)
Sources of energy for Domestic
Sources of Government’s
Income
Feedstock to strategic industries
Indonesian Development
Indonesian gas Production and Consumption
Indonesia’s export of gasIndonesia's gas production has always been directed towards export
markets
Indonesian Government attempts to enlarge domestic uses of gas
Long-term export contracts that were signed in the early and mid-2000s are priced below market prices
The domestic demand cannot be satisfied by domestic production
Indonesian LNG Export
Indonesian LNG contract
Subsidy of Natural GasIndonesian government give subsidy in form of tax incentive.
In 2008, $ 245 Million or Rp 2.37 Trillion was given to oil and gas companies as tax incentive.
How to receive tax incentives?The company must be operate under any one of the following
conditions:Oil refinery with priority for local demand.
Natural Gas refinery and processing business to produce LNG and LPG.
Lubricants manufacture.
Organic basic chemicals industry originating from crude oil and natural gas.
What are requirements to receive tax exemption?
Taxpayer that may be entitled for tax exemption are new corporate that fulfill the following criteria:
Operate in a pioneer industry
New capital investment plan of at least Rp 1 Trillion.
Will deposit minimum 10% of total investment plan to Indonesian bank.
Have status of validated legal entity in Indonesia, at most 12 months before the effective date of tax exemption.
How many period is the effective tax exemption?
The tax exemption on income tax payable for maximum 10 fiscal years and minimum 5 fiscal years, based on commercial production commences.
After the end of exemption periods, taxpayers will be entitled to a 50% reduction on income tax payable for subsequent 2 fiscal years.
The Consumption
Utilization of Natural Gas
Year to Year Comparison
What the future holds?
Will Indonesia becomes an Importer in 2025?
No, because Indonesia is the 10th largest natural gas producing country.
Will Indonesia becomes an Importer in 2025?
Yes, if :Government did not take any action on exploring new untapped resource.
Predominance of natural gas exports under long-term contracts.Indonesia’s inadequate distribution infrastructure.
Sourceshttp://www.gbgindonesia.com/en/main/business_updates/2015/upd_will_indonesia_become_a_net_importer_of_natural_gas_by_2020_11156.php
IGA Presentation
Badan Pengkajian Dan Penerapan Teknologi. Outlook Energi Indonesia 2009. 2009. Jakarta. BPPT-Press
Deloitte. Oil and gas taxation in Indonesia: Deloitte taxation and investment guides.
Sources - Cont.http://ichsaneljufri.blogspot.com/2013/06/sejarah-lahirnya-subsidi-bbm.html
http://countrystudies.us/indonesia/73.htm
http://www.ipa.or.id/overview/index/10
http://www.indonesia-investments.com/
Additional Information