Monday, November 10, 2008

UPDATE 1-Indonesia says plans coal buffer stock

[ Reuters ]

JAKARTA, Nov 10 (Reuters) - Indonesia, the world's top exporter of thermal coal, plans to put in place a coal buffer stock to secure supplies for domestic power plants, the energy minister said on Monday.

Coal for the buffer stock would be procured by revising a policy so that producers pay royalties using coal supplies, Minister Purnomo Yusgiantoro said.

The policy is expected to affect all coal producers, including companies such as PT Bumi Resources Tbk (BUMI.JK: Quote, Profile, Research, Stock Buzz), Indonesia's largest coal producer and PT Indo Tambangraya Megah (ITMG.JK: Quote, Profile, Research, Stock Buzz), a unit of Thailand's Banpu PCL BANP.BK.

"We are considering developing coal buffer stocks and PLN will be authorised to manage it so that when there's a supply problem, it won't cause a panic," Yusgiantoro said, referring to state electricity firm PT Perusahaan Listrik Negara.

The government has said earlier this year that it was looking at swapping cash royalties for coal stocks to ensure domestic supply.

Under the current scheme, the government gets 13.5 percent of miners' total coal supplies. Miners have to return the proceeds from the sale of this coal back to the government.

"We will be able to apply the buffer stock once the policy on swapping cash royalties into coal supplies is completed," Bambang Setiawan, director general of mining, geothermal and coal at the ministry, said at the same news conference.

The energy minister said Indonesia may be able to get around 30 million tonnes of coal for buffer stocks under the plan.

Disruptions in coal shipments partly due to bad weather caused blackouts in Java and Bali, the two main commercial islands, earlier this year.

Last week, PLN was quoted by the state Antara news agency as saying it planned to import coal from Australia to increase stocks ahead of the rainy season due to higher local prices and dwindling stocks at its four major power plants.

But the firm later denied the plan and said it would focus on seeking supplies from domestic producer.

According to Setiawan, most domestic power plants currently use sub-bituminous coal with low heating value and the new policy should enable the country to have better quality coal by blending different kinds of coal quality.

PLN has said it would need more than 40 million tonnes of coal in 2009 up from about 35 million tonnes this year as three new coal-fired power plants start operating.

Indonesia coal output is expected rising to 240 million tonnes in 2009 from 235 million tonnes this year, according to date from the industry-backed Indonesian Coal Mining Association. (Reporting by Fitri Wulandari and Muklis Ali; Editing by Ed Davies)

Tuesday, November 4, 2008

UI to host science Olympics

[ jakartapost ]

DEPOK: Director General of Higher Education Fasli Jalal will open the inaugural Olympics of Science at the University of Indonesia (UI) on Monday.

About 3,000 students from 38 state and 21 private universities across the country will sit elimination tests held simultaneously in 31 provinces to narrow down a shorlist of 250 competitors.

The finalists will gather at UI on Dec. 5-9 to compete for the top honor. Sponsored by state oil company Pertamina, the event offers Rp 135 million worth of scholarships to the winners.

The national competition is restricted to physics, mathematics and chemistry students who have never participated in international Olympic events. -- JP

Rich in geothermal fields? Then exploit them

[ japan times ]

Special to The Japan Times

SINGAPORE — In their quest for energy security, Indonesia and the Philippines are planning to develop nuclear power to buttress a key part of their electricity generating systems. This provides the near constant, or base load, electricity needed by industries and households. However, the possibility of accidents and deadly radioactive releases from nuclear power plants — particularly those in countries like the Indonesia and the Philippines, which are peppered with active volcanoes and subject to earthquakes and tsunami — worries neighboring nations in Southeast Asia as well as Australia.

Such plants would be sited on coastlines so they can draw water from the sea for cooling purposes. The problems even Japan, with its advanced technology and management skills, has encountered with the seismic safety of its nuclear power industry during major earthquakes in recent years has heightened this anxiety.

Yet the very basis for these safety concerns in Southeast Asia points to a solution. Instead of going nuclear with its risks, Indonesia and the Philippines could expand what they are already doing: tapping the virtually limitless heat from deep underground to power their economies. The two Southeast Asian countries are the world's biggest geothermal electricity producers, after the United States.

This form of renewable energy supplies just over 23 percent of the electricity generated in the Philippines and 5 percent in Indonesia. It has reliability advantages over solar and wind power, mainly because geothermal fields do not stop producing energy at night after the sun sets, or when the wind ceases to blow or gusts too hard.

Coming from the Earth's molten core and from the decay of naturally occurring elements such as uranium and thorium, the heat energy in the uppermost 10 km of the planet's crust is vast — 50,000 times greater than the energy content of all known oil and natural gas resources. Among countries with the richest geothermal resources are those that lie atop the so-called Pacific Ring of Fire, a hot geologic zone that encircles the Pacific Ocean. They include the western U.S., Canada, Mexico, Chile, Peru, Russia, Japan, China, the Philippines, Indonesia and New Zealand.

On a worldwide basis, hydropower is by far the most important renewable energy source, accounting for 19 percent of global electricity production. Wind generates just one percent of world power. While both geothermal and solar energy each provide well under one percent, they have the potential to supply much more. Indonesia is the world's third biggest producer of geothermal electricity. Yet it supplies barely 1,000 megawatts of an estimated 27,000 MW potential from its geothermal resources, one of the world's largest.

It plans to develop new capacity of nearly 7,000 MW over the next decade, equivalent to 10 nuclear power plants and equal to nearly 30 percent of its current electricity-generating capacity from all sources. The Philippines, the No. 2 producer after the U.S., aims to increase its installed geothermal capacity by 2013 by over 60 percent, to just over 3,100 MW.

But first impediments in both countries to expanded geothermal investment must be removed. A presidential decree in Indonesia earlier this month (October) offered tax incentives for expanded production from existing fields and development of new resources. However, political bickering in the Philippines has blocked passage of a renewable energy bill to provide greater incentives and clarity.

In both countries, official red tape, difficulty in gaining access to public and private land for development projects, and disputes over the price offered for geothermal electricity going into state-owned power supply networks has slowed progress.

Now the global squeeze on credit and the recent fall in prices of competing fossil fuel energy sources like coal, oil and natural gas, are putting additional barriers in way of geothermal expansion.

Still, the potential for growth remains promising. According to a recent survey by the Earth Policy Institute in Washington, geothermal energy is being tapped in 24 countries, five of which used it to produce 15 per cent or more of their total electricity.

In the first half of this year, worldwide-installed geothermal power capacity passed 10,000 MW and now produces enough electricity to meet the needs of 60 million people, roughly the population of Britain. By 2010, capacity could increase to 13,500 MW in 46 countries.

Most geothermal plants in operation around the world tap into underground pockets of high-temperature water or steam to drive steam turbines. These ventures need high capital investment for exploration, drilling and plant and pipeline construction, compared to coal or gas-fired electricity plants. However, operation and maintenance costs are relatively low.

Now, however, new geothermal technologies enable electricity to be generated at much lower temperatures. They use liquids with lower boiling points than water in heat exchange systems, opening a vast new frontier for geothermal power.

Michael Richardson, a former Asia editor of the International Herald Tribune, is an energy and security specialist at the Institute of South East Asian Studies in Singapore.

Indonesia Power Report Q3 2008

[ pr-inside ]

The new Indonesia Power Report from BMI forecasts that the country will account for 2.08% of Asia Pacific regional power generation by 2012, with an increasing generation shortfall that provides a growing import requirement. BMI’s Asia Pacific power generation estimate for 2007 is 6,865 terawatt hours (twh), representing an increase of 9.6% over the previous year. We are forecasting an increase in regional generation to 9,370twh by 2012, representing a rise of 36.5%. Asia Pacific thermal power generation in 2007 is estimated by BMI at 5,431twh, accounting for 79.1% of the total electricity supplied in the region.

Our forecast for 2012 is 7,104twh, implying 46.6% growth that reduces the market share of thermal generation to 75.8% – thanks partly to environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Indonesia’s thermal generation in 2007 was 135twh, or 2.49% of the regional total. By 2012, the country is expected to account for 2.52% of thermal generation. For Indonesia, oil is the dominant fuel, accounting for 47.5% of 2007 primary energy demand (PED), followed by gas at 26.5%, coal at 24.3% and hydro with a 1.7% share of PED. Regional energy demand is forecast to reach 4,830mn tonnes of oil equivalent (toe) by 2012, representing 37.3% growth over the period.

Indonesia’s 2007 market share of 3.10% is set to fall to 2.98% by 2012. Indonesia is moving ahead slowly with controversial plans to build its first nuclear power plant, which could be operational by 2017. Indonesia is now ranked sixth, just behind Malaysia in BMI’s updated Power Business Environment rating, reflecting to its low level of energy import dependence and healthy power consumption growth prospects. Several country risk factors offset some of the industry strength, and the country may struggle to keep Philippines and Thailand at bay over the longer term. BMI is now forecasting Indonesian real GDP growth averaging 5.83% per annum between 2007 and 2012, with a 2008 forecast of 6.10%. Population is expected to expand from 231.6mn to 245.3mn over the period, with GDP per capita and electricity consumption per capita both forecast to increase significantly.

The country’s power consumption is expected to increase from 173twh in 2007 to 282twh by the end of the forecast period, leaving a shortfall in generation rising from an estimated 26twh in 2007 to 87twh in 2012, assuming 7.1% annual growth in generating capacity. Between 2007 and 2018, we are forecasting an increase in Indonesian electricity generation of 90.7%, which is among the highest for the Asia Pacific region. This equates to 35.1% in the 2013-2018 period, up from 32.6% in 2007-12. PED growth is set to fall from 25.8% in 2007-12 to 24.0%, representing 63.8% for the entire forecast period. An increase of 168% in hydro-power use during 2007-18 is a key element of generation growth. Thermal power generation is forecast to rise by 88% between 2007 and 2018. More details of the long-term BMI power forecasts can be found in the appendix of this report.

Mike King

Indonesia biofuel policy to reduce palm oil exports

[ business standard ]

Exports of palm oil from Indonesia, the largest producer, may decline by as much as 1.5 million metric tonnes a year after the nation made the use of renewable energy mandatory, a government official said.

“In relation to the mandatory policy for bio-energy issued last month, we see that the use of agricultural products for alternative energy will increase,” Bayu Krisnamurthi, a deputy to Coordinating Minister for Economic Affairs Boediono, said on Wednesday in Jakarta. “This will cut our exports” of palm oil.

A fall in supplies from Indonesia, the top producer of the tropical oil, may help support prices that slumped to a two-year low this week on concern slowing global economic growth will dent demand for commodities.

The mandate is “positive for the week” for palm oil prices, said Tan Ting Min, a plantation analyst at Credit Suisse Group in Kuala Lumpur.

Indonesia said September 26 diesel used for transportation must have minimum 1 per cent biodiesel starting this month. The mix was set at 2.5 per cent for industrial users. The nation also mandated 1 per cent bio-ethanol mix for cars using subsidised fuel starting 2009, while industries using gasoline must ensure 5 per cent of the fuel has bioethanol.

Fossil Fuels: Palm oil, with the highest calorific value of any vegetable oil, can be added to diesel to stretch supplies of fossil fuels. Brazil mandates the use of ethanol, made from sugar cane, in cars while the US uses corn to make ethanol.

Indonesia’s biofuel industry can produce between 1.3 million tonnes to 1.5 million tonnes annually, said Krisnamurthi. Capacity may double to 3 million tonnes by 2010, he said.

The country’s palm oil output will be more than 19 million tonnes next year and exceed 20 million in 2010, he added. Food and chemicals industry may use 4.5 million tonnes this year and next, and 5 million tonnes in 2010, Krisnamurthi said.

Palm oil for December delivery is trading at 1,819 ringgit ($520) a ton on the Malaysia Derivatives Exchange at 4:14 pm local time. Prices have dived 60 per cent from a peak in March.

Futures may average 2,900 ringgit a tonne in 2009, compared with 3,226 ringgit so far this year, Credit Suisse’s Tan said.

Indonesia May Cut Tin Output If Price Keeps Dropping

[ Bloomberg ]

By Naila Firdausi and Bambang Dwi Djanuarto

Nov. 3 (Bloomberg) -- Indonesia, the world's largest tin exporter, may reduce production if the price extends its decline, an Energy and Mineral Resources Ministry official said.

``Output will be less than 90,000 tons this year,'' Bambang Setiawan, director general of coal and mineral resources, said in an interview today. ``If the price keeps tumbling we'll talk with local governments and producers on their output quotas and we'll have to tighten them.''

Tin, mostly used in soldering and food cans, has slumped 46 percent from a record $25,500 a ton in May on concern the global credit crisis would push the world economy into recession and reduce demand for commodities. The price slump will probably curb investment and delay new projects, Peter Kettle, research manager of ITRI Ltd., a producer-funded group, said Oct. 29.

``It will definitely have some impact if Indonesia cuts output as they and China are the biggest producers,'' said Pang Ying, an analyst at Shenzhen Rongtuo Trading Co. ``The market will be watching Chinese supplies closely. If these drop too, we could see prices bucking the general downtrend.''

PT Timah, Indonesia's largest tin mining company, may produce 45,000 tons of refined tin this year, while PT Koba Tin, a unit of Malaysia Smelting Corp., may make ``less than 10,000 tons,'' Setiawan said in Jakarta.

Timah Corporate Secretary Abrun Abubakar said Oct. 22 that the company may produce 45,000 tons. That was 6.3 percent down from an August forecast by company president Wachid Usman.

Lower Production

Koba Tin said Oct. 21 full-year production was already scheduled to be half the original target of 15,000 tons. In the 10 months through October, output totaled 6,000 tons, according to company president Kamardin Md Top.

Indonesia's small tin smelters have already agreed to halt production to help stem the price decline. All nine members of PT Bangka Belitung Timah Sejahtera, a group set up in 2007, agreed to stop output, Ismiryadi, a member of the board of commissioners, said in an interview Oct. 21. The group produces about 3,000 metric tons a month.

``Today some of the once probable projects are now only possible, while many previously possible projects have already been postponed or canceled,'' ITRI's Kettle said at a conference in Istanbul last week.

The metal is heading for a third consecutive year of supply shortfall, Kettle said. The deficit may reach 20,700 tons, compared with 2,500 tons last year, he said. That would be more than five times larger than existing stockpiles monitored by the London Metal Exchange.

Tin for three months delivery advanced 2.5 percent to $13,732 a ton on the London Metal Exchange today.