BMI View: Economic growth, supportive demographics and a weak oil price environment will support consumption growth in Indonesia. However, production weakness and infrastructure bottlenecks are constraints to further growth in consumption particularly in the second half of our forecast period from 2019 to 2024. More comprehensive reforms are required to turn Indonesia's upstream segment around.
|e/f = BMI estimate/forecast. Source: Ministry of Energy and Mines, EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||927.2||894.1||909.3||925.3||902.9||886.1||870.9|
|Refined products production & ethanol, 000b/d||914.3||868.6||781.8||785.7||777.8||770.0||773.9|
|Refined products consumption & ethanol, 000b/d||1,686.6||1,716.4||1,795.4||1,858.1||1,903.0||1,939.8||1,987.4|
|Dry natural gas production, bcm||69.9||67.1||66.3||66.4||66.4||64.9||63.4|
|Dry natural gas consumption, bcm||40.2||41.8||43.3||44.7||45.8||46.0||46.5|
The main trends and developments we h ighlight for Indonesia's oil & gas sector are:
Early draft proposals of regulatory reforms of the oil and gas industry point towards the state maintaining its dominant role in the country's upstream segment.
Despite a brief upturn in crude oil output in 2015 and 2016, production will revert to a downtrend from 2017 in the absence large new projects to replace mature fields.
The postponement of key projects and uncertainty regarding the future of the gas-rich Mahakam block has led us to downgrade our forecasts for Indonesia's gas production. We see stagnation in production growth between 2015 and 2017 and a decline thereafter to 2020. Although we expect a small uptick from 2021, this will be highly dependent on FIDs made for significant projects, which could be further postponed without an improvement in regulatory and price environment.
Despite this outlook, Indonesia is a country where much below-ground potential continues to exist. There is considerable upside potential if its business environment improves.
Despite our forecast for an increase in Indonesia's refining capacity, falling utilisation rates will see a decrease in the country's refined oil production from 2015 to 2019. The start-up of the Bontang refinery will help reverse this downtrend in output from 2020. A failure to make a FID for the Bontang plant will see the downward movement in total refined oil output persist through to the end of our forecast period in 2024.
The weak oil price environment is a boon for Indonesia. Combined with a brighter macroeconomic outlook, we have upgraded our forecast for the country's total oil consumption.
Gas consumption is set to trend upwards throughout our forecast period from 2014 to 2023. Not only will the switch of the power sector from diesel to gas be one of the key proponents of demand growth, the greater availability of gas from the start of LNG imports into the country will support consumption requirement.
Growing oil demand will increase net imports of refined oil, particularly with lower refinery runs at existing plants and without plant modernisation and expansion. However, the fall in plant utilisation rates will benefit the country's crude oil trade balance, as lower crude feedstock requirement by refineries see it briefly return to a net exporter of crude oil up to 2020.
Indonesia's growing domestic gas consumption will reduce its export capacity over our forecast period. Hence, while we forecast LNG production to trend upwards from 2014 on the back of new projects, we do not expect net LNG exports to return to its heyday in the 2000s.