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Tuesday, 22 July 14
INDONESIAN ELECTION RESULT ENCOURAGING FOR FOREIGN INVESTMENT IN ENERGY AND MINING SECTORS - WOOD MACKENZIE
 Joko Widodo-Jusuf Kalla has been announced as the official winner of Indonesia's presidential election. Joko Widodo, or Jokowi, is viewed as a more progressive and pragmatic choice for President than his opponent, Prawbowo Subianto.
Wood Mackenzie says that Jokowi's victory will generate short-term positivity for foreign companies looking to invest in Indonesia's energy and mining sectors. However, the new government's ability to implement reforms remains uncertain. A lack of a majority in the senate will weaken the government's ability to push through all reforms required to reinvigorate the investment environment and contribute to a revived Indonesian economy. The significance of this political development for the mining, upstream oil and gas, and fuel sectors are noted below.
Mining
Jokowi could shift the regulatory environment towards being more accommodating of foreign investment and mining in general. Wood Mackenzie's Senior Coal Analyst Rory Simington explains, "Mining-friendly regulatory change is possible, however it is likely to be incremental rather than exponential." Implications for the mining sector are:
- Current official policies are unlikely to be reversed. These include the ban on mineral exports, requirements for divesture of foreign ownership, and Coal Contracts of Work renegotiation.
- The previous DPI-P led government of Megawati Sukarnoputri from 2001 to 2004 showed a willingness to appoint people from industry instead of politicians to prominent positions in key ministries. If the Widodo led DPI-P coalition government appoints a competent administrator with industry experience to head the Department of Energy and Mineral Resources, this could result in mining friendly changes to the regulatory environment.
- Based on discussions with industry contacts in Indonesia, we believe that changes could include easing of foreign investment divesture requirements, and reducing minimum levels of purity that must be achieved for metals refining before export is allowed. Any changes are likely to be incremental rather than exponential.
Upstream oil and gas
Wood Mackenzie believes the wider implications of the election result will be felt more in the oil and gas sector. Wood Mackenzie's Senior Upstream Analyst, Andrew Harwood says, "At a time of growing domestic energy demand, declining indigenous production, and after several years of regulatory instability, the government's ability to implement Jokowi's proposed reforms will be key." Implications for the upstream sector are:
- Indonesia's crude output has fallen from over 1 million barrels per day in 2005 to currently just over 800,000. The domestic fuel subsidy bill is approaching US$21 billion (bn) in 2014, and regulatory uncertainty has stalled several major investment projects, such as Chevron's Indonesia Deepwater development, Inpex's Abadi FLNG and BP's Tangguh expansion.
- Jokowi has outlined plans to reduce Indonesia's reliance on oil imports by developing new gas infrastructure and accelerating the switch to gas. He aims to boost oil and gas output by providing enhanced fiscal terms for mature fields and exploration, and removing red-tape, which would also apply to the mining sector.
- A revision of the 2001 Oil and Gas Law and formalisation of the upstream regulator's role is a longer term objective that would enhance the investment environment by removing regulatory uncertainty. The sanction of Chevron's Indonesia Deepwater development, Inpex's Abadi FLNG and BP's Tangguh expansion could generate over US$30bn of new investment in Indonesia's oil and gas sector.
- While we would expect PERTAMINA to play a greater role in Indonesia's upstream sector under Jokowi, the new president also recognises the benefits of working with international investors to secure technological know-how as well as investment.
- Overall, Jokowi's victory will generate short-term positivity in the energy sector. However, the new government's ability to implement the proposed reforms remains uncertain.
Fuels market
Sushant Gupta, Head of Asia Pacific Downstream Research, says, "Subsidies are a huge burden to the government because around 60% of the total oil demand is subsidised. During the period of 2014-2020, we estimate the total fuel subsidy bill to be around US$120bn, assuming current domestic prices in Indonesia. This accounts for around three-percent of GDP and is therefore unsustainable." As a result, Wood Mackenzie expects Jokowi's government to make changes:
- The government is expected to push through further price reforms, which will impact near-term demand. However, the income-effect prevails in the medium term and will drive demand growth.
- If subsidies are sharply reduced, we could see a demand drop of around 60-70 thousand barrels per day (kb/d) in gasoline and 45-50 kb/d in diesel.
- The current market size of unsubsidised retail fuels (gasoline and diesel) is very small; however, there is a huge upside potential if the government fully deregulates the market. This would provide a good market opportunity to foreign players operating in the unsubsidised retail fuels market or new players looking to invest in refining and retail sectors in Indonesia.
Editor’s notes:
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions. For more information visit: www.woodmac.com
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Wednesday, 03 September 14
KOREA MIDLAND POWER CO. LTD INVITES BIDS FOR 1 MMT OF BITUMINOUS & SUB-BITUMINOUS COAL FOR BORYEONG POWER PLANT
COALspot.com: KOMIPO again in the market for 1 million tons of 5700 NAR and 4600 NAR coal for Jan – March 2015. South Korean state-owned util ...
Wednesday, 03 September 14
CFR S.CHINA COAL SWAP FOR JAN 2015 DELIVERY CLOSED AT $ 68.30 PMT; DOWN 2.43% W-O-W
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 0.95 (-1.39%) day on day and US$ 1.40 (-2.03%) week on wee ...
Tuesday, 02 September 14
BERAU COAL HAS AWARDED A CONTRACT EXTENSION TO BUMA FOR 647 MLN BCM OVERBURDEN REMOVAL
COALspot.com: PT Delta Dunia Makmur Tbk (“DOID”) has announced that its primary operating subsidiary, PT Bukit Makmur Mandiri Utama (&l ...
Monday, 01 September 14
GLOBALCOAL WELCOMES TWO NEW MARKET MEMBERS
COALspot.com: globalCOAL® announced today that two Market Members have joined its trading community. Both new Market Members are from the India ...
Sunday, 31 August 14
COAL FREIGHT RATES INTO INDIA FROM INDONESIA FIRM
COALspot.com: The freight market continued to firm this week. BDI up 5.42 percent week ended 29 August and closed at 1147 points while the Ca ...
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- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- The University of Queensland
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Australian Coal Association
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- Planning Commission, India
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Interocean Group of Companies - India
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