Prabowo aims to boost Indonesia's energy security through oil and gas reforms, biofuels

President Prabowo Subianto, who took the oath of office on Sunday, 20 Oct also plans to build on the previous administration's efforts to tap massive gas discoveries in South Andaman and lift biofuels use. Formerly a member of the Organization of the Petroleum Exporting Countries (OPEC), Indonesia's oil production has declined to under 600,000 barrels per day (bpd) this year from a peak of around 1.6 million bpd in the 1990s due to ageing blocks and sluggish investment. At the same time, oil consumption in the world's fourth-most populous country has more than doubled to 1.5 million bpd, leading to imports of oil and fuel products that have averaged $28 billion annually in the past decade.

"We must have energy self-sufficiency and we are capable to be self-sufficient," Prabowo said in his inauguration speech, citing rising geopolitical tension. Komaidi Notonegoro, energy analyst at ReforMiner Institute, said exploration and production contractors must deal with 19 often-rival agencies to secure permits. "The oil and gas contractors should be busy looking for new reserves instead of taking care of permits, it takes too much time," he said.

To increase production, the new government plans to push reactivation of nearly 5,000 idle wells, Bahlil said.

"The government's main concern is volume, but these contractors are running a business. The question is, whether the government will be willing to compensate" for the added cost, Komaidi said.

To reduce liquefied petroleum gas (LPG) imports, the new government aims to double production of the cooking fuel from 1.7 million tons per year, Bahlil said. Indonesia imports around 70% of the 8 million tons of LPG it consumes annually.

Prabowo also has ambitious targets to increase biodiesel and bioethanol use, which some experts have said should be his main energy sector focus.

"We have to be realistic. Prabowo can no longer rely on oil and gas," Fahmy Radhi of Gadjah Mada University said. "It is best if he put renewable energy as a high priority and focus on that from the get-go."

Prabowo plans to increase the share of palm oil-based fuel in diesel to a world-leading 50%, from 35% now, and on Sunday listed cassava and corn, in addition to palm, as potential biofuel feedstocks.