Shell Indonesia Technology Conference 2016: Technology Innovation as Solution to Energy Challenge amid Economic Dynamics

Jakarta, February 17, 2016. PT Shell Indonesia held the Shell Indonesia Technology Conference 2016 on February 17-18, 2016 in Jakarta. Bringing the theme “Performing in Challenging Economy through Technology Leadership” the event aimed to provide overview of Shell’s technological leadership and development, and how it plays an important role in overcoming global energy challenges, including in Indonesia. A total of150 participant comprising CEOs of Indonesian leading companies and managers from various industries attended the dialogue forum.

As we all are aware, a lengthy period of macro-economic crisis has caused uncertainty in economic sector, triggering political upheaval and increasing social stress. The crisis has also triggered political and economy’s shifting from West to East regions in addition to transformation in global institutions relationship like G20 and ASEAN. The world’s energy, water and food resources are also under stress. The rising global population and urbanization is the major cause stress to the global energy sources.

Shell Indonesia Director of Lubricant Dian Andyasuri said, “This forum will help business players in understanding global energy challenges especially in Indonesia as well as recognizing Shell Technology leadership in energy sector, including its lubricant products which can boost business performance. Furthermore, this forum will also provide an overview about Shell scenario planning in providing wide range of specific energy solutions to different countries in different ways and time.”   

Meanwhile, Indonesian Minister of Industry Saleh Husin said, “We positively respond Shell Indonesia’s initiative for conducting this dialogue forum as a platform to share information on the development of advance energy technology so we can together tackle future energy challenges.”

Collaboration of Shell and some customers has evidently brought positive result in term of operational cost efficiency. Vice President of Shell Global Commercial Technology Dr. Andrew Hepher said that Shell had not only offered products, but also technical services to help customers get all they need to improve business performances. These services include conducting a survey on industrial requirements, providing recommendation on the best products, performance monitoring with real time data and recommendation on customer business performance improvement.

Shell New Lens Scenarios

World population is estimated to reach 9 billion in 2050 or higher than the current population at 6.7 billion. Meanwhile, the urbanization will drive 75% of population to live in urban areas in 2050 or 50% higher than what is reported in 2014. This condition will triple the energy demand, which potentially causes energy crisis. Currently, around 3 billion of people do not have access to modern energy sources.   

On the other side, the world is striving to reduce CO2 emission. The future will demand not only more energy but also lower carbon sources of energy. Shell as the world’s top oil and gas producer has been ready to face uncertainties and these global energy challenges by preparing a global energy model. Shell uses this global energy model to understand global change in the future and to design scenario to see how these challenges will impact the future.

Shell scenarios go beyond traditional outlooks or forecasts by covering a broader set of drivers and trends in economics, geopolitics, social change, and environmental stresses on water and climate. Shell has two major scenarios – Mountains Scenario and Ocean Scenario. With these two scenarios, Shell sees wide range of energy solutions applicable to different country with different methods and time different ways and on different timeliness.  

In Mountain Scenario, the power remains concentrated in the hands of economic and political elites. Consequently, the top-down policymaking results and the steady use of gas becomes the backbone of the global energy system by the 2030. Meanwhile, in Oceans Scenario power becomes increasingly devolved away from governments and elites. This situation spurs innovation and economic growth, but also slows consensus-building in other areas. Furthermore, the development of natural gas infrastructure is slower following a greater and more sustained role for coal. This situation causes late reduction of CO2 emissions.

Local Energy Challenges

ASEAN Center for Energy recorded Indonesia as the country with the greatest energy demand in Southeast Asia reaching 44% of total energy demand in this region. Malaysia and Thailand followed with 23% and 20%, respectively. Fossil energy is predicted to dominate energy demand in that region by 80% in 2030 or 76% higher than in 2011. Industrial sector will dominate demand growth by 2.7% per year up to 2035.

Meanwhile, National Energy Board (DEN) estimates total national energy demand reaching 2.41 million barrels of oil equivalent (BOE) in 2025. It grows by 84% compared to total national energy demand in 2013 at 1.243mboe. Currently, fossil energy still dominates energy demand in Indonesia. Fossil energy contributed 94.6% of total energy demand in 2013 or equivalent 1,357mboe while renewable energy contribution was only 5.5%. Those fossil energy sources were oil (44.0%), natural gas (21.9%) and coal (28.7%).

At the moment, oil exploration output in Indonesia is still unable to meet national energy demand. Total national oil consumption reached 425 million barrels in 2013 referring to crude oil. A total of 352 million barrels of national oil consumption comprising of 233 million barrels of fuel were supplied by domestic refineries. Meanwhile, 192 million barrels were imported in the form of crude and fuel products. This situation is reasonably caused by the decline in oil production and limited capacity of domestic refineries. 

Transportation sector, especially land transportation including the freight reportedly consume nearly 88% of national fuels stockpile – the subsidized and non-subsidized fuels. This sector mostly consumes gasoline and diesel fuel.    

Government has taken some efforts to overcome those challenges through electricity saving, public transportation and fuel consumption efficiency campaigns. The government has even issued EMR Ministerial Regulation No.12/2012 on Oil Fuel Consumption Control and EMR Ministerial Regulation No.13/2012 on Electricity Usage Saving.

Shell Technology Solution

All measures taken by Indonesian government to overcome energy challenges in the future will not be optimal without the support from other parties. Good collaboration between government, business/industrial players and public, in addition to academicians is needed to face energy challenges in the future. Shell believes the importance of collaboration in facing global energy challenges.  

Dian said, “Collaboration and technology are essentials to achieve significant change in meeting global energy demand in the future. We believe collaboration between government, business players and public is the important key to face the energy challenges. Cross-industry collaboration is highly needed to develop a technology to help us meet energy and business demand in addition to reduce negative environmental impacts.”

Energy efficiency has doubled in the last 50 years. However, this efficiency rate can further increase with sustained technology investment and cross-industry collaboration. Lubricant technology plays key role in boosting energy efficiency and enhancing engine life. Collaboration of Shell and business players in Indonesia can maximize the value of technology to meet industry requirements in the future.  

In the current and future competitive business climate, there will be an increased focus on operational cost reduction. Each business will need to ensure that current capital investments continue to deliver more efficiency. Automotive business players will focus on low carbon emission alternative energy. Other industrial players will require engines to deliver optimum result with low energy consumption. Power plant industrial players will focus on lubricants that can ensure its equipment in delivering long-term uninterrupted power.

Dr. Andrew said that Shell Lubricants with its technology could offer solutions to help industrial players face the challenges. Shell lubricant technology will bring significant impacts to every industry in improving energy efficiency, enhancing engine life due to its ability to protect industrial equipment against corrosion. Collaboration of Shell and industrial players will bring better business performance.

Collaboration of Shell and a construction company in Indonesia has successfully saved US$22,915 per year through longer oil change interval up to 500 hours using Shell Rimula R4 X. In addition, collaboration of Shell and the mining company Pama has also saved US$220,000 per year through longer oil change interval up to 6,000 in hydraulic machine with Tellus S3M 46.

“In addition to our collaboration with customers of various industries, Shell has also made technical cooperation with international racing organizers, academicians and industries, enabling Shell to keep its leading position in technology,” Andrew added.

For further information, photos or interview, please contact:

Haviez Gautama

PT. Shell Indonesia, Talavera Office Park 22nd - 27th Floor

Jl. Letjen TB. Simatupang Kav. 22 – 26

Phone : +62 21 7592 4700

About Shell Indonesia

Shell Indonesia with its 300 employees conducts business which involves gas stations, lubricants (automotive, industrial and transportation), marine, fuel for business and industry sectors as well as bitumen. In the Upstream sector, Shell Indonesia is the PSC operator of deep-water block Pulau Moa Selatan and a strategic partner of Inpex, Masela PSC operator which includes the Abadi gas field.

For more information, please visit www.shell.co.id