Introduction
Indonesia is a Southeast Asian nation that is made up of thousands of different islands. The majority of these islands are bordered by water meaning that Indonesia has control over both a significant land and sea area. Spread out over 740 thousand square miles Indonesia is the 14th largest nation in the world by land area alone or the 7th largest when you combine land and sea area.
On top of this enormous size, Indonesia is home to rapidly growing population of 250 million. As a nation where energy consumption and vehicle traffic are increasing rapidly, this is, as we will see, an enormous potential oil market. The majority of Indonesia's population is located on the island of Java with a population of more than 140 million. As we will see throughout this article, Indonesia's enormous population and growing industrialization, could come together to make it the next major oil importer.
Indonesia Demographics
Now that we have an overview of Indonesia's size and the country's enormous population, along with a discussion of the country's growing industrialization, let's begin by talking about the demographics that will fuel Indonesia becoming a major oil importer.
Indonesia Population Growth - Trading Economics
To begin with, Indonesia has an enormous and rapidly growing population, a population that has been growing at approximately 1% annually. The country's population has grown from 225.6 million people in 2007 to 258.7 million people at present. This represents a population growth of 16% over the last decade and means that Indonesia, as the 4th largest country in the world, is an enormous country with a lot of people who want to consume energy.
Indonesia Population Breakdown - Live Population
At the same time, we can see how Indonesia has an enormous young population. The largest portion of the country's population is aged from 5 to 19 years old. The country currently has roughly 35 million people in this age group. These are people who will become adults over the next decade, and as adults, they will want cars and consume additional energy.
This shows how Indonesia has the demographics to support significant future growth in its energy consumption. As we can see here, this is the consumption of a major future oil importer.
Indonesia Oil Environment
Now that we have a discussion of Indonesia's young growing population and the potential for increased oil production, let's discuss Indonesia's present oil environment.
Indonesia Production v. Consumption - Crude Oil Peak
As we can see here, from 1965 to 2014, Indonesia watched its oil consumption increase steadily from just under 0.2 million barrels per day to present oil consumption of almost 1.8 million barrels per day. This means continued growth in oil consumption of 32 thousand barrels per day and shows how Indonesia's oil consumption is increasing fairly consistently at 2% annually.
However, Indonesia's oil production tells a much different story. The country was a net exporter of oil with peak production from the early-1970s to the late 1990s of roughly 1.5 million barrels per day. This meant that over this time the country exported an average of almost 1 million barrels per day. However, growing production and falling production meant in 2001, the country
became a net importer.
As a result, Indonesia has gone from exporting a million barrels a day in the late 1980s to a breakeven in 2001 all the way to importing 800 thousand barrels a day in the most recent year. The combination of growing consumption and decreasing production means that Indonesia's oil imports have been increasing at an average rate 55 thousand barrels per day from the early-2000s.
Indonesia has a consistently growing population with a large number of young people who will consume increasing amounts of energy in the future. As a result, Indonesia's oil consumption is growing rapidly while the country's production is falling. This gives Indonesia the potential to be the next major oil importer.
Indonesia Dropping Oil Production
So far, we have a detailed overview of Indonesia's demographics along with a discussion of the oil environment and how the country is on the path to becoming a major oil importer. Now let's conclude by discussing Indonesia's dropping oil production.
Indonesia Oil Reserves - Slide Share
As we saw above, even with the drop in Indonesia's oil production, the company is continuing to produce 330 million barrels per year. Looking optimistically at the chart above, and we saw that in 2009 Indonesia had total potential reserves of 8.00 billion barrels. Over the past 7 years, the country has produced roughly 2.31 billion barrels per year decreasing its current reserves to 5.69 billion barrels.
At the same time, with the country's continued production, its reserves should continue to decline significantly. It is important to note above that even with Indonesia's significant total reserves, almost half of these are potential reserves that might not actually exist. However, even if all these reserves are real, the company just has 17 years of reserves left.
This means that Indonesia, as a country, is well on its way to running out of oil. With the country having just 17 years of reserves left, that means that the company should run out of oil by 2033. At this point, almost 1 million barrels of oil will need to be found daily, oil that will be imported, and this doesn't count the company's growing production.
This shows overall how Indonesia is the next major oil importer with significant potential.
Conclusion
Indonesia is a major country, but one that is ignored a lot of the time. The country is the 4th largest country in the world by population and the 7th largest in the world by land and sea area. At the same time, the country's oil consumption is growing rapidly. This growth in consumption means increased imports.
Up until the early 2000s, Indonesia was a net oil exporting nation. However, since then the country's falling production and growing consumption have meant the country is on its way to becoming a major oil importer. At the same time, even taking into account its probably reserves, Indonesia only has 17 years of oil reserves. That means Indonesia will need to import additional oil soon.
This shows how Indonesia is on the path to becoming the next major oil importer.
