China's Petrochemical Surge Drives Global Oil Demand, Raises Environmental Concerns

Image source : Suara.com/Ema RohimahThe recent hike in the price of fuel oil has left the public infuriated. On the same day when President Joko Widodo and the ministers held a press conference last September, the official fuel price increased by 30 percent. The hike—the first in eight years—raised the Pertalite's price from Rp. 7.650 to Rp. 10.000 per liter, diesel price from Rp. 5.150 to Rp. 6.800, and Pertamax from Rp 12.500 to Rp 14.500. This then begs a question, why did the price of gasoline rise?One thing we should know, anything that impacts crude oil will affect gasoline. The price of crude oil, however, always fluctuates.  One of the factors that can influence the recent price of crude oil is the supply and demand of crude oil.The principle of supply and demand is the same as what we’ve learned at school, when demand increases, oil prices rise (or supply decreases), and vice versa. For example, Brent crude oil, a type of crude oil, plummeted to $22.58 a barrel in March 2020, reaching its lowest level since 2002 due to the COVID-19 pandemic. That can happen because a lot of businesses closed, which caused the low demand for oil.Geopolitical events in any of the major oil-producing countries might also result in oil trade wars and affect oil prices. Oil prices can skyrocket as a result of conflict or crisis. This is because traders are concerned that it will limit the oil supply, causing prices to rise. The recent Russia-Ukraine conflict made oil prices top $100 per barrel for the first time since 2014 in February. What a number.In addition to crude oil, outside factors may also contribute to raising the price. Retail prices for fuel oil can be influenced by production costs and government regulations, too. The components of production costs that must be considered are the cost of crude oil, the cost of refining, the cost of distribution and marketing, and the cost of taxes. According to the Finance Ministry, Sri Mulyani, the economic price (crude oil price + production cost combined) for Pertalite is supposed to be Rp. 14.450 per liter while diesel is Rp. 13.950 per liter. Of course, the retail gasoline prices that we pay in SPBU are already subsidized by the government.Difference between subsidized prices at the pump and economic prices in Indonesia. Source: Investor Daily Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel UpdateGovernment policy plays a vital role in ensuring that the price is reasonable for both the people and the country. According to President Joko Widodo, the energy subsidy had tripled this year from its original budget, triggered by rising global prices of oil and gas. So, rather than increasing the number of subsidies, the decision to raise fuel prices appears plausible for the time being. But why isn't the price of gasoline rising in neighboring countries like Malaysia?Well, despite having similarities in many aspects, the production and distribution of energy are structurally quite different due to factors like market size and domestic supply. Indonesia has not recently made significant profits because the domestic market has become the primary market, which is more political and economical to people than profit-driven. This presents a challenge because consumers are used to the days of cheap, plentiful oil, while Indonesia is producing less than it once did. Oil production and consumption in Indonesia Source: BP Statistical Review of World Energy, various yearsPertamina’s limited refinery capacity means that it has become ever more reliant on imports and thus more sensitive to swings in global energy prices. Contrarily, Malaysia has consistently generated profits and has managed to hold gasoline prices steady despite volatility in the world energy markets. It is difficult to compare the two countries since Malaysia has a much smaller domestic market than Indonesia.The rising of fuel prices is a really sensitive issue, any changes will have a significant impact on households and small businesses. Indonesia probably needs to allocate more spending toward human resources investment, like creating more jobs and improving education, in order to be resilient to the swings of global energy. It must do more than just raise the prices to benefit from its demographic transition.References: https://thediplomat.com/2022/09/why-the-price-of-petrol-increased-in-indonesia-but-not-in-malaysia/https://www.thebalancemoney.com/how-are-oil-prices-determined-3305650#:~:text=What%20affects%20the%20price%20of,supply%2C%20and%20expected%20global%20demand.https://www.investopedia.com/articles/investing/072515/top-factors-reports-affect-price-oil.asphttps://www.investopedia.com/articles/economics/08/determining-oil-prices.asp

With the aim of raising awareness about the significance of health, the Community Outreach Division  SPE ITS SC has taken the initiative to organize a medical check-up event called "HEAL” (Healthy Empowerment and Active Living). The event was successfully conducted in collaboration with the Asian Medical Students' Association (AMSA) Universitas Airlangga. Last year, SPE ITS SC also collaborated with AMSA Universitas Airlangga for the same event. SPE ITS SC decided to collaborate with AMSA Universitas Airlangga again as it allowed the committee to proactively monitor and evaluate individuals' health, detect potential issues early, and promote preventive care.  Took place on 26th November 2023 at Taman Harmoni Keputih Surabaya, from morning to afternoon, this initiative stems from a recognition of the limited knowledge and awareness surrounding personal health in these communities. “SPE is committed to the welfare of the community, hence we are inspired to conduct health checkup activities for underprivileged communities due to lack of knowledge and awareness of the importance of personal health.” said Ghassa as the Project Officer of the event.  In order for the event to be successful, the committee promoted the activities by contacting the head of the local neighborhood association such as RT and RW. “In addition, I distributed brochures to local residents. We maximize promotion by distributing brochures and inviting people around the park on the day of the event. In addition, we also maximized promotion by using SPE's Instagram.” added Ghassa.From the event, the committee successfully checked various health tests, including uric acid, glucose blood sugar, and blood pressure. And although the event ran smoothly, the committee encountered a challenge during data collection due to the overwhelming number of participants. Unfortunately, many residents had to leave empty-handed as the health check tools had run out.In the end, the event turned out to be a significant success, leaving a positive impact in the community. “Residents around Harmony feel very helped by the free health test activities.” Ghassa said. This free medical check-ups event at Taman Harmony has proven to be immensely beneficial for local residents. A considerable number of individuals had never undergone health checkups previously, primarily due to financial constraints and limited awareness about healthcare. Encouraged by the positive impact, residents in the Harmony Park area have expressed a desire to establish free health testing as an annual community event. This growing sentiment underscores the community's recognition of the importance of proactive healthcare and its eagerness to prioritize the well-being of its residents.Written By: Arya Nugraha Aulia Rahman Yusup

Early in 2024, there is a heightened risk of disruptions to the global oil supply due to the conflict in the Middle East —a region that supplies one-third of the world's seaborne oil trade— especially for oil flows that pass through the Suez Canal and the Red Sea. The International Energy Agency (IEA) has warned that the US and UK airstrikes on Houthi targets in Yemen in response to attacks on tankers in the Red Sea have expressed worries  about the potential for an escalation of the conflict. This important trade route handled almost 10% of the world's seaborne oil commerce in 2023, or about 7.2 million barrels per day (mb/d) of crude and oil products, as well as 8% of the world's trade in liquefied natural gas (LNG). The primary alternate shipping route around the Cape of Good Hope in Africa prolongs voyages by up to two weeks, which puts strain on international supply systems and raises the cost of freight and insurance.Stable oil prices despite escalating tensionsOil companies are taking a cautious stance in response to these escalating geopolitical tensions in the Middle East. Mike Sommers, CEO of the American Petroleum Institute, has expressed worries about the growing chance of the crisis intensifying and derailing oil supplies. And although Oil prices have stayed comparatively steady despite the tensions; some experts attribute this to the impact of economic considerations on oil prices. Thus far, the Houthi raids and other Red Sea disruptions—such as the diverting of supplies away from the Suez Canal—have not had a substantial effect on energy prices. Experts have cautioned that tensions in Iran, particularly around the Hormuz, may have an impact on oil prices and that the longer the violence in Gaza continues, the more likely it is that a regional crisis may break out. The closure of important trade routes, which would have previously led to a significant increase in energy prices, has not had the same effect due to the market's confidence in the availability of supply.Assessing Supply and DemandThe World Bank's Commodity Markets Outlook in October 2023 provided a preliminary assessment of the potential near-term implications of the conflict. In a "medium disruption" scenario, the global oil supply would be reduced by 2-4 million barrels per day, initially increasing oil prices by 21% to 35%. In a "large disruption" scenario, with a reduction of 5-10 million barrels per day, oil prices could increase by 56% to 75% initially. Additionally, The IEA has revised its forecast for oil demand upward, anticipating a larger increase in global oil demand in 2024. The IEA's forecast indicates a balanced oil market, with world oil demand expected to grow by 1.1 million barrels per day in 2024, and non-OPEC supply growth projected to reach 1.2 million barrels per day. This balanced outlook is significant, considering the potential impact of the geopolitical tensions and disruptions in the Red Sea on the global oil supply. The agency's assessment of a "comfortable" oil market in 2024, despite the disruptions in the Red Sea, reflects the resilience of the oil market due to factors such as ample oil and gas supply, weaker demand in certain countries, and the ability of tankers to find alternative routes to deliver oil and gas products. ConclusionWhile the present upheavals and wars aren't having a big effect on the world energy markets, the international community should still be prepared and pay close attention to the Middle East's ongoing volatility. The developing scenario in the region could result in further escalation and have an effect on the energy landscape. Thus, in 2024, it will still be imperative to keep an eye on Middle Eastern geopolitical developments and any potential effects they may have on the energy markets.Written By: Arya Nugraha Aulia Rahman YusupReferences:Oil prices steady despite Middle East tensions, but risks are rising | Oil and Gas News | Al JazeeraOil Market Report - January 2024 – Analysis - IEAConflict in Middle East Could Bring ‘Dual Shock’ to Global Commodity Markets (worldbank.org)Geopolitical tensions in Middle East bear risks for oil supplies — IEA - Business & Economy - TASSIEA's Birol predicts 'comfortable' oil market despite Red Sea disruption | Reuters

PetroChina International Jabung Ltd. (PCJL) has successfully completed the initial production test of the Gemah-81 development well in the Jabung Working Area, Jambi, marking another milestone for Indonesia’s upstream oil and gas sector. The drilling activity was conducted under the supervision of SKK Migas, the country’s upstream oil and gas regulator.Head of SKK Migas Djoko Siswanto confirmed the positive test results, highlighting the well’s strong production performance following completion on February 11, 2026.Based on well test analysis conducted at a 32/64-inch choke, Gemah-81 produced 4.8 million standard cubic feet per day (MMscfd) of gas at a wellhead pressure (WHP) of 1,080 psig, along with approximately 400 barrels per day (bpd) of condensate. The well targets three reservoirs, with the primary zone located at a depth interval of 7,259–7,281 feet measured depth (MD). The results indicate promising hydrocarbon potential within the Gemah field.To accelerate production, PetroChina plans to connect the well to the existing Gemah Station production facility within approximately two weeks. The tie-in will involve the installation of around 300 meters of pipeline, enabling the well to commence regular production promptly.Building on this success, the company is scheduled to drill two additional wells — Gemah-85 and NEB-85 ST — within the next month. SKK Migas expressed hope that these wells will deliver even higher production rates, further strengthening output from the Jabung Block.Looking ahead, PetroChina reaffirmed its commitment to expanding exploration activities and optimizing existing assets in the block through technology deployment, cost efficiency, and collaborative efforts, supporting sustained production growth in the years to come.