China's Mnc Energy in Indonesia Case Study
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CHINA’S MNC ENERGY IN INDONESIA CASE STUDY: CNOOC IN TANGGUH-FUJIAN LNG PROJECT (2009-2012) An Undergraduate Thesis Submitted to the Faculty of Social and Political Sciences In Partial Fulfillment of the Requirements for Bachelor of Arts (B.A) in International Relations By: Faruq Muhandis 108083100014 DEPARTMENT OF INTERNATIONAL RELATIONS FACULTY OF SOCIAL AND POLITICAL SCIENCES SYARIF HIDAYATULLAH STATE ISLAMIC UNIVERSITY JAKARTA 2014/1436 DECLARATION OF ORIGINALITY This thesis entitled: CHINA’S MNC ENERGY IN INDONESIA CASE STUDY: CNOOC IN TANGGUH-FUJIAN LNG PROJECT (2009-2012) 1. Is my original work proposed to fulfill one of requirements to obtain undergraduate degree in Syarif Hidayatullah State Islamic University Jakarta. 2. All sources used in this thesis I have attached according to the rules applied in Syarif Hidayatullah State Islamic University Jakarta. 3. If this thesis is afterwards found not as my original work or recognized as plagiarize from other’s work, I agree to take all the responsibilities and penalties applied by Syarif Hidayatullah State Islamic University Jakarta. Jakarta, 10 November 2014 Faruq Muhandis ii THESIS ADVISOR RECOMMENDATION LETTER Thesis advisor hereby declares that the student: Name : Faruq Muhandis Student No. : 108083100014 Major : International Relations Has finished the undergraduate thesis entitled: CHINA’S MNC ENERGY IN INDONESIA CASE STUDY: CNOOC IN TANGGUH-FUJIAN LNG PROJECT (2009-2012) And fulfill requirement to be examined. Jakarta, 31 September 2014 Acknowledged by, Approved by, Head of Department Thesis Advisor Debby Affianty, M.A. Taufiq Rahman, M.A. iii PANEL OF EXAMINER APPROVAL SHEET THESIS CHINA’S MNC ENERGY IN INDONESIA CASE STUDY: CNOOC IN TANGGUH-FUJIAN LNG PROJECT (2009-2012) by Faruq Muhandis 108083100014 Has been defensed in thesis oral defense in the Faculty of Social and Political Sciences of State Islamic University Syarif Hidayatullah Jakarta on 10 November 2014. This thesis was assessed and approved as partial fulfillment of the requirements for Bachelor of Arts (B.A.) in International Relations. Head, Secretary, Debbie Affianty, M.A. Agus Nilmada Azmi, M.Si. NIP : 197808042009121002 Examiner I, Examiner II, Ahmad Alfajri, M.A. Febri Dirgantara Hasibuan, S.E., M.M. Head of Department Faculty of Social and Political Sciences Debby Affianty, M.A. iv ABSTRACT The increasing of gas demand in China is an implication of China’s policy on promoting natural gas use. This policy has objective in order to improve energy diversification, energy efficiency, and as a solution to environmental problems. With this condition, China needed to import gas from foreign countries to supply gas demand due to lack of gas resources energy in China, particularly in the coastal region. Indonesia is one of countries which determined by China to supply gas demand in China. The gas cooperation between China and Indonesia is started in convening bidding for Guangdong LNG terminal supply in November 2001 which is held in China. It is the first time for China entered global gas market. China decided Indonesia as a winner of a consolation prize with 2.6mtpa for 25 years of LNG to Fujian LNG terminal. With this cooperation, this research explained factors that influenced China’s policy to import gas from foreign countries and determined Indonesia as a supplier LNG for Fujian LNG terminal in 2002. This research used framework or concept of national interest, foreign policy, internal and external factors, and resource diplomacy. Based on analysis, this research has resulted two internal factors and three external factors that influenced China’s policy on importing gas from Indonesia. Two internal factors are the rising of China’s economic and gas demand in China’s coastal region. Three external factors are Indonesia gas supply, Indonesia gas price, and the ability to transfer gas to China. Keywords : China, CNOOC, gas cooperation, energy security, energy diplomacy, Tangguh plant, Indonesia v PREFACE Praise to Allah SWT for all His gifts, His protection, His power, His mercy and guidance given to me so I can finish the final task of this thesis. Sholawat and salam for the Prophet Muhammad SAW who has delivered the holy Quran to mankind and to save mankind from moral decay. To complete the final task of this thesis the author has worked hard all his strength, but the author is well aware that this thesis would not have materialized without the help of various parties, both morally and materially. Therefore, it is fitting that the author expressed the highest appreciation to: 1. Debby Affianty, M.A., The Head of International Relation Department of Faculty of Social and Political Sciences Syarif Hidayatullah State Islamic University (UIN), which has provided instructions and guidance to the author for completion of proposal thesis. 2. Taufiq Rahman, M.A., as thesis advisor which is always patient and sincerely provide guidance until the completion of this thesis. 3. All Lecturers in International Relations Department, especially Mr. Nazaruddin Nasution, M.A., as academic advisor. 4. Especially for beloved abi Drs. H. Muhammad Alwi (alm.) And dear umi Hj. Mimim Hamimah, S.Pd.I and grandfather K.H. Ahmad Jaelani HR and Hambali (alm.) also my grandmother Hj. Mukhifah and Siti Aisyah (almh.), who have never stopped to love, encourage and support me and the children. Thank you all for always company me in this process. Thank you for waiting vi me patiently to finish my awesome undergraduate program. There is nothing can replace all of their love. I hope Allah repay with blessing of them. 5. My brothers Fuadi Vairuz, S.Pd.I., Fadil Hilman, Fathan Muzayyan, and my sister Faradina Alwi who have been together in times of happiness and sadness. We walk together for gaining our success. 6. My thanks to classmate friends in International Class (cohort 2, 2008), Haryo dewanto (bebew), Akbar Fitriyasa (abai), Fajar Fiqh (Jay), Mazhar Sandy Priagung, Muhammad Q Rusydan, Noviar Nurdiansyah (alm), Asep Zulhijar, Nadia Ayu Safitri, Rizkika Adi Rahmawati, Yurizka, Arrum, Festy, Seruni, Ita, Chika, Dhea, and Asri. No inspiration without you guys. The author also thanks to senior and junior IRs International family from 2007-2011 who has made this university environment special and unforgetable. 7. My special thanks to my special women, Novira ellentina as the best companion ever. Thanks for all your motivation and your patient on waiting for my research and graduation. May Allah reward and bestow His mercy and grace for all the help and support given. The author is fully aware that this thesis is still far from perfection due to the limited knowledge and experience of the author. At the end, the authors greatly appreciate suggestions and constructive criticism from all sides. Final word with all humility, the authors dedicate this paper to all interested parties with the hope that this paper can be useful as it should. Jakarta, 9 Oktober 2014 Author Faruq Muhandis vii TABLE OF CONTENTS ABSTRACT ……………………………………………………………………....v PREFACE ………………………………………………………………………..vi TABLE OF CONTENTS ……………………………………………………….viii LIST OF TABLES AND FIGURES ……………………………………………..x GLOSSARY ……………………………………………………………………...xi CHAPTER I INTRODUCTION A. Background ……………………………………….1 B. Research Question ………………………………...7 C. Research Objectives ………………………………7 D. Literature Review …………………………………7 E. Theoretical Framework ………………………….10 F. Research Methods ………...……………………..14 G. Research Outline ………………………………...15 CHAPTER II China’s Gas Security and Policy A. China’s Gas Security …………………………….17 B. China’s Gas Policy ………………………………20 CHAPTER II I Cooperation of China and Indonesia in Gas A. Overview of China and Indonesia Relations ...…..23 B. Indonesia and China Energy Forum (ICEF) …….27 C. China-Indonesia Gas Cooperation ...….………....29 viii CHAPTER IV Factors that Influence China’s Policy on Importing Gas from Indonesia A. Internal/Domestic Factors ………………………….35 1. Rising of China’s Economic …………..………….35 2. Gas Demand in Chinese Coastal Region ...………..39 B. External Factors …………………………………….45 1. A Stable Gas Supply in Indonesia ..……………….45 2. Affordable Gas Price ……………..……………….46 3. Ability to Transfer LNG to Fujian China …………50 CHAPTER V CONCLUSION …………………………………………54 REFERENCES …………………………………………………………………..57 ix LIST OF TABLES AND FIGURE Table 1 : China Economic Growth and Total of Gas Production and Consumption since 2000 -2012 ..…...…………………………………2 Table 2 : A comparison of emission growth rates for the world and China 1971-2005 ...…………..............................................................39 Table 3 : Primary Energy Consumption in the Coastal Regions .…………….41 Table 4 : Primary Energy Consumption in Inland Regions …….……………42 Table 5 : Supply, Demand and Import Balance: 2005-2020 ……..…………..44 Figure 1 : China LNG import sources, 2011 ……………………………..…….4 Figure 2 : China’s natural gas production and consumption, 2000-2011 ......…37 x GLOSSARY BCF Billion cubic feet BCM Billion cubic meters BOE Barrels of oil equivalent BPI British Petroleum Indonesia BP MIGAS Badan Pelaksana Kegiatan Hulu Minyak dan Gas BPH MIGAS Badan Pelaksana Kegiatan Hilir Minyak dan Gas Btu British thermal units CM Cubic meter CNOOC China National Offshore Oil Corporation CO 2 Carbon dioxide ESDM Energy and Mineral Resources Ministry of Indonesia IEA International Energy Agency ICEF Indonesia China Energy Forum JCC Japan Crude Cocktail KWh Kilowatt hours LNG Liquefied natural gas LPG Liquefied petroleum gas MCF Thousand cubic feet MCM Thousand cubic meters MMCM Million cubic meters