How the EU’s new energy plans impact Southeast Asia

Amid an ongoing energy crisis, European countries have turned to Southeast Asia’s coal and liquefied natural gas (LNG) producers to help offset the collapse of Russian supplies.  

The EU’s prohibition on coal from Russia, which took effect in August, as well as Moscow’s decision to turn off gas supplies to certain European countries this month, have seen European buyers scrambling for coal from Indonesia, the world’s largest exporter of thermal coal.

As early as April, two months after the Russian invasion of Ukraine, the coal mining giant PT Adaro Energy Indonesia said it had sold 300,000 tons of coal to the Netherlands and Spain. Poland reportedly ordered 53,230 tons of coal from Indonesia in the same month.

But industry experts expect a surge in European imports by the end of the year and into 2023 when energy prices are expected to soar even higher across Europe.

Last week, Asia’s top coal industry event Coaltrans was held on the Indonesian island, Bali

“Demand for Indonesian coal is increasing significantly due to this geopolitical issue,” Pandu Sjahrir, chairman of the Indonesian Coal Mining Association, told Nikkei Asia last week.

“Germany is a good example. They’re asking a lot from Indonesia. Essentially, by next year Germany will potentially be the second- or third-largest importer of Indonesian coal, after China and India,” he added.

Indonesian coal and Malaysian LNG to Europe

A statement released this month by Indonesia’s state-owned coal miner PT Bukit Asam noted that it has exported 147,000 tons of coal to Italy so far this year. It is reportedly also in discussions with Germany and Poland.

Bumi Resources, Indonesia’s largest coal producer by volume, recently told local media it has made some small shipments to Europe this year but reckons output will increase by the end of 2022.

Kadri Simson, the EU’s commissioner for energy, visited Indonesia earlier this month for a G20 meeting, but also took in a tour of a local coal mine, according to Commission records.

Indonesia’s coal benchmark price was set at $319.22 (€331.4) per ton in September. It hit a record $321.59 last month. In the first half of 2022, Indonesian coal exports rose by a fifth compared to the same period last year.

Author: David Hutt
Source: Deutsche Welle