Huibert Vigeveno: Indonesia Forms an Important Market for Shell
Huibert Vigeveno, EVP Global Commercial at Royal Dutch Shell Plc, recently visited Indonesia and shared information about Shell's views on the Indonesian oil and gas market. Shell, a British–Dutch multinational oil and gas company, has a long - more than 100 years - history in Indonesia and seems committed to stay in Southeast Asia's largest economy for a long time as Vigeveno names Indonesia an important market for Shell.
Vigeveno said Indonesia is among the most important emerging market economies for Shell as it has a huge population and a rapidly expanding middle class that is increasingly consuming energy. The domestic economy is supported by strong macroeconomic fundamentals. Considering Indonesia is the largest economy of the ASEAN region, the Indonesian market is therefore an important market in the world, especially as domestic market conditions are positive. For example, inflation is relatively low (for Indonesian standards) at around 4 percent year-on-year (y/y) due to the successful efforts of the government and central bank (Bank Indonesia), while interest rates are very attractive compared to rates in advanced economies.
For Shell Indonesia is the third most important growth market (after China and India). This is due to the fact that Indonesia is among the world's top ten biggest lubricant markets, and the fifth-largest lubricant market in Asia (after China, India, Japan, and South Korea).
Vigeveno said it are challenging times for energy companies as crude oil prices are volatile and have difficulty to pass beyond USD $50 per barrel. Therefore, Shell has to identify strategic markets for investment. It is particularly interested in long-term promising markets that offer a wide variety of lubricants that are consumed by the domestic population. Indonesia is regarded one of these countries. Therefore Shell established the Shell Lubricants Oil Blending Plant in Bekasi (West Java) in 2015. This is the largest internationally operated lubricant blending plant in Indonesia and supplies a wide range of locally produced, high-quality motor oils, transmission oils and industrial lubricants to the Indonesian market.