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Gas-rich RI to import LNG for electrification program
Despite claims of having abundant natural gas resources, Indonesia plans to start importing liquefied natural gas (LNG) to be able to run its ambitious 35,000 megawatt (MW) electrification program
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Despite claims of having abundant natural gas resources, Indonesia plans to start importing liquefied natural gas (LNG) to be able to run its ambitious 35,000 megawatt (MW) electrification program.
The country will start importing LNG in 2019 as demand for natural gas is expected to skyrocket within the next decade due to a high number of gas-fueled power plants to be constructed, according to the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas).
“Existing data show that we can barely fulfill existing demand and it seems that in 2019 we will have to start importing. This will reverse what we achieved in the past. We were one of the first countries to export LNG,” SKKMigas spokesman Taslim Z. Yunus told reporters on Thursday.
According to the data, national production of natural gas reached 6,650 million standard cubic feet per day (mmscfd) between January and June 18, 2.8 percent higher than production targets in this year’s state budget.
Domestic demand is estimated to stand at 4,000 billion British thermal units per day (BBTUD) of gas, 57.5 percent of total production.
However, the same data also show that existing supply will decline to around 5,000 mmscfd in 2019 and continue to drop to below 2,000 mmscfd by 2030.
If supply drops in 2019, it has been estimated that more than 8,000 mmscfd will have to be imported in order to fulfill Indonesia’s annual 9 percent increase in natural gas demand.
At the same time, state-owned electricity company Perusahaan Listrik Negara (PLN) has also said that it will need 1,250 BBTUD of gas to supply its power plants for the next 25 years.
As many as 1,142 BBTUD of gas will be distributed to its gas and steam-fueled power plants in Java and Bali, while the rest will be distributed to other power plants across the country.
The volume of natural gas needed for all power plants is even larger, highlighting the urgency of making new gas field discoveries.
According to the government’s estimates, it will need 8,297 billion cubic feet (bcf) of gas by 2025 to supply all power plants in Indonesia. Up to 4,149 bcf will be delivered using piped gas, while the remaining 4,148 bcf will come in the form of LNG.
Gas and steam-fueled power plants have greater needs as they make up a significant portion of both the 35,000 MW program and also the long-term 2016-2025 electricity procurement business plan.
According to the latest business plan, gas and steam-fueled power plants are expected to be the second-largest category of electricity supply under the 35,000 MW program, with coal-fueled power plants accounting for the largest portion.
“If we do not make any more discoveries soon, we will definitely have to start importing,” Taslim said.
However, hopes for new discoveries remain low as oil and gas companies have downscaled most of their exploration activities as a result of low crude oil prices over the past two years.
In 2016, only six seismic and non-seismic surveys out of 46 planned surveys have been conducted so far, while only 19 exploratory wells have been drilled out of 137 wells planned.
Energy and Mineral Resources Minister Sudirman Said claimed that his ministry would not allow LNG imports before 2020 as the government wanted to ensure that all gas produced would be absorbed by the domestic market.
“If we continue to produce gas as we normally do now but also import, the country will not be able to absorb all that gas because of our small market and infrastructure,” he said.
