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RI projected to become net gas importer in 2030
The country is expected to suffer from a gas deficit in 2030 and become a net gas importer as supplies fail to meet rising demand
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The country is expected to suffer from a gas deficit in 2030 and become a net gas importer as supplies fail to meet rising demand.
By then, the national deficit is estimated to stand at 4.07 million standard cubic feet per day (mmscfd), according to data from state-owned oil and gas company Pertamina.
The highest demand for gas will come from Java and Sumatra on the back of growing industries in the region, with respective deficit of 1.56 mmscfd and 3.87 mmscfd.
Most of the demand currently comes from state-owned electricity company PLN, but other non-PLN demands are expected to rise as well by 7 percent per annum from 2015 to 2025. The demands are driven primarily by fertilizers, refineries and mining industries, most of which are located in eastern Indonesia.
Indonesia is not the only country in the Southeast Asian region that will experience a surge in natural gas demand.
Pertamina director for gas and renewable energy Yenni Andayani said all of Southeast Asia would become net gas importers by 2030, as demand would be more than 200 billion cubic meters (bcm) of natural gas that local supplies cannot fulfill, resulting in import needs of around 60 bcm.
Southeast Asia is expected to develop regasification infrastructure with a capacity of almost 75 million tons per annum (mtpa) by 2030 and it will possibly lead to a race of who can get the cheapest gas import contracts among neighboring countries.
“We have to be more aggressive, especially seeing the development in Thailand, Vietnam and even in the Philippines. We have to be ready to face some competition,” Yenni said during the opening of the IndoPIPE 2016 Conference and Exhibition on Tuesday.
Indonesia has two floating and storage regasification units (FSRU) and one onshore liquefied natural gas (LNG) processing facility in West Java and Lampung with a total capacity of 8.7 mtpa.
Two more FSRUs in Banten and Central Java are expected to start operation in 2019 and 2022, respectively, with combined additional capacity of 6.7 mtpa. Eleven FSRUs and 66 land-based facilities are also expected to be in operation in 2025.
The Energy and Mineral Resources Ministry aims to increase the gas pipeline network to 27,273 kilometers by 2025, consisting of open access pipelines, upstream dedicated pipelines, downstream dedicated pipelines and privately used pipelines.
However, despite the government’s best efforts to develop infrastructure to transport gas, current absorption of LNG in the domestic market is relatively small. According to the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas), only 39.02 of 64.02 cargoes allocated for the domestic market were absorbed last year.
The ministry’s director for oil and gas engineering and environment, Djoko Siswanto, attributed the low domestic absorption to high gas prices.
Gas prices in Indonesia are among the highest in the region, averaging at around US$9 per million British thermal unit (mmbtu), compared to gas prices in Malaysia and Singapore, which sell for around $4 to $5 per mmbtu.
The high domestic prices are mostly caused by large investment in gas-related technology and an overly long supply chain. Gas from Papua that needs to be processed into LNG, for example, must be taken by ship to the Arun LNG facility in Aceh, which would add an additional $1 to $2 per mmtbu.
The government is trying to cut local gas prices through the revision of a ministerial regulation. It stipulates that the energy and mineral resources minister can cut gas prices for certain industries if they rise above $6 per mmbtu.
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