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Govt scrambles to secure natural gas as output falls, demand rises
The government is mulling over several measures to secure natural gas supply for industries and households, including potentially allowing imports, amid declining domestic production and a projected rise in demand.
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A mini liquefied natural gas (LNG) terminal operated by state-owned electricity company PLN and built by PT Pelindo Energi Logistik, a subsidiary of state-owned port operator PT Pelindo III, stands at Bali’s Benoa Port in this undated file photo from 2016. (Tribun-Bali.com) (Tribunbali)
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ndonesia is struggling to secure natural gas for industries and households amid declining domestic production and a projected rise in demand.
Despite the supply challenges, the government recently extended the fixed natural gas price (HGBT) subsidy program for certain industries and is considering expanding the program to include more sectors.
As the government mulls over ways to meet rising demand, Industry Minister Agus Gumiwang Kartasasmita proposed last week to increase the domestic sales share of gas producers’ output to 60 percent, but no regulation on the matter has been issued.
Oil and gas contractors operating under the current gross-split production scheme must allocate 25 percent of their output to fulfill the domestic market obligation (DMO) under Government Regulation No. 53/2017.
Indonesian Petroleum Association (IPA) executive director Marjolijn Wajong said she would support a higher DMO for natural gas, so long as business remained profitable.
"The IPA can understand the DMO [proposal] as long as it meets investors' economic considerations, which would help boost supply sustainability in the domestic upstream oil and gas sector," Marjolijn said, as quoted by news portal Detik.com on Friday.
The government is also looking to allow imports of liquefied natural gas (LNG) to anticipate the projected rise in gas demand.
