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Jakarta Post

Energy Ministry picks DMO option to lower industrial gas prices

  • Norman Harsono

    The Jakarta Post

Jakarta   /   Mon, January 13, 2020   /  05:47 pm
The Jakarta Post Image
Environmentally friendly – Two workers of state-owned gas company Perusahaan Gas Negara (PGN) check gas pipelines , which supply gas to electricity producer PT Indonesia Power at a gas meter station in Tambak Lorok, Semarang, Central Java. The company needs 116 million standard cubic feet per day (mmscfd) of natural gas per day. (JP/Suherdjoko)

The Energy and Mineral Resources Ministry has chosen to pursue a combination of a domestic market obligation (DMO) and fiscal incentives to reduce industrial gas prices in the hope of fulfilling a four-year-old promise from President Joko “Jokowi” Widodo. The ministry will, among other requirements, expect oil and gas companies to prioritize selling their liquefied natural gas (LNG) to state-owned gas distributor PGN as part of efforts to bring the gas price down to US$6 per million British thermal units (mmbtu) as promised by the government, from between $8 and $9 per mmbtu at present. “As long as PGN’s infrastructure runs at full capacity, it can sell at $6 per mmbtu,” said the ministry’s acting oil and gas director general Djoko Siswanto on Jan. 8. Should PGN fail to bring gas prices down even with the higher LNG supply, then the ...