Amid rising domestic demand for Liquefied Petroleum Gas (LPG), State oil and gas company PT Pertamina has suggested for alternative supply solutions, acknowledging that current production levels are insufficient to meet the nation’s needs.
The state-owned energy company is urging both the government and industry stakeholders to collaborate on expanding natural gas utilization and enhancing gas transmission networks to bridge the gap.
Deputy CEO of Pertamina, Wiko Migantoro, underscored the importance of exploring alternative supply sources to fulfill the increasing consumption needs.
He emphasized the urgency of maximizing available natural gas resources and expanding the existing gas transmission infrastructure.
“We need to consider alternatives like expanding the gas grid by utilizing available natural gas and enhancing our existing gas transmission capabilities,” Wiko said on Monday, August 19, 2024..
Despite the production shortfall, Wiko noted that Indonesia still has two primary sources of LPG. First is direct extraction from natural gas fields rich in propane and butane (C3 and C4), which are key components of LPG. Meanwhile, second source involves the processing of refinery products that yield LPG.
“We can extract propane and butane from several upstream fields and also from refinery operations,” Wiko said.
The pressing issue of LPG production has also caught the attention of Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, who pointed out the high costs associated with LPG in Indonesia.
Bahlil called for a collaborative approach to identify and implement cost-reduction strategies.
He further expressed concerns over the declining trend in the nation’s oil and gas lifting (production), which has struggled to keep pace with domestic demand, leading to an increase in imports.
He emphasized the need to bolster domestic production to reduce dependency on foreign imports.
Oil and gas production optimization
Currently, Pertamina is responsible for 69 percent of Indonesia’s oil production and 34 percent of its gas output. To address these production challenges, Bahlil highlighted the need to optimize the use of idle oil wells and stranded gas resources.
He said that both President Joko Widodo and President-elect Prabowo Subianto have prioritized the optimization of oil and gas production for the upcoming administration.
Additionally, Minister Bahlil called for a thorough review of Indonesia’s gas imports and urged the identification of potential domestic sources of C3 and C4 gases for LPG production.
He stressed the importance of swiftly developing LPG downstream industries to lessen the country’s reliance on imports and stabilize market prices.
“We must ensure that the price difference between domestic and imported LPG does not widen excessively, as this could encourage excessive imports,” Bahlil warned.
He emphasized the need for close cooperation between SKK Migas, Pertamina, and the Ministry of Energy and Mineral Resources.
