State-owned fertilizer producer PT Pupuk Indonesia has projected that its natural gas demand will reach 1 billion standard cubic feet per day (BSCFD) by 2030, a substantial increase from 820 million standard cubic feet per day (MMSCFD) in 2024.
This projection reflects the company’s plans for production expansion and upgrading old plants, as stipulated by Jamsaton Nababan, Director of Portfolio and Business Development at Pupuk Indonesia.
“Our gas demand will rise due to the expansion of production and new plant developments. By 2030, we will need nearly 1 BSCFD, a significant increase,” Jamsaton said in Jakarta on Tuesday, July 16, 2024.
The company is currently developing several key projects, including the construction of Pusri plants producing ammonia and urea, as well as soda ash plants in Bontang and Gresik. These projects are expected to be operational by 2027, increasing gas demand to 850 MMSCFD that year.
Further expansions are planned, such as completing a new plant in Fakfak, Papua, by 2029, which will increase gas demand to 951 MMSCFD. By 2030, Pupuk Indonesia aims to establish additional fertilizer plants in Aceh and Kujang, along with a methanol plant in Aceh or Bontang, pushing the gas demand to 1 BSCFD.
Fertilizer contributes significantly to agricultural productivity, accounting for 62 percent of food productivity and 23 percent of rice farming costs.
Jamsaton emphasized that natural gas, a key raw material in fertilizer production, significantly impacts fertilizer prices. Natural gas constitutes 71 percent of the production cost for urea fertilizer and 5 percent for NPK fertilizer.
“We appreciate the government’s decision to continue the specific natural gas price policy for fertilizers and the commitment of the Ministry of Energy and Mineral Resources (ESDM) to ensure a stable gas supply for the fertilizer industry,” Jamsaton noted.
Mirza Mahendra, Director of Oil and Gas Program Development at the Ministry of ESDM, assured that the ministry will guarantee the availability of domestic gas for the fertilizer industry until 2030.
While the pricing will be determined later, the government has extended the specific natural gas price policy for fertilizers and several other industries.
“The fertilizer industry is prioritized for gas allocation due to its broad multiplier effect on the overall food sector,” Mirza said.
However, the government faces challenges in gas distribution, particularly due to Indonesia’s geographical layout as an archipelago, which complicates the delivery of gas from its sources to industrial consumers.
