The Ministry of Energy and Mineral Resources (ESDM) has announced plan to establish a liquified petroleum gas (LPG) production plant using local propane (C3) and butane (C4) resources.
ESDM Minister Bahlil Lahadalia disclosed that the plant’s production capacity could range from 1.5 to 2 million tons annually, with the goal of addressing the country’s high LPG demand, which far exceeds its domestic production capabilities.
Currently, Indonesia’s annual LPG consumption reaches approximately 8 million tons, while domestic production only covers about 1.9 million tons.
This gap has driven the country to rely heavily on imports, which reached 6.95 million metric tons in 2023 − a 3.14 percent increase from the previous year.
The significant import reliance has also led to substantial government subsidies, amounting to around Rp83 trillion (US$5.2 billion).
The ESDM ministry aims to finalize this project’s details, including potential investors, by early 2024.
In an effort to foster competition and efficiency, Bahlil emphasized that the project will be open to both State-owned enterprise PT Pertamina and private sector entities.
“We want to keep the process competitive and open,” Bahlil said on Thursday, November 11, 2024.
SKK Migas, Indonesia’s upstream oil and gas regulatory body, has identified 15 oil and gas fields with LPG production potential, focusing on the significant resources in East Kalimantan and Senoro.
By tapping these fields, Indonesia seeks to bolster local production, lessen the economic burden of subsidies, and reduce its dependency on LPG imports.
