Friday, April 19, 2024

Indonesia plans to halt LNG exports to meet domestic demands

Reading Time: 2 minutes
Journalist IBP

Journalist

Mahinda Arkyasa

Editor

Interview

The Indonesian Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, revealed the government’s plan to cease the export of liquefied natural gas (LNG) due to the rising demand from domestic industries. 

Increasing domestic needs

During the launch of the Indonesia Carbon Capture and Storage Center (ICCSC) in Jakarta on May 30, 2023, Luhut stated that this policy shift was prompted by the realization of the country’s increasing domestic needs. 

“Yesterday we conducted a study. We have been exporting LNG for years, but it turns out that now we need it domestically. So, the Deputy 1 [Deputy for Maritime Sovereignty and Energy Coordination] said that we no longer want to export,” he said.

The government is considering the option to halt LNG exports as the domestic gas demand increases, especially with the government’s ongoing push for downstream development. 

Luhut stated that his ministry has prepared a report that will be submitted to the President regarding LNG exports. 

However, he mentioned that existing export contracts will remain valid. Nonetheless, future gas exports are recommended to be prohibited. Despite this, the export ban on natural gas could be realized only by 2025 or 2026. 

“We have prepared a report to the President stating that we want to export LNG. For contracts that have been signed, they will continue. But we must stop future exports,” he added. 

Luhut further stated that the government aims to utilize natural gas supplies for domestic needs, particularly for methanol and petrochemical production, which currently experience high demand within the country.

He also explained that currently, Indonesia still imports petrochemical products. Additionally, the government is actively promoting the establishment of a petrochemical industry in North Kalimantan (Kaltara). 

“We need gas. We have enough of our own gas, and we no longer need to import,” he emphasized.

High expectations

Luhut further highlighted that the utilization of gas domestically is expected to reduce industrial gas prices, which are currently set at US$ 6 per Million British Thermal Units (MMBTU). 

He even suggested that this figure could be further reduced through efficiency improvements in gas wells. 

As one of the largest LNG exporters globally. In 2021, Indonesia ranked eighth in terms of LNG exports, with a volume of 14.6 billion cubic meters. 

The main destinations for Indonesia’s LNG exports include China, South Korea, Japan, Taiwan, Singapore, and Mexico.

Journalist IBP

Journalist

Mahinda Arkyasa

Editor

 

Interview

SUBSCRIBE NOW
We will provide you with an invoice for your reimbursable expenses.

Free

New to Indonesian market? Read our free articles before subscribing to the premium plan. If you already run your business in Indonesia, make sure to subscribe to the premium subscription so you won’t miss any intelligence & business opportunities.

Premium

$550 USD/Year

or

$45 USD/Month

Cancelation: you can cancel your subscription at any time, by sending us an email inquiry@ibp-media.com

Add keywords to your market watch and receive notification:
Schedule a free consultation with us:

We’ll contact you for confirmation.

FURTHER READING

PT MRT Jakarta sealed on Wednesday, April 17, 2024, a partnership agreement with Sojitz Corporation for the Phase 2A construction of railway tracks and signaling systems from the Hotel Indonesia turnabout  to Kota, valued at IDR 4.7 trillion (about US$ 290 million).
PT Asuransi Allianz Life Indonesia (Allianz Life) and PT Bank HSBC Indonesia (Bank HSBC) on Thursday, April 18, 2024, launched a financial protection product − the Premier Legacy Assurance − in the form of inheritance to support customers’ prosperous family life in the future.
Coordinating Minister of Maritime Affairs and Investment, Luhut Binsar Pandjaitan, has announced that the government is prepared to provide incentives to attract investments from Apple Inc., akin to those in India and Thailand.
Abu Dhabi Islamic Bank (ADIB) is reportedly in talks to acquire a stake in PT Bank Syariah Indonesia (BRIS) worth approximately US$1.1 billion (IDR 17.98 trillion).
PT Harum Energy (HRUM) is about to release a maximum of 49 percent of its shares in subsidiaries in the nickel business, PT Harum Nickel Perkasa (HNP) and PT Tanito Harum Nickel (THN), to Chinese stainless steel smelting giant Eternal Tsingshan Group.
PT Atlantis Subsea Indonesia (ATLA) made a remarkable debut on the Indonesia Stock Exchange (BEI) on April 16, 2024, raising IDR 120 billion (US$7 million), and thus becoming the 21st issuer on the exchange this year.