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.
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.