JAKARTA (RambuEnergy.com) – The nation industries’ hungry for natural gas and more expensive domestic price have prompted the Indonesian government to allow key industries to import the gas.
Indonesia is one of natural gas (LNG) producer, however, significant portion of gas are exported to overseas buyers under long-term contract.
The Indonesian government has in recent years encouraged domestic industries to use more gas, however, lack of infrastructure and relatively expensive gas price have resulted in low usage of domestic gas by local industries.
In addition, domestic demand for natural gas is projected to increase in the coming years, with some observers projected Indonesia to begin importing LNG from abroad from 2019. Pertamina, as a case in point, has earlier signed a deal with Cheniere of US to import LNG.
The Joko Widodo government has tried to push down domestic gas price. Recently, it issued ruling to lower gas price to below US$6 per MMBTU to three industries, namely fertilizer, petrochemical and steel.
“To push gas price to below USD6 per MMBTU, then room is given to industries to import gas directly at certainly lower price,” Cabinet Secretary Pramono Anung said at a press conference after a cabinet meeting at the Presidential Office (Jan. 24).
The cabinet meeting was led by President Joko Widodo and attended by key economic ministers, namely Coordinating Minister for the Economy Darmin Nasution, Coordinating Minister for Maritime Affairs Luhut Panjaitan, Finance Minister Sri Mulyani Indrawati, Energy and Mineral Resources Minister Ignasius Jonan, Industry Minister Airlangga Hartarto and other ministers.
Meanwhile, Minister Darmin said that the government is still studying the gas import mechanism, whether it will be done directly by the industry or done by industrial zones.
“The President has decided to allow importing gas. Who will import? It will be formulated by the energy (ESDM) and industry ministries within two weeks,” Minister Luhut Panjaitan said.
Minister Jonan said the government is still trying to ensure gas price is lower than at present that industries can produce a more competitive products. (*)
Written by Roffie Kurniawan (email: email@example.com)