INDONESIA will need 106 to 120 LNG cargoes by 2025 to avoid a potential gas shortage, as rising domestic consumption growth outstrips supply.
“The Indonesian government must immediately take swift action to accelerate gas infrastructure and upstream development, ensure economical gas prices for upstream producers, and encourage public-private partnerships to leverage private sector expertise and funding,” said Aris Mulya Azof, Chairman of the Indonesian Gas Society during the IndoPACIFIC LNG Summit 2024, in his statement, Saturday (20/7).
This significant increase in demand is due to reduced supply of pipeline gas from old fields in West Java and Sumatra, while domestic demand is expected to continue to increase.
Meanwhile, new projects, including the Abadi Field in the Masela block, which is mostly in eastern Indonesia, are not expected to come online until after 2027.
To bridge this gap, PGN is expected to purchase around 23 LNG cargoes to meet the needs in 2025, this is an increase from the absorption of 3 cargoes in 2024. Meanwhile, PLN will require an additional 27 LNG cargoes in 2025.
In total, Indonesia could potentially need to import up to 35 LNG cargoes next year, given that domestic supply only reaches 14 cargoes.
Also read: KPK Examines Nippon Ketjen Employees to Investigate Alleged LNG Procurement Corruption Case
The urgent need for LNG imports highlights the importance of investing in new gas fields and infrastructure to meet Indonesia’s growing energy demand.
The government’s commitment to increasing domestic gas utilization and reducing exports will be critical in maintaining energy security and supporting economic growth.
“In addition, targeted financial incentives, such as tax breaks, low-interest loans, and direct subsidies, can help reduce the high initial costs of developing critical gas infrastructure, especially to support LNG needs,” Aris added.
Also read: HGT Policy for 7 Sectors Continued, from Fertilizer to Rubber
Based on the statement of the Coordinating Minister for Economic Affairs, the government recently decided to grant permits for industrial areas to import LNG and build LNG regasification infrastructure. The National Industrial Development Master Plan (RIPIN) identified 7 new Special Economic Zone (KEK) locations that have the potential for natural gas network development.
Currently, the price of imported and domestic LNG does not have a high disparity. Domestic producers have also started to apply selling prices that reflect the global LNG market price. From this side, LNG imports will not necessarily increase the price of natural gas domestically.
IndoPACIFIC LNG Summit 2024, held on July 16-17, 2024, at the Sofitel Hotel in Nusa Dua, Bali, Indonesia, brought together more than 150 global gas and LNG sector leaders to discuss the critical role of LNG in achieving net zero emissions. The event explored key issues, including climate policy, price volatility, midstream infrastructure, and alternative energy, that are constraining global and regional LNG markets. (Ant/N-2)
#Soaring #Demand #Indonesia #Import #LNG #Cargoes
