Indonesia to lower gas prices for industry

Posted on 10 January 2020

Source: Kallanish

Indonesia’s government is working on plans to make natural gas prices cheaper for its manufacturing industry, capping prices at around $6 per million British thermal units (MmBtu), Kallanish Energy learns. 

Currently, prices range between $8 and $9/MmBtu – a level manufacturers aren’t happy with. High-intensive energy consumers have been complaining to the government such prices aren’t affordable. These include electricity, steel, cement and glass industries. 

Energy and mineral resources minister Arifin Tasrif said Thursday the government is studying a so-called Domestic Market Obligation (DMO), which would ensure cheap supplies for manufacturers. Gas producers would have to sell some of their production at capped prices.

It would also require liquefied natural gas (LNG) producers to prioritize the gas utility company PGN as a buyer for their uncontracted cargoes. Companies would offer the LNG to PGN before offering it on the spot market.

In case PGN’s offered prices were below spot market levels, the government would compensate the LNG producers. 

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