
Natural Gas: Source of State Income or National Industry Competitiveness
By : Ardi Krisnamurti
In the past few weeks there have been warm discussions related to the condition of national natural gas. PGN said there was a decrease in natural gas production but was denied by ESDM. This is interesting because it is in line with the discussion of the utilization and development of natural gas is focused as a source of state revenue or as an important jack for industrial competitiveness. A discussion without stopping and without a definite decision.
The argument of national gas as a state revenue can be seen from Indonesia as one of the largest natural gas producers in the world (No. 12) with a production capacity of 6600 7000 MMSCFD. At present the price of natural gas regasification set by PGN is USD 16.77 Permmbtu. Can be a large source of income for the country
The problem is that a large gas price will weaken the competitiveness of the industry. At present the needs of several strategic industrial sectors such as petrochemicals, ceramics, glass etc. requires around 25 % to 70 % (fertilizer industry) energy. And this is obtained from natural gas. The allocation of national natural gas for local needs has reached 70% so with a high price makes production costs rise and finally the competitiveness of the Indonesian industry is low.
If you look at the overall structure of Indonesian natural gas usage, the needs of several sectors are as follows:
Currently the industry receives two tariffs. Normal regional tariffs of USD 16,77 permmbtu and HGBT tariffs based on the 76th Decree of 2025 amounted to USD 7 Permmbtu. But the real realization of the HGBT tariff industry is still around 50 - 57% of the needs of several industrial sectors. The rest must buy at a regasification price.
As a comparison of gas prices in neighboring countries. Gas Prices in Malaysia USD 4.5 Permmbtu, Gas Prices in Thailand USD 5.5 Permmbtu, Gas Prices in Vietnam 6.39 Permmbtu. Especially when compared to Saudi Arabia where the price of gas is USD 0.5 Permmbtu. If we see Vietnam and Thailand, it is not a large producer of natural gas, it needs to be deregulated from the government.
With the use of energy in the strategic industrial sector, which ranges from 25 % - 70 %, this is one of the major blows for the industry. Products produced by industry in Indonesia are certainly more expensive than other countries. Potential deindustrialization and labor layoffs will emerge.
On one side Indonesia is trying to become a developed country. To become a developed country the contribution of the manufacture sector must be above 30%. At present the contribution of the manufacturing sector is still around 18-19%. So it needs a strong jack. One of them is in the energy supply to the industry. If you look at the Parameter of Manufacture Value Added (MFA), the contribution of MFA Indonesia is in the range of USD 255 billion. To become a developed country MFA continues to be increased to USD 450-500 billion.
HGBT regulations are good. This means that the midpoint of natural gas functions as a source of state revenue as well as boosting me is competitive in the industry. But at this time the realization is still less than optimal. For this reason, the national natural gas development ecosystem must be strengthened.
The thinking is not at the conventional level but out of the box. How important is:
All involved must have the same partner. See national natural gas as an important part of Indonesia towards developed countries.
There are some natural gas potential that should be developed massively:
stranded gas. Indonesia has a fairly large stranded gas potential. South Sebuku, Wasambo, North Aye Guava, including stranded gas in western Java. The key is in the right and applicative technology, good management supply chain, ease of investment. Stranded gas auction system regulation for example applying the upper limit of the price of stranded gas, for example, USD 3 permmbtu depends on the quality of stranded gas can be tried, especially in stranded gas that has not been included in the production phase because of the low economic level.
Gas Flare. There is a potential for gas flare in Indonesia around 207 MMSCFD. Some companies that have large gas flares are Pertamina EP, Pertamina Hulu Mahakam, BP Berau. If it can be maximized around 60 - 70 MMSCFD can make an economic contribution of around USD 80-90 million per year.
Biomethane - Biocng. Indonesia has the potential of biomethane, especially from oil palm waste - pome. The estimated value is 1280 mwe or equivalent to 288 MMSCFD. Because the locations in Sumatra and Kalimantan Biomethane - BIOCNG can also be used as a substitute for non -subsidized industry solar in remote areas.
By utilizing the potential of the three natural gas sources above and of course the development of a large conventional gas field should be able to carry out a consistent HGBT policy. At the same time optimizing gas as a source of state revenue. These three gas sources must be given special regulations related to investment and management. For now investors still see the need for better regulations related to investment in these three natural gas sources.
The government must also be serious about handling infrastructure of pipelines and natural gas infrastructure. Development must be more massive. LPG and industrial fuel subsidies can be some of the massive infrastructure development. The key is in the government's will.
As a closing. Indonesia can become a developed country going forward. According to the expectations of President Prabowo with 8%economic growth. The key is that the manufacturing industry must develop and advance. The availability of competitive and continuous energy is one of the important factors.
Jakarta 8 May 2025
The author is currently active as
Photo Source: Pexel
Request A Call Back
Ever find yourself staring at your computer screen a good consulting slogan to come to mind? Oftentimes.
