Indonesia Cuts Industrial LNG Price to $13/MMBTU to Aid Businesses

Indonesia's government has implemented a significant price reduction for industrial liquefied natural gas (LNG), lowering it from a range of $20-23 per MMBTU to a fixed $13 per MMBTU. This decisive move aims to bolster the sustainability of domestic industries and safeguard employment opportunities, particularly as global LNG prices continue to climb.

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The price of LNG for industry is set at $13 per MMBTU. Previously, the market price of LNG was around $20 to $23 per MMBTU.

Minister of Energy and Mineral Resources Bahlil Lahadalia announced the decision following extensive coordination with the House of Representatives, state-owned energy companies Pertamina and PGN, and various business stakeholders. He confirmed that the government will maintain the Special Gas Price (HGBT) at $6.5-7 per MMBTU for seven key industrial sectors. Additionally, piped gas prices for industries outside the HGBT scheme in Java will remain at $9.6 per MMBTU.

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The gas is there, it's not that there's no gas. The problem is the high price of LNG due to transportation and regasification costs.

The price increase primarily affected LNG for industries not covered by HGBT, driven by higher procurement costs for LNG sourced from regions like Papua, Sulawesi, and Kalimantan. These costs are associated with transportation and regasification processes before the gas can be distributed via pipelines. Minister Lahadalia emphasized that Indonesia does not face a gas shortage; the issue lies in the elevated cost of LNG due to logistical factors.

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Everyone contributes. Part of the government's share is reduced, then we ask for costs in the downstream sector to also be lowered. Pertamina also makes adjustments, as do KKKS and PGN. So everyone is lowering costs.

To achieve the $13 per MMBTU target, the government has called for shared responsibility across the entire supply chain. This includes contributions from the government, upstream contractors (KKKS), and downstream business entities. Pertamina, PGN, and KKKS are all adjusting their costs to facilitate this price reduction. Furthermore, the government is redirecting some LNG cargoes originally slated for export to prioritize domestic industrial needs, acting on direct instructions from the President to protect national industries and prevent layoffs.

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There are several ships that we should have exported, we are prioritizing them for domestic needs first.