Indonesia Taps Eastern LNG for Western Industries Amid Price Hikes and Layoff Fears

Indonesia's industrial gas demand in West Java, Banten, and Jakarta is now being supplied by Liquefied Natural Gas (LNG) sourced from eastern Indonesia, including Maluku, Sulawesi, Papua, and Kalimantan. This strategic shift comes in response to a decline in pipeline gas production within these key industrial areas.

Minister of Energy and Mineral Resources Bahlil Lahadalia explained that the decrease in domestic gas "lifting" necessitated the use of LNG to cover the shortfall. While gas prices in East Java have remained relatively stable, the transition to LNG has led to price adjustments in West Java, Banten, and Jakarta. This change is directly linked to the reduced availability of piped gas.

Despite the reallocation of resources to meet domestic demand, Lahadalia assured that LNG export quotas for the second half of 2026 will not be reduced. This follows a previous quota cut in 2025 to prioritize national needs.

However, the rising energy costs, particularly for gas, have raised concerns in labor-intensive industries. Deputy Speaker of the House of Representatives, Sufmi Dasco Ahmad, reported that over 50,000 workers in a ceramic factory in Bekasi, West Java, face potential layoffs if no solution is found. The Indonesian Confederation of Workers' Unions (KSPSI) has highlighted the urgency of the situation, with potential job losses imminent within the next 7-10 days if energy costs remain high. Dasco has initiated communication with the CEO of PT Pertamina to discuss potential solutions for the affected companies.