Amelia Rahima Sari, Caesar Akbar, Jakarta – The Oil and Gas Companies Association (Aspermigas) claimed that the government has not yet discussed the plan to ban the export of liquefied natural gas or LNG. "No communication yet [between the government and related companies]," Aspermigas chairperson Moshe Rizal told Tempo on Thursday, July 20, 2023.
Rizal assessed that the LNG export ban is counterproductive and could disrupt the upstream oil and gas investment climate in the future since the domestic market is not yet mature. Therefore, he suggested gas distribution infrastructure must be built first to boost domestic market demand and reduce logistics costs.
"Gas prices in Indonesia are driven by the economy of the domestic market, not global market prices, mainly due to the high cost of gas production," Rizal explained.
He also mentioned that Indonesia and producing countries such as the United States have different market schemes.
The plan to restrict LNG exports was conveyed several times by Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan. Luhut said he would propose the export ban to President Joko Jokowi Widodo.
"[Running] contracts may go on, but those expired will be stopped," Luhut said in an interview on national television media as quoted from Koran Tempo on Wednesday, July 12, 2023.
Luhut said domestic LNG would be channeled into petrochemical products. Simultaneously with the downstream program, the government would review the gas price structure so that it could be suppressed from US$6 to US$5 per million metric British thermal units (MMBTU).