Domestic Gas Uptake Depressed by Government Targets

The purchase of gas production, especially liquefied natural gas or LNG, is urged by Indonesia's export capacity. Its share is almost half of the national gas production, which is as much as 48 percent is exported abroad. The remaining 52 percent of gas production is purchased by domestic industries, including gas power plants (PLTG).

PT Perusahaan Gas Negara (Persero) Tbk or PGN rate, the depressed domestic gas absorption is also affected by the government's target to increase state revenue. As is known, state revenue from gas exports is very high.

PGN Corporate Secretary, Heri Yusup said that besides the target due to state revenue, the high gas export was due to the lack of gas infrastructure in Indonesia. Weakening global economic growth also affected domestic demand, which made gas producers export their products.

"Gas is not economical if it is stored for too long. There is no gas market yet, it still needs time, "said Heri.

To improve the domestic market climate, the issuer with the PGAS code has built a 7,200 kilometer (km) transmission and distribution pipeline network. The length of the pipeline is equivalent to 78 percent of the total length of the natural gas pipeline in the downstream sector throughout Indonesia.

Heri said, the gas pipeline built by PGN was spread in several areas, such as the open access transmission pipeline, for distribution and transmission, the Bekasi-Semarang Muara line, the Batam WNTS-Pemping distribution pipe, the Duri-Dumai-Medan open access transmission pipeline, and the distribution pipeline natural gas in existing territories, and other new areas.

He admitted, the funds used to build the PGN gas pipeline came from internal companies and did not rely on the State Budget (APBN) funds. Since the beginning of the year, PGN has aggressively increased its natural gas pipeline infrastructure to reach 1,680 km until 2019. PGN has targeted the total length of the gas pipeline to be 8,656 km.

For information, at the end of last year PGN distributed 1,591 million cubic feet of natural gas per day. Of this amount, the company claims a national savings of Rp 88.03 trillion per year.

"The addition of this gas infrastructure can increase the ability to utilize natural gas by 1,902 million cubic feet per day (MMSCFD)," said Heri.

Energy observer and executive director of the Indonesian Resources Studies (IRESS) Executive Director Marwan Batubara rate, the lack of domestic gas purchases is a consequence of the lack of existing infrastructure.

This is what makes producers sell LNG products to the export market. Marwan assessed that the sluggish global market has made LNG products difficult to buy. In fact, next year there are 40 cargoes that have the potential to not yet attract buyers.

"So even though there is an excess of cargo from Tangguh or Donggi Sengoro, it cannot be bought all because of the form of LNG. Must be converted into gas again while the terminal is in three places, in Muara Karang, West Java, Lampung, South Sumatra, and Arun in Aceh.

It was bought from the excess earlier. If it continues to be exported, because indeed we cannot buy due to limited infrastructure. Marwan said, one way for the government to be able to market LNG is by providing cross subsidies from regions that have many LNG consumers, to regions with few consumers.

Republika, Page- 13, Monday, Oct 17, 2016