The growing population and the rising economic prospects are set to increase Indonesia’s energy consumption by 80%. This has led to the launch of private and public sector initiatives for new energy supplies and infrastructure investments to cater to the increasing demands. As a result, there is a growing need to increase the natural gas share in the country’s energy mix. This is because, currently, gas accounts for only 15% of the total energy consumption. Also, this increases the need for affordable and sustainable LNG distribution networks.
Further, the natural gas production from existing basins and oil production have declined in Indonesia. As a result, petroleum imports have increased. For instance, terminals in Arun have switched their facilities to import from export, and plants like the Bontang LNG facility lie underutilized. Besides, the pandemic hindered natural gas production by -6.58% in 2020.
Moreover, the major onshore gas pipeline networks are limited to Sumatra and Java. In addition, the power generation is largely based on diesel. Therefore, there is a need to build LNG storage, break-bulk, and receiving terminals across several provinces.
Furthermore, the prevalence of LNG supplies and the sustained low LNG pricing offer growth opportunities for Indonesia. As per evaluations, the country has the potential to enhance the cost-effectiveness of its power generation and the local competitive rivalry by switching distillates and oil with gas and LNG as primary fuel sources.