RI’s plan to stop gas exports is not simple, here’s the reason

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Jakarta, Klinik Farma – It is believed that the plan of the Indonesian government to close the valve for exporting gas abroad will not be easy. At the same time, the use of gas for domestic purposes is still relatively small.

Elan Biantoro, Secretary General of the Association of Oil and Gas Companies (Aspermigas), agrees that Indonesia’s natural resource wealth must be fully maximized in the interests of the state in order to ensure a multiplier effect (multiplier effect).

However, if we talk about the history of the gas industry, then this sector cannot be called a cheap and easy industry. This is due to the fact that this sector requires quite a large capitalization, starting from the upstream (upstream), middle flow, downstream (downstream).

“Although the path of our country from the very beginning until now has shown that part of our gas production, with the restrictions that we have, we need to export, and export is also a long-term contract in nature, because when we exported our gas demand in Indonesia was still very small,” he told CNBC’s Energy Corner in Indonesia on Tuesday (August 8, 2023).

Elan acknowledged that the country’s current gas production is quite large, but it cannot be separated from the role of world-class investors who are investing in Indonesia. Bearing in mind that at the beginning of the development of gas fields in Indonesia, national companies were not yet capable of investing.

“Currently, the contract for gas exploration and production is for 30 years and can be extended for 20 years, so we also need to take into account aspects that are already related to the contract, whether from the exploration and production side or from the midstream side,” he added. . .

For example, there is exploration and production on the upstream side. In addition, on the midstream side, there is LNG infrastructure, the investment costs of which are not cheap.

“And it was financed by investors, hence Indonesia had the advantage at the time, but demand-a little domestic. But we produce in large quantities, so we export to Japan, Korea, China, and with the current growth of the economy, our domestic demand is starting to grow,” he said.

Earlier, Coordinating Minister for Maritime Affairs and Investment (Menko Marves) Luhut Binsar Panjaitan said the government would ban gas exports to support the domestic petrochemical industry. At the same time, the import of raw materials for the domestic petrochemical industry remains quite high every year.

Luhut said the idea for a policy to ban gas exports came about after his party conducted an internal study with Jody Mahardi, deputy for coordinating maritime sovereignty and energy at the Coordinating Ministry for Maritime Affairs and Investments.

“After settlements with the Jodi CS team, we could assume that we would no longer export gas. We will be refining petrochemicals,” Luhut said in the Klinik Farma Economic Review on Monday (10/7/2023).

Therefore, he hopes that domestic gas prices can be reduced to $5 per million British thermal units (MMBTU). Currently, the government has set the price of certain natural gas, or HGBT, for seven industrial sectors at US$6 per MMBTU.

“We will find gas in Masela, then in Varima, it can be almost twice as much as Masela. We can also find oil reserves thought to be 27 billion barrels. So your country is very rich. ” He said.

[Gambas:Video CNBC]

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