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The Star
a day ago
- Business
- The Star
Indonesia's gas subsidy cut could slash industrial output, trigger layoffs: Industry Ministry
JAKARTA: Industry Ministry spokesperson Febri Hendri Antoni Arief said the ministry had received a flood of complaints from private companies reliant on the government's fixed natural gas price (HGBT) programme. According to him, supply disruptions and steep surcharges, such as state gas company PGN's tariff of US$16.77 per mmbtu, are squeezing manufacturers, particularly in energy-intensive sectors like ceramics, glass, steel, fertiliser, petrochemicals and oleochemicals. 'Energy costs make up a significant share of production expenses in these industries. Any increase in prices or cuts in HGBT supply erode margins, lower factory utilisation and, in the long run, deter investment, especially in energy-intensive manufacturing,' Febri said in a statement on Thursday (Aug 14). He added that this appears to be a recurring problem, despite the existence of a presidential decree that fixes the price and ensures supply continuity. 'No party or institution should attempt to override the President's order by raising the price above $6.5 or restricting the supply,' he noted. Indonesia's industrial gas demand is estimated at 2,700 million standard cubic feet per day (mmscfd), but the available HGBT supply is only 1,600 mmscfd, with about half, roughly 900 mmscfd, allocated to state-owned enterprise (SOE) consumers. He noted that SOEs such as PLN and Pupuk Indonesia have been the largest HGBT beneficiaries. 'Private manufacturers, the backbone of the national industrial base, are often treated differently. This imbalance risks undermining the business climate,' he said. 'If the private sector's share continues to shrink, the consequences will be immediate: reduced capacity, lower efficiency and potentially mass layoffs.' According to the ministry, 134,794 industrial workers rely on a stable HGBT supply. If volumes fall to just 48 percent of demand, a significant share of these jobs could be lost. The sectoral breakdown of workers at risk includes: fertiliser (10,420), petrochemicals (23,006), oleochemicals (12,288), steel (31,434), ceramics (43,058), glass (12,928) and rubber gloves (1,660). 'These figures are a serious alarm. Every gas policy must weigh its impact on industrial sustainability and the livelihoods it supports,' Febri said. Ministry data shows several sectors are already facing declining utilisation due to gas constraints. The national ceramics industry, for example, averaged 70 to 71 percent utilisation in the first half of 2025. 'If supply disruptions persist, even critical sectors like fertiliser, which supports President Prabowo's food self-sufficiency programme, could see output decline,' Febri warned. Previously, Indonesian Ceramics Association (Asaki) chairman Edy Suyanto said the ceramic industry in West Java is now limited to 48 percent of its HGBT gas allocation, down from the previous 60 percent set by PGN. In eastern regions, the cap is 40 percent. 'From August 13 to August 31, only 48 percent of the HGBT gas volume can be used, while the remainder will incur a surcharge of US$14.8 per mmbtu due to force majeure,' Suyanto said on Wednesday, as reported by Bisnis. He urged the government to resolve the disruption by ensuring adequate HGBT quotas. The industry is also grappling with a surge in low-priced ceramic imports, which is putting additional pressure on domestic production. - The Jakarta Post/ANN
Yahoo
21-05-2025
- Business
- Yahoo
Indonesia Signs Swap Deals to Ensure Domestic Gas Supply
Indonesian natural gas producers have signed a multi-party gas swap agreement with Indonesian and Singaporean traders aimed at increasing gas supply security in western Indonesia. As gas production in Sumatra in western Indonesia is falling, local companies and regulators looks to redirect domestic gas supply to meet local demand while selling overseas gas from other areas. In a deal signed on Wednesday, Indonesian gas producer Medco Energi Internasional signed a multi-party swap agreement with companies including state energy firm PT Pertamina and Singaporean and Indonesian gas traders Oil Natuna Sea B.V., Star Energy (Kakap) Ltd., Sembcorp Gas Pte Ltd., Gas Supply Pte Ltd., Petrochina International Jabung Ltd., and PT Perusahaan Gas Negara (Persero) Tbk (PGN). Under the agreement, specific gas volumes will be supplied to Singapore from the West Natuna Supply Group, replacing volumes currently delivered from Corridor Block and Jabung PSC, the so-called South Sumatra Sellers. These redirected volumes will then be allocated to meet domestic gas demand, with PGN serving as the domestic buyer. 'This collaboration demonstrates a strong example of productive synergy between upstream operators, the regulator, partners and buyers in ensuring gas supply across both domestic and international markets,' MedcoEnergi director and chief operating officer, Ronald Gunawan, said in a statement. Indonesian gas demand is rising, while production at some legacy gas fields is dropping. The country has started replacing diesel as a fuel in dozens of power plants with LNG, which is set to boost demand for natural gas in one of the world's top LNG exporters. Last month, Indonesia awarded five strategic oil and gas blocks to international and domestic players in a bid to reverse its decade-long production decline and bolster energy security. The awards are part of Indonesia's broader upstream revival strategy, with nearly 60 additional blocks expected to be offered over the coming years. 'The government hopes these auction winners will be able to contribute to Indonesia's energy security ahead,' said Tri Winarno, a senior official at the Ministry of Energy and Mineral Resources. By Charles Kennedy for More Top Reads From this article on
Reuters
05-05-2025
- Business
- Reuters
Indonesia's Bukit Asam eyes $3.1 bln plant to convert coal to synthetic natural gas
JAKARTA, May 5 (Reuters) - Indonesian state coal miner Bukit Asam is studying a plan to invest $3.1 billion into a plant to convert coal into synthetic natural gas, its chief executive said on Monday. It would be Bukit Asam's latest attempt to produce gas from coal, as the government pushes for domestic value addition on its natural resources, after its partner pulled out from a project to produce dymethyl ether gas. The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. Bukit Asam plans to convert 8.4 million metric tons of low-grade coal of around 3,700 kcal/kg GAR into 240 billion British thermal unit per day (1.6 million metric tons per year), Arsal Ismail, chief executive of Bukit Asam told members of parliament. "Some of Bukit Asam's low-grade coal reserves would be very suitable for conversion into synthetic gas," Arsal said, adding the project is aimed at meeting future gas demand in Indonesia. The company plans to form a joint venture with state-controlled gas distributor Perusahaan Gas Negara (PGN) and a technology provider to build the plant, he said, without naming the technology provider. Bukit Asam and PGN are currently conducting a feasibility study for the project, including the projected cost of the gas it will produce and its competitiveness against liquefied natural gas. Arsal said an initial study indicated that the synthetic gas would be competitive against imported LNG. Indonesia is currently a net exporter of LNG, but some analysts expected that it could turn into a net importer by early 2040s. Bukit Asam previously partnered with U.S. firm Air Products (APD.N), opens new tab to convert coal into dimethyl ether, to produce substitution to liquefied petroleum gas popularly used as cooking fuel. Air Products, however, pulled out of the project in 2023 to redeploy its capital in other projects. Bukit Asam is currently in talks with a number of Chinese companies for potential partnership to replace Air Products, Arsal said.
New Straits Times
29-04-2025
- Business
- New Straits Times
Globaltec's Australian unit gears up for early coal bed methane sales
KUALA LUMPUR: Globaltec Formation Bhd's Australia-listed unit, NuEnergy Gas Ltd, has commenced drilling site preparation activities at its Tanjung Enim production sharing contract (PSC) in South Sumatra, Indonesia. This comes as the group moves closer to first coal bed methane production under its early gas sales initiative, NuEnergy said in its quarterly activities report, which Globaltec filed with Bursa Malaysia today. The company, through its subsidiary Dart Energy (Tanjung Enim) Pte Ltd, finalised a gas sales and purchase agreement with Indonesia's national gas distributor PT Perusahaan Gas Negara (PGN) at the end of 2024. The drilling site preparation work involves building access roads, repairing bridges, clearing land and constructing foundations, mud pits and flare stacks. Featured Videos The area also includes a site designated for PGN's compressed natural gas facility. The first of four wells is expected to be spudded in May. Elsewhere, NuEnergy continues dewatering operations at its Muralim PSC, also in South Sumatra, to gather gas production data. It is also awaiting government approvals to advance environmental permitting at its Muara Enim PSC. Separately, the company is in the process of relinquishing its Muara Enim II PSC. During the March quarter, NuEnergy posted a net operating cash outflow of A$143,000 and capital expenditure of A$822,000. Its cash and cash equivalents stood at A$3.92 million at the end of the quarter, giving it an estimated funding runway of four quarters based on current expenditure levels. NuEnergy, an independent clean energy company focused on Indonesian unconventional gas, holds three coal bed methane PSCs in South Sumatra. It aims to integrate these assets into a coal bed methane production hub, targeting sustainable energy supply for Indonesia's growing market.
