Page 4 - AsianOil Week 43 2022

AsianOil COMMENTARY AsianOil

Indonesia's potential reversal

to LNG importer

Gas output decline and the need to reduce coal use for climate aims could see

Indonesia swing to becoming a net importer of gas

INDONESIA WITH the likes of Australia, Qatar and the US Investment hurdles
now by far the world’s biggest LNG exporters, it Another question is why natural gas production
WHAT: is hard to imagine that this was a title once held, has declined so sharply. This is partly a result
Indonesia, now an LNG in 1990, by Indonesia. That year the country of constrained private, and in particular, inter-
exporter, could become a delivered 20.35mn tonnes of the super-cooled national investment in the country’s gas sector.
net importer in the near gas to the global market, accounting for 38.4% Investment in Indonesia has long been prob-
future. of overall trade. However, years of declining lematic owing to the country’s opaque legal and
sales meant that in 2021 Indonesia had dropped regulatory environment, and it has never truly
WHY: to eighth place among exporters, and in the not recovered from the unilateral contract changes
Domestic gas production so far future it looks poised to become a net that were imposed by the government during the
is falling, the government importer. 1997 Asian financial crisis. This has meant less
will have to cut its use Indonesia’s diminishing role as an LNG funding for increasing recovery at existing fields,
of coal to realise climate supplier is partly the result of government and less for exploring for new ones.
aspirations. efforts to prioritise domestic gas needs. There are other issues. Even projects that have
Instead of exporting more gas, the country managed to secure the investment they need can
WHAT NEXT: has tried to use more of it to manufacture face an uphill struggle to overcome regulation.
The speed at which products for export. It has also used more gas One case in point is the Masela block in the
the transition will take to boost oil production, which has fallen 3.1% Arafura Sea, which Japan’s Inpex secured rights
place will depend on on average annually over the past decade. But to in 1998, subsequently passing a 35% interest
Indonesia's commitment primarily it is simply the consequence of to Shell. As it currently stands, the $20bn pro-
to coal reduction and the declining gas output, which dropped from ject will involve the development of the 359 bcm
outlook for domestic gas 82.7bn cubic metres in 2011 to 59.3 bcm in Abadi gas field, underpinning a 9.5mn tonne per
supply. 2021. As a result, Indonesian LNG exports year (tpy) LNG terminal and gas sales to state
almost halved over the same period, arriving power firm PT PLN.
at 14.6 bcm, according to BP’s statistics. Masela is clearly valuable, but has suffered

P4 www. NEWSBASE .com Week 43 31•October•2022