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Indonesian LNG under pressure as domestic gas demand grows

Fri 09 Oct 2015 by Karen Thomas

Indonesian LNG under pressure as domestic gas demand grows
Indonesia is producing less gas, but domestic demand has doubled

Indonesia is struggling to replace its natural gas reserves at the rate they are being used, heightening pressure on the country to export less LNG and strengthening the case to invest in import infrastructure, according to a new report from the US-based Energy Information Administration (EIA).

The country boasts the second-largest natural gas reserves in Asia-Pacific but has seen domestic demand double since 2005, prompting Jakarta to invest in new LNG-import terminals and to curb the amount of gas set aside for export.

According to the EIA, Indonesia’s natural gas production grew by an annual average of 2.4 per cent a year in 2000-2010, but production fell by an annual average of 4.4 per cent in 2011-2013 as the country “has struggled to attract foreign investment in more technically challenging and deepwater fields”.

Exploration has slowed, due to regulatory hurdles and a shortage in Indonesia of fiscal incentives for international oil companies, the EIA reports.

Although Chevron is developing deepwater fields off east Kalimantan to supply Bontang LNG terminal to meet domestic demand, it has delayed the second phase of the project to 2020.

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