JAKARTA (TheInsiderStories) – Indonesia’s oil and gas regulator has mapped out strategies and priority steps to be taken to reduce the oil and gas deficit next year. The country has suffered from a large deficit in this sector for years. In the third quarter of 2019, the oil and gas deficit swelled 429.9 percent to US$761.8 million as exports only reaching $830.1 million and imports swelling at $1.59 billion.

These strategies include, first, the regulator will increase the development of the gas network up to 10 million which will encourage the utilization of domestic gas while reducing the import of liquified petroleum gas (LPG).

“We are ready to oversee the development of the gas network to help the utilization of gas more independently. Yes maybe up to 10 million networks to reduce imports and ready to provide competitive prices,” regulator chairman Fansurullah Asa said in a written statement, Friday (11/22).

The regulator noted LPG imports reached Rp85 trillion ($6.07 billion) in a year with details of Rp35 trillion of state-owned oil and gas PT Pertamina and Rp50 trillion from the State Budget. In total in just five years there was already Rp426 trillion for LPG imports, Asa said.

The regulator expects by the end of 2019 there has been a 404,139 house connection gas network built. Planning for the construction of a similar program was also announced by the government in 2020, totaling 293,533 across the archipelago.

Secondly, the regulator will immediately complete the auction of 294 gas distribution network areas which is mandated by energy minister regulation number 4 of 2018 concerning natural gas exploitation in oil and gas downstream business activities. Currently, there are 294 areas of 21 business entities that will be auctioned after the revision of the national natural gas network master plan is completed.

Third, optimize the use of natural gas-fueled transportation in Indonesia. According to the regulator calculations, the price of liquefied natural gas (LNG) for motor vehicles is in the range of Rp6,000.

Two days ago, President Joko Widodo encouraged coal entrepreneurs to conduct downstream as a key to solving the problem of the current account deficit (CAD). According to Widodo, with downstream, the products produced can have added value. If a product has added value, then the income derived from exports will also increase.

“That’s the importance of downstream. I invite all of us to start the mining process into semi-finished products so that our country has added value and has a large multiplier effect on employment needed by the community,” Widodo said at the Indonesia Mining Awards in Jakarta.

According to the president, with downstream even the trade balance and CAD deficit can be resolved in just three years. And that’s just the contribution of one commodity, namely nickel. He also urges that all mining sectors such as tin, coal, cobalt would do the same thing. So it is not impossible the Indonesian economy can grow fast amid a global slowdown.

“Three weeks ago I calculated that if everything went downstream, industrialization would become finished or half-finished goods, I’m sure the problem would take decades, the trade balance deficit, the CAD would be resolved in only three years. It was only one commodity, nickel,” he concluded.


Written by Lexy Nantu, Email: lexy@theinsiderstories.com