Indonesia To Curb LNG Exports

Indonesia is set to place caps on exports of liquefied natural gas, adding the commodity to a list of critical raw materials subject to export controls.

The purpose of the potential limits is to secure sufficient supply for domestic consumption, Bloomberg reports, citing an Indonesian government official.

“We believe that this policy will have a positive impact in meeting domestic energy needs, encouraging domestic industry growth, and maintaining existing export commitments,” Jodi Mahardi, deputy coordinating minister for maritime sovereignty and energy, said.

He noted, however, that there were no plans to completely halt exports of liquefied natural gas.

The export curbs would also lower domestic gas prices, according to the country’s coordinating minister for maritime affairs and investment, Luhut Binsar Pandjaitan.

Indonesia is the world’s sixth-largest LNG exporter, according to shipping data cited by Bloomberg, with exports totalling 15 million tons last year.

To affect the export caps, the Indonesian government could ban extensions of existing contracts for exports of LNG or the conclusion of new ones, Pandjaitan told media.

According to Bloomberg, contracts for the export of some 10 million tons of liquefied natural gas annually from Indonesia are set to expire by 2030.

The renewed focus on ensuring sufficient volumes of LNG for domestic consumption followed last year’s global LNG squeeze that led to soaring prices. These were felt particularly acutely in Asia, where poorer nations could not afford LNG cargos and were forced to switch to coal as the blackouts began.

Unlike most Asian nations, Indonesia has its own LNG supply but demand for the superchilled fuel remains strong, especially after prices eased off last year’s high. This in turn means the temptation of ever-growing exports must be strong for Indonesian LNG producers, threatening domestic supply security the way it did in Australia.

By Irina Slav for Oilprice.com

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