A large new volume of LNG, up to 14.5 million tonnes per year, will increase the total supply of LNG in Indonesia between now and 2030. The new LNG volume will come from the following LNG production centers:
- Tangguh LNG Train #3 – 3.8 MPTA in the Q4 2023.
- Genting Kasuri FLNG – 1.2 MTPA in 2026
- Masela Abadi LNG – 9.5 MTPA in 2029
This article looks at the new LNG production capacity between now and 2030, and how the domestic market can absorb this new LNG volume.
The objective of this market analysis is to give information and incentives to both the LNG producers and buyers – domestic and international – to start planning on how to take advantage of the new LNG volume.
Assumptions and Scenario
First, here are the numbers and scenarios used in this market analysis.
- Estimated domestic LNG allocation: Tangguh T3 – 70%, Kasuri FLNG – 50%, Masela – 50%.
- On the domestic demand side, only Jawa 1 Power is the confirmed new power demand.
- The development of small-scale LNG receiving terminals is considered less likely to happen.
- There will be new LNG demands from the smelters located in Bahodopi and Sumbawa.
- Another potential LNG domestic consumption should come from Pertamina’s refinery fuel conversion, which will come by the end of this decade.
- Due to the high prices of Indonesia’s LNG as they are indexed to oil prices, the fertilizer and downstream industries are expected to play a very minor role in the domestic LNG market.
Results of Analysis
The results of the market analysis are presented in the graphic shown in this article.
The graphic shows that once full production of LNG from the Masela Abadi plant starts in 2030, the domestic-allocated LNG volume will far exceed the domestic LNG demand.
The surplus between the domestic-allocated LNG volume and the domestic demand in 2030 amounts to around 4.3 MPTA. To put it in perspective, this amount of gas is good enough to feed a 5-GW gas-fired power plant.
Without additional infrastructures or new domestic demand for LNG in the future, the producers will have to sell it together with the export-oriented volume of around 6.5 MTPA to the international markets.
Recommendations
- There will be a big surplus of LNG to meet the domestic demand in 2030. Nevertheless, the outlook for LNG is good for exports.
- To increase domestic demand for LNG, new infrastructures are needed to distribute the gas.
- To make LNG more absorbable to domestic markets, the LNG pricing mechanism will need to be adjusted.
Article by Nisi Setyobudi
