DEN’s Gas Export Moratorium Plan Remains Firm Despite Economic Challenges

Oil and Gas Source

The Dewan Energi Nasional (DEN) stands unwavering in its commitment to implement gas export moratorium until 2035, even in the face of economic difficulties caused by the Covid-19 pandemic over the past three years.

Despite ongoing efforts to revise the Republic of Indonesia Government Regulation No. 79 of 2014 on National Energy Policy and Presidential Regulation No. 22 of 2017 on the National Energy General Plan (RUEN), DEN has decided to maintain its target of halting gas exports until 2035.

Satya Widya Yudha, a member of DEN, emphasized the importance of increasing domestic consumption while awaiting the completion of the revision: “We will maintain the target [gas export moratorium] because the revision is not yet completed, but we will continue to uphold the trend of increasing domestic absorption,” he stated during a recent interview.

DEN’s projection for Indonesia’s economic growth, with an aggregate growth rate ranging from 5.2 percent to 5.9 percent until 2043, serves as the foundation for strategic policies in the energy sector, including the gas export ban.

Satya further elaborated on the potential positive impact of sustained economic growth within this range, stating that it would contribute to the increased absorption of domestic gas, which aligns with the implementation of the moratorium in 2035.

In parallel with the moratorium, the government is actively promoting investments in infrastructure to support and enhance gas distribution within the country. Satya emphasized the government’s efforts to stimulate demand and attract investments, stating, “We are actively encouraging demand growth and simultaneously investing in infrastructure development.”

Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, previously announced the government’s intention to halt gas exports for new contracts in order to prioritize the development of high-value-added industries within Indonesia in recent years.

Acknowledging the significant growth in domestic consumption, Luhut explained that the plan is still under refinement and will soon be presented to President Joko Widodo (Jokowi) for consideration.

While existing gas export contracts will continue, Luhut emphasized the importance of the export moratorium in reducing gas production costs domestically, ultimately enhancing the competitiveness of Indonesian industries. He stated, “We aim to utilize our gas resources domestically, ensuring a gas price of $6 per MMbtu or potentially even lower. Our focus is on achieving bottom-line efficiency and fostering a conducive environment for sustainable growth.”

According to data from the Central Statistics Agency (BPS), the volume and value of gas exports under HS code 2711 have experienced a substantial decline over the past decade. In 2022, the export volume reached 16 million tons, representing a 6.76 percent decrease compared to the previous year.

However, due to global supply disruptions during that period, the export value of the commodity increased by 31.76 percent in 2022, amounting to $9.82 billion, compared to $7.45 billion recorded in 2021.