Indonesia: Gas Sector Subsidizes USD 4.36 Billion to Economy in 2011

Indonesia’s gas sector has contributed Rp 40 trillion in subsidy to Indonesia’s economy in 2011, according to BPMIGAS.

“If calculate, the average prices for the domestic market range from US$5 to US$6 MMBTU (million British thermal unit), while the (average) gas prices for exports are between US$12 MMBTU and US$13 MMBTU. This means the gas sector had given a direct subsidy worth Rp 40 trillion in supporting Indonesia’s economic activities along 2011,” said Indonesia’s Upstream Oil and Gas Executive Agency (BPMIGAS) Chairman R. Priyono during a hearing with the Commission VII at the House of Representatives.

In the past five years, the gas volume needed to support domestic demands has increased by 200 percent, the greater part of which was being allocated for industrial purposes. In addition, gas has been used to support the availability of electricity, and as the raw material in the fertilizer industry.

In the meeting, Priyono also emphasized the importance to adjust current domestic gas prices. Such a movement, he said, was needed to maintain investors’ interests in developing gas fields. Priyono also underlined that the buying power of local customers was actually getting stronger nowadays.

“Most of domestic buyers are actually willing to pay three times higher than current prices,” he said.

40 trillion Indonesian rupiahs = 4.36 billion U.S. dollars

[mappress]
LNG World News Staff, March 21, 2012; Image: BPMIGAS