Industrial LNG Pricing to Be Reinforced Through a Special Policy Instrument

The Ministry of Energy and Mineral Resources (“ESDM”) has set the price of Liquefied Natural Gas (“LNG”) for industrial users at US$13 per MMBtu, despite current global market prices being in the range of US$20–23 per MMBtu. To provide legal certainty for the implementation of this policy, the Government intends to introduce a dedicated regulatory instrument that will serve as its legal basis.

“This will later be regulated through a form of special policy,” said Laode Sulaeman, Director General of Oil and Gas at the Ministry of Energy and Mineral Resources, in an interview with Hukumonline.

The Government will also issue a Decree of the Minister of ESDM governing the determination of LNG prices for industrial users in order to ensure the implementation of the policy. At the same time, the Ministry of ESDM has confirmed that the Specific Natural Gas Price (Harga Gas Bumi Tertentu – “HGBT”) scheme and its categories of beneficiaries will remain unchanged. Nevertheless, the Decree of the Minister on HGBT will be revised to adjust gas allocation in accordance with upstream supply availability in order to ensure sufficient supply for industrial users.