Jakarta – The desire of some industry players in Indonesia to import their own liquefied natural gas (LNG) to get cheaper prices is considered a step that is not necessarily profitable. ReforMiner Institute Executive Director Komaidi Notonegoro emphasised that low LNG prices on the international market are often deceptive, as they do not take into account various significant additional costs.
“If you think the price of imported LNG is cheaper, please try importing it yourself. You will see how additional costs such as transportation, regasification, and the risk of price fluctuations make it far from cheap,” Komaidi said in an official statement on Tuesday, January 7.
According to Komaidi, international LNG prices that attract attention, such as LNG from the United States (US), seem low, but several additional costs cannot be avoided. These cost components include transcontinental transportation, the regasification process, and contractual obligations such as take or pay.
“The price of LNG in the US may only be USD 3 per MMBTU (metric million British thermal unit), but after adding shipping and regasification costs, it jumps to around USD 6 to USD 7 per MMBTU. Not to mention other risks, such as fluctuations in world oil prices that affect the LNG price index,” he added.
He explained that the regasification process has four costly stages, especially if the gas has to be delivered to areas without pipeline infrastructure. This condition often makes imported LNG more expensive than domestic pipeline gas, which is currently in the range of USD 10 to USD 11 per MMBTU outside the Specific Natural Gas Price (HGBT) program.
Industry must be careful
The move to import LNG itself, according to Komaidi, should be carefully considered by industry players. PT Perusahaan Gas Negara Tbk (PGN) is already acting as a buffer by assuming infrastructure and investment risks to meet industrial energy needs, especially when domestic pipeline gas supply is limited due to natural decline in old wells such as the Corridor Block.
“PGN takes an important role as a buffer for the industry. They provide a solution with LNG regasification so that energy needs are still met while reducing the risks that can be experienced if the industry directly imports itself,” he explained.
Komaidi strongly denied accusations that domestic gas prices are not transparent. According to him, pricing is based on international standards. “Gas prices in Indonesia are transparent. If you want it to be cheaper, the only solution is a subsidy from the government,” he said.
In the global market, LNG prices also show volatility. Liquefied natural gas from the US for January 2025 delivery increased from USD 3.3 to USD 3.8 per MMBTU. In Europe, the TTF (or Title Transfer Facility, a virtual trading point for natural gas in the Netherlands) gas price for the same period increased from USD 12.7 to USD 13.4 per MMBTU.
Komaidi emphasised that industry players must understand these complexities before deciding to import LNG independently. “It does look tempting at the beginning, but if not calculated carefully, this step could backfire on the industry,” he concluded. (Hartatik)
