Jakarta – Observers have voiced concerns about the threat of reduced gas supplies from several old oil and gas blocks in the western region, which will impact Indonesia’s energy security. The reduced gas supply will halt production, and there are fears that thousands of workers will lose their livelihoods.
Prof. Tumiran, an energy expert at Gadjah Mada University and former member of the National Energy Council (DEN), said on Wednesday, August 20, that the threat of an uncertain gas supply and the resulting halt in production could potentially lead to the loss of market share.
“(As a result of the loss of) market segments, it will be very difficult to restore market confidence. What’s more dangerous is that thousands of people could lose their jobs,” he said.
Natural gas has long been the mainstay of the national economy. More than 90% of its distribution is channelled to strategic sectors, ranging from electricity, petrochemicals, fertilisers, footwear, ceramics, and glass. However, the shift in supply sources from piped gas in the west to Liquefied Natural Gas (LNG) in the east has created new problems.
In addition to being more expensive, most of Indonesia’s LNG—such as from Tangguh and Bontang—is already under export contracts.
“If domestic gas is already dedicated to exports, then just open up the import market. Don’t be shy. Imports are important for maintaining energy security,” said Tumiran.
Mismatch between supply and demand
The rapid growth in demand for natural gas is supported by infrastructure development undertaken by PT Perusahaan Gas Negara Tbk (PGN). However, the increasing demand from industry, MSMEs, and even households, which are now increasingly dependent on natural gas, is not matched by the availability of supply from upstream sources.
“PGN is currently having difficulty securing supplies. If domestic supplies are insufficient, LNG imports must be opened up. Especially now that LNG prices are falling,” explained Tumiran.
Businesses are already feeling the effects of this critical situation. With gas supplies dropping dramatically, some production facilities have been forced to shut down. Rudy Ramadhan, Chairman of the Indonesian Rubber Glove Manufacturers Association (IRGMA), said that several factories in Tangerang were experiencing a drop in gas pressure.
“Several high-temperature heaters were turned off, resulting in production stoppages. Once production stops, there will be layoffs,” he said.
The Indonesian Metal Casting Industry Association (Aplindo) experienced similar conditions. The drastic decline in gas supply forced factories to shut down their furnaces for metalworking.
Industry players are now waiting for swift action from the government through the Ministry of Energy and Mineral Resources to ensure long-term domestic gas supplies. Without policy intervention, the threat is not only to productivity but also to national socio-economic stability.
“This gas supply issue must be addressed, because the socioeconomic interests are far greater. Workers must not become victims of the energy crisis,” Tumiran concluded. (Hartatik)
Banner photo: Image generated by OpenAI’s DALL·E via ChatGPT (2024)
