Photo taken from Wikimedia Commons

Many are wondering what will the future of the liquefied natural gas (LNG) busines in Indonesia be, especially after the government has failed to win an agreement extension with a consortium of buyers from Japan known as Western Buyers Extension (WBX).

Pri Agung Rakhmanto, oil and gas expert from Trisakti University, said that the present state of the LNG business in Indonesia is that it is overwhelmed by an oversupply that has driven LNG prices further down, while LNG producers from other countries have been selling their products at even lower prices, like LNG producers from Australia, Qatar, Malaysia, and the United States. Pri said this situation could continue for the next two or three years.

According to Pri, the future of the LNG business in Indonesia depends on the ability of policy makers in the government to find new buyers in the market. One option the government could take is to make the Indonesian LNG price more competitive is by reducing the LNG proportion for the government. Pri also mentioned that what’s important is to keep LNG projects going in order to trigger a multiplier effect for the economy.

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