PGN's Initiative to Optimize LNG to Support Industrial Energy Needs Amid Geopolitical Risks

Jakarta – PT Perusahaan Gas Negara Tbk (PGN) is pursuing an initiative to optimize liquefied natural gas (LNG) products. In addition to meeting the growing energy needs of industries amidst the ongoing decline in natural gas production, the penetration of this future energy product is also part of PGN’s strategy to remain resilient in the face of ongoing global geopolitical risks.

“One initiative that PGN is currently pushing is the market penetration of LNG. This should be a consideration for industries if their energy needs are not being met through pipeline gas,” said Rosa Permata Sari, Director of Strategy & Business Development at PGN, on April 26, 2024.

She emphasized that this initiative is a response to the challenges posed by natural decline (the natural decrease in gas production), and it is also part of PGN's commitment as an energy provider to continue supporting energy needs for customers, particularly in the industrial sector. The goal is to enable continued growth amidst the dynamic challenges currently faced.

This aligns with the Ministry of Energy and Mineral Resources’ (ESDM) announcement in March 2024, stating that Indonesia has larger natural gas reserves than oil, but gas production is expected to decline in the coming years due to the natural decline of existing gas wells.

From discussions with industry stakeholders, Rosa observed that many players in the industrial sector have understood the situation and recognize that LNG, in addition to its safety advantages, also offers more competitive costs compared to other fossil fuels. Therefore, LNG is seen as the right solution to enable industries to continue growing amidst natural decline and the challenges of geopolitical dynamics.

LNG has been widely used in many countries as an alternative energy source, playing a key role in the industrial sector and benefiting nations. With proper management and optimization, LNG can also serve as a sustainable and environmentally friendly energy source to help achieve the Net Zero Emission target by 2060.

Given the significant role LNG plays, Rosa emphasized that it is crucial for Indonesia to have LNG trading facilities for both export and import purposes. Import facilities are essential in case domestic LNG supplies do not meet demand.

To this end, PGN is preparing to establish a dedicated entity to manage cross-border LNG trade. “We also need to build infrastructure hubs, which are planned in several locations, one of which is in Lamong, East Java. Other hubs will be in Aceh, Arun, and Bontang,” Rosa added.

She also highlighted the importance of planning and implementing energy policies that are in line with current situations to help safeguard the country’s economic strength. “Given the current geopolitical conditions and several energy policies, we need to make proper plans involving not only PGN but also regulators.”

PGN has already prepared a long-term plan for the next 5 to 10 years, focusing on infrastructure developments to strengthen its commitment to meeting energy needs for customers. "We hope that this will help achieve a more competitive logistics price or infrastructure cost to supply energy," she concluded.

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