Indonesia Implements Gradual Gas Export Reduction

Rising Domestic Demand Drives Policy Change

The Indonesian government, through the Ministry of Energy and Mineral Resources (ESDM), has announced plans to gradually reduce gas export quotas over the coming years ¹

. This policy shift is primarily driven by the increasing demand from domestic industries, which remain the largest consumers of natural gas in the country ¹

Source 1

https://industri.kontan.co.id/news/kementerian-esdm-akan-pangkas-kuota-ekspor-gas-secara-bertahap-ini-alasannya

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Impact on Investment Climate

The Association of National Oil and Gas Companies (Aspermigas) has raised concerns that this export reduction could negatively impact the investment climate in the upstream oil and gas sector ²

. The chairman of Aspermigas's Investment Committee, Moshe Rizal, noted that the policy change introduces uncertainty for investors, particularly as domestic gas prices are significantly regulated by the government, making them less lucrative compared to international prices ²

Source 2

https://industri.kontan.co.id/news/aspermigas-ungkap-efek-samping-dari-pemangkasan-ekspor-gas

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Balancing Domestic Needs and Export Commitments

The government's decision reflects a broader strategy to prioritize domestic energy needs while managing existing export commitments. As the country develops its industrial sector, the demand for natural gas is expected to continue growing, necessitating a balanced approach to resource allocation. The phased reduction of export quotas is designed to give both producers and consumers time to adjust to the changing dynamics.