The government of Indonesia plans to divert more liquid natural gas (LNG) cargoes from the state-owned oil and natural gas corporation, Pertamina, for domestic consumption to mitigate energy shortages in 2022.
Indonesia is witnessing a shortage of coal and LNG and has imposed a temporary ban on coal exports in early 2022 for the first month of the year. The country is suffering from a decreasing gas production of its mature fields, and facing a lack of investment in its oil and gas upstream sector. These issues caused supply shortages to customers in countries such as Singapore a year earlier. Hence, Indonesian President Joko Widodo asked coal and LNG producers to priorities domestic market demand over exports in early January 2022. Indonesian coal miners who fail to meet a government requirement of selling 25% of their products to the local market, would face sanctions, and their business permit could be canceled.
Lowering coal consumption and promoting renewable energy utilization is at the center of Indonesia’s low carbon transition plans. The power sector has a paramount role in Indonesia’s target of cutting greenhouse gas emissions by 2030 and reaching carbon neutrality by 2060. The country is experiencing a challenge in balancing local market demand and achieving its targets in lowering greenhouse gases.