As an Alternative to LPG, CNG Targeted for Consumption This Year

Jakarta, CNBC Indonesia - The Ministry of Energy and Mineral Resources (ESDM) has outlined plans to implement Compressed Natural Gas (CNG) as a replacement for Liquefied Petroleum Gas (LPG), particularly for 3 kilogram (kg) cylinders, this year. In essence, the use of CNG is needed to reduce dependence on LPG imports, which have reached 7 million tonnes per year, and to lessen the burden of state subsidies. The Director General of Oil and Gas (Dirjen Migas) of the Ministry of ESDM, Laode Sulaeman, stated that they are refining the distribution model and preparing supporting infrastructure in the field. He noted that accelerating this conversion is primarily aimed at curbing the growing share of gas imports amid population and economic growth. “It is targeted that the public can consume it this year,” he said during a discussion event by ASPEBINDO in Jakarta, quoted on Wednesday (6/5/2026). The government records that national LPG production has been on a downward trend since 2010, now remaining at around 1.6 million tonnes per year. This situation forces Indonesia to bring in large quantities from abroad to meet domestic needs, most of which are allocated to the household sector. “That means from year to year, with population growth and economic growth, we will continue to increase LPG imports if we cannot convert to other sources,” he added. Unlike LPG, whose raw materials are limited domestically, the gas source for CNG is available from national oil and gas fields, thus saving foreign exchange while cutting subsidy costs by up to 30%. “If this gas comes from our own production and the distance is not far, after calculations and simulations, it can save around 30 percent as announced by the Minister,” he said. In the initial stage, CNG distribution is planned to target areas with the most ready supporting infrastructure. The government is focusing on starting simulations of this gas type’s use in several urban areas before implementing it evenly across Indonesia. “Gradually in big cities in Java first. The roadmap is that we have it, of course, because this hasn’t been announced by the Minister yet, but the point is that going forward we will reduce our LPG and replace it with CNG,” he emphasised. On the other hand, Energy Minister Bahlil Lahadalia is also studying the possibility of subsidising CNG use. “Everything is being studied. The subsidy option must still be there; it’s just about the volume, which we need to see,” Bahlil explained after a limited meeting at the State Palace on Tuesday (5/5/2026). As is known, Indonesia’s LPG needs are still supported by imports of 75% to 80%. Of which, 7 to 8 million tonnes are used for household needs. The issue is that amid current political turmoil, Indonesia also needs certainty for LPG imports. “For that reason, we are formulating to find other alternatives. CNG is one of the alternatives. Now, CNG is already used by hotels, restaurants, and MBG; it’s there, but in classifications of 20 kilograms and above, there are those of 10 kilograms and above,” Bahlil explained. Currently, they are testing to introduce CNG in smaller sizes or 3 kilograms. It is estimated that this trial can be completed in 2-3 months.