Bahlil Prepares Gas Project to Replace LPG, Costs 40% Cheaper

Jakarta, CNBC Indonesia - The Ministry of Energy and Mineral Resources (ESDM) has revealed plans to substitute Liquefied Petroleum Gas (LPG) with the development of Compressed Natural Gas (CNG). This plan aligns with the government’s efforts to reduce domestic reliance on LPG imports.

Energy Minister Bahlil Lahadalia explained that the government intends to develop CNG in 3-kilogramme (kg) cylinders as an alternative for the public. The use of domestic natural gas is considered far cheaper than LPG, most of whose components still need to be sourced from abroad.

“But (CNG) for the 3kg size is just about to be made. Yes, we want to, and its cost is 30%-40% cheaper,” he stated at the IPB Alumni Synergy for the Nation event, quoted on Tuesday (5/5/2026).

The development of 3kg CNG is also driven by the massive scale of national LPG imports, reaching 7 million tonnes per year. According to Bahlil, although Indonesia has abundant natural gas reserves, the domestic gas composition has minimal C3 and C4 content, which are the main raw materials for LPG production.

“The problem is the question I always get: why don’t we produce LPG domestically? We have plenty of gas. We no longer import gas,” he added.

Currently, Indonesia’s annual LPG expenditure reaches Rp137 trillion, with the state allocating subsidies of Rp80 trillion to Rp87 trillion. Through conversion to CNG based on C1 and C2 gas components, the government hopes to achieve energy self-sufficiency, as the resources are fully available domestically.

“He explained that C3 and C4 differ from most of our gas; our gas is C1 and C2. C3 and C4 are minimal, which is why our domestic LPG industry is small. From there, I racked my brains again,” he said.

In addition to CNG, substitution efforts are also being pursued through coal downstreaming into Dimethyl Ether (DME) as another solution to replace imported gas. Bahlil emphasised that the government will not hesitate to make risky decisions to realise energy independence and efficiency in public services.

“I said there is no issue with efficiency, goodness, and public services; we will stake anything to achieve independence,” he asserted.