In line with the government's plan to optimize gas utilization at home, a minister says he is considering the gradual halting of liquefied petroleum gas (LPG) exports.
Energy and Mineral Resources Minister Purnomo Yusgiantoro told reporters Tuesday that the halting of exports would likely be needed to meet a surge in demand at home as the government pressed ahead with its plan to replace the domestic use of kerosene with LPG starting in 2007 in a bid to reduce the cost of the kerosene subsidy.
"We will review LPG domestic needs and exports," he said, adding that based on the review, LPG export contracts could be terminated.
He did not give any figures for overall domestic demand, but said that current demand in Jakarta was about 600 million kilograms of LPG per year, of which only 200 million kilograms could be met from domestic sources.
"We will make up the difference by halting exports," he said.
According to central bank statistics, Indonesia's LPG exports in 2005 amounted to 1.07 million metric tons valued at US$ 476.69 million.
Purnomo said that to support the proposed increase in the domestic utilization of LPG, the country would need to develop additional infrastructure.
"We are planning to assign Pertamina to provide the infrastructure, particularly as regards filling stations," he said.
He added that the government also planned to subsidize the sale of LPG stoves and gas cylinders to low-income families so as to wean them away from kerosene.
"The Industry Ministry will focus on the arrangements for the supply of LPG cylinders, and the State Ministry for Cooperatives and Small and Medium Enterprises will concentrate on the stoves," he said. "They will both cooperate with Pertamina."
He did not elaborate on the amount of the proposed subsidy.
Recently, Industry Minister Fahmi Idris said that his ministry would facilitate the production of 121 million LPG bottles, each with a capacity of 3 kilograms, at prices ranging between Rp 30,000 (US$3.29) and Rp 50,000.
Currently, an LPG bottle with a capacity of 12 kilograms cost Rp 200,000.
Purnomo said the government could save up to Rp 2.2 trillion annually if kerosene users switched to LPG.
The proposal to halt LPG exports has been on the cards since the government recently announced its long-term policy of reducing liquefied natural gas (LNG) exports to anticipate a possible oil crisis resulting from growing demand and soaring global oil prices.
In March, President Susilo Bambang Yudhoyono said that LNG export contracts expiring in 2009 would not be renewed.
"To secure our energy supplies in the future, we need to reallocate energy resources, especially in cases where the contracts have expired, to meet domestic demand," Purnomo said.
Indonesia has about 178 trillion cubic feet of proven and potential gas reserves, equivalent to about 1.4 percent of total world natural gas reserves, according to the Oil and Gas Directorate General. About 55 percent of total production was exported in 2005.
The value of the country's oil and gas exports increased by 19 percent to US$5.1 billion in the first quarter of 2006 compared to the same period in 2005.(09)
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