Key issues facing emerging LNG markets: the case of Indonesia Report

Insight 20 July 2017

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Report summary

Edi Saputra, senior analyst – APAC gas and power, chaired and presented at the 2017 Gas Indonesia Summit in Jakarta on 13 July 2017. His paper assessed the challenges to Indonesia's power generation sector as it turns increasingly towards LNG. Faced with declining piped gas production, LNG will be increasingly needed by Indonesia's power projects. Wood Mackenzie forecasts that LNG's share in Indonesia's power generation will increase from 25% today to more than 60% by 2030. As the country braces for higher LNG consumption, Indonesia needs to address several issues. Some of these are specific to Indonesia's case, but there are lessons for other emerging markets that increasingly rely on LNG volumes.

Pricing – The market faces a significant price gap between existing supply and LNG imports
Procurement model – Indonesia needs to decide clearly between having an integrated structure or competitive model
Regas development – The regulator needs to consider midstream consolidation
Third-party access – TPA is required for both regas and pipeline infrastructure
Market structure – The country needs to align its new market structure