JAKARTA – A senior Indonesian government official said about $10 billion is needed to halve the country’s oil use, replacing it with gas, local media reported here on Thursday. The National Development Planning Agency (Bappenas) energy and natural resources chief Monti Giriana said that the money would be used to build basic infrastructure such as pipelines, gas stations and gas receiving terminals.
“We estimate that gas consumption in Java, the island with the highest fuel consumption in Indonesia, will jump to around 1,500 million million standard cubic feet per day (MMSCFD),” he told reporters on the sidelines of a meeting here on Wednesday. To meet demand Indonesia should build a pipeline between Kalimantan and Java and build more terminals to distribute liquefied natural gas (LNG) from remote plants, such as the Tangguh LNG plant in Papua, he said.
“The gas supply from Sumatra won’t be enough to meet demand in Java, so supplies from Kalimantan and Papua are very vital,” Monti was quoted by the Jakarta Post as saying. The investment should come from private companies or state-owned enterprises and not the state budget, according to Monti. “The government will only provide incentives to attract investors.”
The agency would also continue to study giving incentives to private car owners to use gas instead of oil-based fuels and might also give soft loans to small enterprises to manufacture kits to convert cars to gas, he said. The kits would enable a car to use gas-based fuels such as liquefied gas for vehicles (LGV).
“To produce conversion kits makers don’t need to sophisticated technology. I believe that our small-scale industries can do that, as is done in India, so that the prices would be more affordable,” Monti said. Evita Herawati Legowo, the oil and gas director general at the Energy and Mineral Resources Ministry, previously said that conversion kits might cost as much as 10 million rupiah (about $1,136).
Monti said Bappenas was currently studying whether LGV or compressed natural gas (CNG) was most suitable gas-based fuel for the nation’s vehicles. “LGV is made of liquefied natural gas (LNG). But even now we have to import LNG. We don’t have sufficient domestic supplies. CNG will be a bit more preferable because we’ve plenty of stock from our gas fields,” he said.
Upstream oil and gas regulator BPMigas has announced that the agency will increase the domestic gas supply to 1,690.43 MMSCFD in 2011, up from 1,203.18 MMSCFD in 2010, as stipulated in the 2011 natural gas supply contract. The government is eager to promote gas use for cars to reduce the consumption of subsidised fuel.
