Indonesia Caps LNG Prices as Industrial Gas Costs Climb

Indonesia has imposed a price cap on regasified LNG for industrial users, aiming to ease energy costs as tighter gas supplies increase reliance on imported LNG.

(Reuters) — Indonesia will cap the price of regasified liquefied natural gas for industrial users to help them manage rising energy costs caused by a surge in global gas prices, the country's energy minister Bahlil Lahadalia said on Monday.

Here are some details:

• The government will cap LNG-based gas prices at $13 per million British thermal units (MMBtu) from the current level of $20.57 per MMBtu for users, Bahlil told reporters after meeting with parliamentary leaders.
• The new price cap will be implemented immediately, he said.
• Piped gas supplies in western Java, home to many industrial areas, have been depleting and power suppliers have turned to LNG cargoes instead. However, the costs are higher due to rising global prices and high logistic costs, Bahlil said.
• The shortfall between the cap and the market price will be borne by gas producers, the state utility and the government, Bahlil said.
• The government will take a lower share of the revenues from the gas production to compensate suppliers for the lower gas price, he added.
• Indonesia caps the price of piped gas at $6.5 to $7 per MMBtu for seven industrial sectors, including fertilizer, petrochemicals and oleochemicals, among others. This price cap will remain unchanged, Bahlil said.