Indonesia's state utility PLN sees gas demand doubling by 2040
TANGERANG, Indonesia (Reuters)—Indonesia's state power utility expects its natural gas demand to nearly double by 2040 as it aims to build 20 gigawatt (GW) of gas-fired power plants, a company official said on Wednesday, in the quest to reach net-zero emissions by 2060.
Perusahaan Gas Negara (PLN), which has pledged to stop expanding coal-fired capacity, is revising a long-term power supply plan to build 80 GW of new generation capacity, with a quarter to be powered by gas instead.
Its demand for gas, seen as a transitional fuel in the move to renewables from coal, is estimated at 1.2 TBtu this year, and could increase to 1.5 TBtu in 2027, as PLN converts diesel-fired power plants to LNG, said Rakhmad Dewanto, a director of PLN Energi Primer Indonesia.
Gas demand is expected to reach 2.3 TBtu in 2040, Rakhmad, tasked with making PLN's fuel purchases, told delegates at the Indonesia Petroleum Association conference.
"These are still conventional numbers, because we have potential upside coming from additional demand from smelters," he said, a prospect that could boost PLN's gas consumption to 3.4 TBtu in 2040.
Indonesia's smelting sector has expanded massively in recent years as investment poured into the nickel processing industry to meet surging global demand for batteries.
Coal is the dominant power source for its operations, but some companies are building gas-fired units instead. Much of that gas demand is expected to be met by liquefied natural gas (LNG), Rakhmad said, as supply from existing pipelines falls.
This year PLN's LNG consumption has surpassed gas supplied through pipes, Rakhmad said. LNG consumption in 2024 is seen at around 82 to 84 cargoes, up to 23% from last year as supply.
Out of the estimated required cargoes this year, 76 have been secured, he said, adding that PLN has requested import permits from the government.
"At least we need to secure the import quota first. If domestic supply is available, we will not need to import," he added.
In 2025, LNG demand by the utility firm was expected to be between 84 cargoes and 90 cargoes, he said.
Most of Indonesia's future gas supply is expected to come from its eastern region, while demand is centered in the west.
If LNG meets all the gas needs for the 20 GW of capacity by 2040, that could translate into 400 cargoes of LNG per year, Rakhmad said. That figure compares with Indonesia's current production of fewer than 200 LNG cargoes a year.
To meet future demand, the government is pushing for quick development of recent discoveries such as Italy's Eni in the Kutai basin and the United Arab Emirates' Mubadala Energy in the South Andaman block.
Consultancy Wood Mackenzie said Indonesia was expected to be a net importer of gas by 2040, though significant new discoveries could alter that scenario.
"But the current outlook clearly suggests legacy fields are declining and it may take time for some of these new developments," analyst Mangesh Patankar said.
(Reporting by Fransiska Nangoy and Bernadette Christina; Editing by Florence Tan, Clarence Fernandez and Louise Heavens)
Related News
Related News
- Gasum selects Wärtsilä for another bio-LNG project in Sweden
- Linde selected to supply carbon capture technology to ADNOC’S Hail and Ghasha project
- Tecnimont to build waste-to-biogas plant to fuel local kitchens in India
- Topsoe, Aramco sign JDA to advance low-carbon hydrogen solutions using eREACT™
- Indonesia regulator confirms disruption at bp's Tangguh LNG project
Comments