Indonesia considers moves to increase use of gas reserves

Indonesia is considering implementing several gas-to-liquids (GTL) projects and undertaking other measures in order to increase use of its gas reserves. The country has about 21 billion boe of gas, according to Indonesian Gas Association Pres. John S. Karamoy.

Sep 14th, 2000


PATTAYA, THAILAND�Indonesia is considering implementing several gas-to-liquids (GTL) projects and undertaking other measures in order to increase use of its gas reserves.

The country has about 21 billion boe of gas, according to Indonesian Gas Association Pres. John S. Karamoy. He said the state oil and gas enterprise, Pertamina, and Indonesia's production-sharing contractors are studying the feasibility of building several GTL plants in the country.

The development of GTL projects to produce naphtha, kerosine, gas oil, and other products will help increase gas use in Indonesia, he told Gasex 2000, a gas conference being held in this resort city.

Other uses of natural gas are growing as well in Indonesia. As an incentive, the government has created an oil and gas bill to establish a gas price based on market forces, he said. The bill is to be tabled in the House of Representatives this month.

Though Indonesia will likely continue to be a net exporter of natural gas through LNG and pipeline gas, intra-island trunk pipelines are being considered to increase the use of natural gas within the domestic market, added Karamoy.

He pointed out that more than 300 MMcfd of natural gas is now being used as fuel for the Duri steamflood project in central Sumatra, which produces heavy crude through an enhanced oil recovery system that involves injection of steam and water into the reservoir. Karamoy said gas used by the steamflood project will increase twofold in the future.

As well, natural gas demand in the power sector is projected to rise from 700 MMcfd today to 1.5 bcfd in 2005. A key issue in power generation is related to the substitution of natural gas for diesel oil as a feedstock fuel, he noted. Gas now accounts for one third of the fuel mix in the Indonesian power sector.

Karamoy said the government currently subsidized the cost of diesel fuel in power generation. However, this subsidy would have to be removed by 2003 under the Association of Southeast Asian Nations free trade agreement, which should encourage a further increase in the use of natural gas for power generation.

While gas use in Indonesia's industrial sector is expected to soar in the next 5 years, Karamoy said he sees slower growth in gas use in the petrochemical sector. Key factors in the increase in use of natural gas in fertilizer production would be farmers' purchasing capabilities, production efficiencies, and exports.

Indonesia has been slow in using natural gas in the transportation sector, though it launched a pilot project in 1978. Currently, about 2,000 vehicles are using compressed or liquefied natural gas.

Karamoy stressed that environmental concerns would compel the use of more natural gas in the transportation sector in the coming years as a measure to reduce pollution in major cities.

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