Asean consists of countries with quite diverse characteristics. There are several countries that have abundant energy sources, such as Indonesia, Thailand, Vietnam and Malaysia. Against tis, there are countries with acute energy needs, such as Singapore, Indonesia and Malaysia. Interdependence between these countries to secure their energy supply is vital, especially the dependence of industrialized countries on energy-producing countries.
Natural gas is the energy resource produced in a large volume in Asean. In fact, Indonesia is one of the world’s largest natural gas-producing countries. It also has the largest natural gas reserves in the Asia Pacific, after Australia and China. In Asean, Indonesia is among the top producers of natural gas, together with Malaysia, Thailand and Vietnam. This has encouraged energy utilization and a drive to increase natural gas network interconnectivity through TAGP.
Indonesia is one of the most important natural gas producers in the world. The World Bank and World Gas Intelligence reports place Indonesia among the top ten natural gas producers in the world. According to the CIA World Factbook, Indonesia is among the top 15 countries with the largest gas reserves. As much as 60 percent of Indonesia’s natural gas production is directed to meet its domestic needs. The remainder is exported to other countries, such as Singapore, Japan, South Korea and Taiwan.
Over time, the paradigm of natural gas utilization has begun to be adjusted. Natural gas is no longer a commodity solely exploited to increase state revenue through exports but also as a strategic commodity to drive national economic growth, both as a source of energy and as a raw material for national industry. In its role as an energy source, natural gas is quite competitive compared to oil, coal and renewable energies. Compared to oil and coal, natural gas is considered “cleaner”, due to its lower emissions.
The government has formulated several policies to encourage the domestic use of natural gas. This includes setting a specific natural gas price (HGBT) of US$6/mmbtu for industry and power plants. Even though in practice there are still several problems, this policy has injected new vigor into the industrial sector.
According to a 2022 study by the Industry Ministry (Kemenperin), the HGBT policy has significantly increased the utilization of the glass and ceramic industry, by 32.55 percent and 10.26 percent, respectively. The oleochemical and rubber glove industries also saw an increase in utilization during the peak of Covid-19. Overall, the HGBT policy is considered capable of providing a net impact of 11.5 percent increased utilization in the industrial sector.
This in turn has led to increased employment and a stronger contribution to tax revenue. Based on Kemenperin data, it has increased employment by 14.13 percent, which translates to jobs for 19.11 million people. The industrial sector also contributed 28.7 percent in tax receipt in 2022. Given the positive outcome of HGBT policy, Kemenperin hopes that it can be expanded beyond the seven industrial sectors.
The unique characteristics of natural gas also signify its unique competitive value. natural gas market prices are currently linked to those on the international market, since natural gas prices are influenced by the volatility in oil prices. Thus, if it is supported by adequate infrastructure and an efficient market, natural gas will be able to deliver higher added value, because of its increasingly affordable price.