Abstract

The gas industry in Indonesia is of fundamental importance to the economic and social well-being of the country. Since the discovery of rather large reserves of non-associated gas in South Sumatra in 1958, the utilization of gas has developed to support various domestic industries as feedstock for fertilizer and fuel. Since 1977 it has become an exported commodity as LNG, which is very significant as a reliable foreign exchange earner. Natural gas is used domestically as feedstock and fuel for industry, city gas supply, power generation and transportation. Gas demand has been increasing as energy requirements increase in line with the stages of national development.

The development and usage of energy in Indonesia are directed by the National Energy Policy towards an economical and efficient management by considering the increase in domestic energy demand, export opportunities, protection of the nation's long term needs and the interest of future generations. The role of natural gas in the future is projected to increase considering a number of factors including the nation's GDP growth rate of 7% per annum. Other factors affecting projected gas growth include the energy content and cost of gas compared to that of oil, the energy diversification program that seeks to minimize the issue of Indonesia becoming a net oil importer, environmental requirements, and advanced technology in the fields of gas utilization and processing.

This paper will review the background phenomenon, gas supply and utilization and the penetration of gas into domestic and export markets.