This Equivalent (MTOE). By assuming ofincreasing energy consumptions

This business situation analyses is help to give consideration and outlook to set the forecastgas business in Indonesia in the future.2.3.1. Outlook Domestic Gas Market & RegulationNational economic growth of Indonesia increase average 5.64% per years in the period 2011-2015. This economic growth is relatively high compare than average world economic growth,that 3.64%. For 2016, 2017 and 2018, economic growth of Indonesia is expected to growth5.1%, 5,3% and 5.5%. This economic growth is triggered by accelerate the infrastructuredevelopment, improve at many economic sector and also improve at bureaucracy (NeracaGas Bumi Indonesia 2016-2035).Gas business at Indonesia is highly regulated business. The government set many of policyand regulation to manage the gas business. The regulation cover target of growth gasconsumption through Rencana Umum Energi Nasional (RUEN), regulates about gasallocation and prioritization, regulate prioritization of gas consumer sector, regulate thedevelopment of gas infrastructure and also regulate gas pricing. Due natural gas is a energysources that needed by many people, the government set many regulation to ensure thatnatural gas can be useful to prosperity of all citizen. Supply & DemandWith the condition of economic growth, it will influence the energy demand of Indonesia.Based on current condition, gas portion of energy mix at Indonesia is approximately 23% at2015 with total consumption 166 Million Ton of Oil Equivalent (MTOE). By assuming ofincreasing energy consumptions is 2% per year, the government set the target that natural gasportion at energy mix 2025 is at least 22% from the total energy consumption 400MTOE, andat 2050 portion of natural gas at least 24% of 1000MTOE total energy consumption. Itmeans, gas demand will increase from 38.18 MTOE at 2015, to 88MTOE at 2025 and at240MTOE at 2050. (Rencana Umum Energi Nasional (RUEN) 2017 PP no 22 th 2017).12Figure 2.2. Target Energy Mix of RUEN 2017Government through Ministry of EMR regulate gas allocation for domestic market by issuedPermen ESDM no 6 th 2016. This regulation is a procedure to determine gas allocation andalso gas pricing for each sector. Government set allocation policy of natural gas utilization toensure effectiveness of natural gas fulfillment at domestic. Natural gas allocation is given bythe government by prioritization as follow:a. Support the government for household consumers, transportation and also smallindustries.b. Gas that utilize to increase oil lifting. (gas lift)c. Fertilization Industriesd. Natural gas bases industriese. Power Plantf. Industries that utilize gas as a fuel.Gas demand at Indonesia is used for industries, power plant refinery, transportationhouseholds, etc. The most gas consumer of natural gas is at Industries sector and power plant.Industries gas consumption projected growth approximately 5.2% per year, and 3.9% peryear for power plant. Another sector, Commercial sector growth is approximately 6.1% peryear, transportation sector growth approximately 5.9%. The growth is higher compare thanindustries and power plant, but the portion of consumption is relatively low compare to theindustries and power plant sector. Forecast growth of gas market at Indonesia is attached as infigure 2.3. This growth of gas demand at all sectors is an opportunity and also potential futuremarket for Gas Company to grow in the future.13Figure 2.3. Projection of Domestic Gas Demand (BPPT, Energy Outlook 2016).Indonesia has large natural gas reserve. Gas reserve Indonesia at 2016 approximately 144.8Trillion Standard Cubic feet (TSCF) that consist of 102 TSCF proven reserve and 42.8 TSCFas potential reserve, natural gas production at Indonesia is approximately 7939 MillionStandard Cubic Feet per Day (MMSCFD) equivalent with 2.9 TSCF per year. (PWC,Investment & taxation Guide 2017).It means with current gas production, Indonesia gas reserve will be depleted at next 49 yearsin the future. But due the increasing of gas demand as set in the RUEN, if there is no othernew invention of gas reserves, the gas reserve will depleted faster. That means domestic gasdemand will be full fill from imported gas or by another energy sources. Government andalso gas business entity should anticipate the growth of the gas market.Currently, domestic gas demand can be fulfilled by domestic production. But for several nextyears, when gas domestic production is not able to fulfill domestic gas demand, domestic gasdemand will fulfilled by imported natural gas through Liquefied Natural Gas (LNG).Gas net import is expected to occur starting 2027 for base scenario and in 2026 for highscenario. Imported gas in LNG form will be the backbone in meeting gas demand in thefuture if domestic gas production cannot be increased. Imports of gas in LNG form areexpected to start in 2025 for base scenario and the volume will increase from 118 BCF to2,645 BCF in 2050, or increase of 13.2% per year. (BPPT, Energy Outlook 2016)