Government Cuts Industrial LNG Prices to $13/MMBtu: Impact on Gas Supply & Industry Expectations

The Indonesian government has cut the price of industrial liquefied natural gas (LNG) to US$13 per million British thermal units (MMBtu), a move officials say will provide relief to energy-intensive sectors amid rising production costs. The decision follows months of industry lobbying, with manufacturers including ceramic producers warning that higher gas prices threatened competitiveness.

The price reduction—announced by the Ministry of Industry—applies to HGBT (Harga Gas Bahan Bakar Terbaru), the benchmark for industrial gas tariffs, and takes effect immediately. According to a statement from the ministry, the adjustment is part of efforts to support domestic industries facing inflationary pressures and global supply chain disruptions.

Indonesia’s ceramic producers, who rely heavily on gas for kiln operations, had previously urged the government to increase the HGBT subsidy to 80% of costs, up from the current level. The Association of Ceramic Producers (APKI) told Kompas.com that the price cut would help mitigate losses, though it stopped short of declaring the measure sufficient. "We hope this will stabilize production costs, but we still need further clarity on long-term supply guarantees," an APKI representative said.

State-owned energy firm Perusahaan Gas Negara (PGN) confirmed it is preparing to implement the new pricing structure, though it did not provide a timeline for full rollout. In a statement to detikFinance, PGN emphasized its commitment to aligning with government policy, adding that it would work with industrial partners to ensure smooth transition.

Why the price cut matters
The move comes as Indonesia’s industrial sector grapples with rising global LNG prices, which have surged due to geopolitical tensions and reduced supply from traditional exporters. Before the cut, industrial gas prices in Indonesia had been above the regional average, higher than competitors like Thailand and Vietnam, where subsidies keep costs lower.

The government’s intervention reflects broader concerns about manufacturing competitiveness. Indonesia’s ceramic industry, a key export sector, has seen declining margins in recent quarters as production costs outpaced revenue growth. Analysts at PT Bank Mandiri noted in a June report that without further support, smaller producers risked shifting operations to lower-cost regions, potentially accelerating job losses in East Java and Central Java, where most ceramic factories are concentrated.

What comes next
Industry groups have called for additional measures, including extended supply contracts and tax incentives for gas-intensive sectors. The Ministry of Industry has not ruled out further adjustments, but officials stress that the current reduction is a short-term relief rather than a permanent solution.

Meanwhile, PGN is in discussions with upstream providers to secure stable LNG supplies, though no new long-term contracts have been signed. The company’s CEO, Dwi Soetjipto, told reporters that negotiations were ongoing with ExxonMobil’s LNG facilities in Bontang and Shell’s facilities in East Kalimantan, both of which supply Indonesia’s domestic market.

Sources:

• Ministry of Industry press statement (June 30, 2026)
• Kompas.com interview with APKI representative
• PGN statement to detikFinance
• PT Bank Mandiri industry report (June 2026)
• Antara News coverage of HGBT adjustments