LNG Price Cut: Ceramic Industry Expects 40 Pct Savings

TEMPO.CO, Jakarta - The Indonesian Ceramic Industry Association (ASAKI) has expressed its appreciation for the government's move to lower the price of liquefied natural gas (LNG) for industrial use to US$13 per Million British Thermal Units (MMBTU). The policy is seen as a vital step toward alleviating energy cost pressures and preserving the competitiveness of the domestic ceramic industry.

ASAKI Chairperson Edy Suyanto stated that the policy provides much-needed business certainty amid the mounting pressures the industry has faced in recent years.

"This policy provides business certainty, maintains the competitiveness of our national industry, and protects employment sustainability," Edy said in a written statement issued on Monday, June 29, 2026.

According to Edy, prior to the implementation of this policy, gas costs accounted for roughly 50 percent of total ceramic production costs. With the reduction in LNG prices and an additional allocation of Specific Natural Gas Prices (HGBT), average gas costs are estimated to drop to around US$9.5–US$10 per MMBTU, bringing energy expenses down to equivalent to 38–40 percent of total production costs.

He explained that the reduction in energy overheads will help industrial operators maintain operations, mitigate the risk of mass layoffs, and optimize production capacity utilization.

Furthermore, Edy expressed hope that the government would restore the HGBT allocation to its previous level of 70–80 percent. He believes such a move would reinforce the competitiveness of the domestic industry amid fierce pressure from imported products, particularly those originating from China and India.

Edy added that the certainty of gas supply paired with more competitive energy pricing would stimulate a broader expansion of the ceramic industry over the 2025–2029 period. This expansion could boost manufacturing capacity by around 80 million square meters, attract up to Rp12 trillion in fresh investment, and "create approximately 6,000 new jobs," he noted.

Prior to this, Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia announced that the industrial LNG price had been successfully lowered to US$13 per MMBTU. According to Bahlil, this rate was the result of intense negotiations involving the government, LNG producers, and state gas utility PT Perusahaan Gas Negara (PGN) to safeguard industrial sustainability, particularly in western Java.

"Therefore, we have locked in the industrial LNG price at US$13 per MMBTU," Bahlil stated during a press conference at the parliamentary complex in Jakarta on Monday, June 29, 2026.

Bahlil noted that this new rate marks a steep decline from previous highs of around US$23 per MMBTU. That former price spike had severely burdened industrial players and heightened the threat of job losses for thousands of workers.

He explained that the initial price surge had been triggered by declining gas output from oil and gas blocks across West Java. To satisfy industrial demand, the supply had to be redirected via shipments of LNG sourced from Papua, Sulawesi, and Kalimantan.

Beyond maritime transportation costs, the imported LNG also required a regasification process before it could be fed into local distribution pipelines. These technical layers significantly inflated the final gas price delivered to factories.

"Why was the LNG price so high? Because it came from regions requiring heavy transport infrastructure, had to be regasified, and was then distributed through pipelines; that is where the auxiliary costs accumulated," he explained.

Bahlil confirmed that the reduced LNG pricing takes effect starting today. He stated that the government managed to drive down the cost by squeezing margins across the entire supply chain, ranging from upstream Cooperation Contract Contractors (KKKS) and state revenues down to downstream PGN distribution margins.

"Everyone takes a hit; the government has cut its portion on the upstream side, and we have instructed the downstream players to reduce their overheads too," Bahlil said. "We also trimmed Pertamina's margin—so adjustments were made across the board by the KKKS, the government, and PGN."

Read: Indonesia Cuts Industrial LNG Price to US$13 per MMBTU

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Indonesia Cuts Industrial LNG Price to US$13 per MMBTU

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