Indonesia is exploring the production of compressed natural gas to reduce its reliance on imported LPG, Energy and Mineral Resources Minister Bahlil Lahadalia said Monday, according to a government news release.
This comes as Indonesia seeks to strengthen its energy independence, although Bahlil said domestic supply remains stable despite the Middle East conflict.
Indonesia's annual LPG consumption currently stands at around 8.6 million metric tons, while domestic production stands at just around 1.6 million to 1.7 million mt/year, leaving the country heavily reliant on imports to meet domestic demand.
Bahlil added that while CNG production is still under discussion, it is one of the best alternatives to reduce the country's dependence on LPG imports.
Indonesian trading sources said that while a shift to CNG could reduce the country's long-term import dependence, domestic LPG inventories are currently being maintained with no shortages reported. Sources added that Indonesian LPG importers have already started diversifying cargo origins since the start of the war.
"A lot of traders are open to CFR cargoes of any origin as long as they are non-sanctioned," an Indonesian trader said. "As long as the price is favorable and cargo specifications--such as the propane-butane ratio--are met, buyers are willing to take cargoes regardless of origin."
Sources said U.S. cargoes, followed by Australian cargoes, have become the main alternative sought in plugging the supply gap left by reduced Middle East volumes. Vortexa data showed U.S. LPG cargoes to Indonesia rose to 458,800 mt in March from 333,800 mt in February, and are estimated at 434,700 mt in April and 649,900 mt in May.
The same data showed no Australian LPG flows to Indonesia before April, but the level reached 47,700 mt that month.
Indonesia is a key LPG importer in Asia and the largest in Southeast Asia. Of its total 7.3 million mt of LPG imports in 2025, around 2 million mt came from the Middle East, according to Vortexa data. In the first three months of this year, Middle East LPG flows to Indonesia stood at 496,700 mt, with almost no volumes tracked after that.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
--Reporting by Cheryl Lee, clee@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com
(END) Dow Jones Newswires
April 28, 2026 04:45 ET (08:45 GMT)
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