Oil and gas giant Pertamina is preparing to meet most of the country’s future natural gas demand by stocking up on liquefied natural gas (LNG) commitments with companies overseas.

Domestic demand for natural gas may rise to 10 billion cubic feet per day (bcfd) with the rise of industries, especially in Java and Sumatra, according to data from Pertamina.

Although oil will remain the fuel of choice, demand for gas is expected to grow 3.8 per cent per year until 2030, with the majority of demand coming from the power sector. Non-power demand is driven primarily by fertilisers, refineries and the mining industry, most of which is located in eastern Indonesia. Given the projected high demand, Indonesia is expected to suffer a national natural gas deficit of 2.5 bcfd by 2020 and 4.07 bcfd by 2030.

To prevent such a deficit, Pertamina plans to build an LNG portfolio of just below 4 million metric tonnes per annum (mtpa) from both domestic production and deals made with LNG importers, said Pertamina’s LNG vice president Didik Sasongko Widi.

"If our gas supply is low, our economic growth will also be low. We will need a lot of natural gas by 2020, so we have already started stockpiling LNG commitments. We believe that it will be needed, so we are taking that risk," he said during a press briefing.

Pertamina had previously signed two agreements with Corpus Christi Liquefication, a subsidiary of US-based Cheniere Energy, for the latter to supply approximately 1.52 mtpa starting in 2019.

Under the sales and purchase agreement, Pertamina will purchase the LNG on a free on board basis at a price indexed to the monthly Henry Hub price, in addition to a fixed component. Pertamina said it had also secured commitments from other overseas companies for around 1.5 mtpa.

Didik declined to disclose details on specific commitments.