The Indonesian oil and gas midstream market is expected to register a CAGR of less than 1.83% during the forecast period, 2020 – 2025. Factors, such as the increasing demand for natural gas and oil and the increasing production of oil in the country, are expected to boost the demand in the Indonesian oil and gas midstream market, during the forecast period. However, reduction in the oil and gas production has impeded the growth in the oil and gas midstream market.
- In 2020, the decrease in the production levels of the oil and gas in the country, in 2015 – 2018 period, has caused uncertainty in the market. Also, deals with Singapore, for providing oil through pipeline may end, as the government is shown no interest to continue the gas swapping agreement.
- Indonesia's government-owned company is expected to invest in the exploration and production of Indonesia's oil and gas fields. The investment would likely increase production and create an opportunity for cheaper oil and gas for the refineries.
- Few projects are expected to be added in the storage market in the forecast period. Marginal growth in the oil and gas sector, is expected, in the forecast period. Increase in Investment is expected to be the driver of the market.
Key Market Trends
Pipeline Capacity to Witness Growth
- Indonesia sends about 25% of its gas exports to Singapore and Malaysia through two pipeline connections: one from its offshore fields in the West Natuna Sea and the other from the Grissik gas processing plant in South Sumatra.
- Consumption of natural gas decreased in the country, by 1.1%, year on year, from 40.1 million tons of oil equivalent (mtoe), in 2015 to 41.9 mtoe, in 2018. While gas production has decreased in the country from 65.5 mtoe, in 2015 to 62.9 mtoe, in 2018.
- In 2019, New projects are underway for the creation of gas pipeline in the country like Trans-Kalimantan gas pipeline and Borneo gas pipeline, are expected to be installed in the forecast period.
- In 2019, Pertamina, a private player in the Indonesia oil and gas market, is proposing around 1611 km of pipeline and 443 km of the pipe is underway. Which is expected to ease and reduce the cost of transportation.
- · Hence, pipeline capacity of the country is expected to grow slightly in the forecast period due to an increase in oil consumption in the country and increase in investments in the sector.
Increase in Investments to Drive the Market
- Indonesia has a total oil storage capacity of 4.8 million kilolitres. Pertamina owns around 87% of the capacity. While over 40% of the capacity is in the Island of Java, which has the most significant demand, the Riau Islands close to Singapore have significant capacity growth. Largest of gas storage is the UPMS-III site, owned by Pertamina which provides for around 1,235,850 kiloliters billion cubic meters of space.
- Pertamina is expected to strengthen the midstream infrastructure to distribute fuel and LPG. The Maumere BBM Terminal is expected to increase the fuel storage tank capacity from 20,000 Kiloliters (KL) to more than 85,000 KL and served as the primary point supply in the East Nusa Tenggara region
- Production of oil increased, by, consumption of natural gas increased in the country, by 3.1%, year on year, from 73.8 million tons of oil equivalent (mtoe), in 2015 to 83.4 mtoe, in 2018. The oil production in the country decreased to 39.5 million tons, in 2018 from 41 million tons, in 2017. An increase in consumption is expected to boost growth in the market.
- Hence, Indonesia oil and gas midstream is expected to witness growth in the forecast period due to an increase in investment in the region.
The Indonesian oil and gas midstream market is moderately consolidated. The major companies operating in the market include Pertamina EP, PT. Connusa Energindo, ConocoPhillips Company, PT. Perusahaan Gas Negara Tbk, and Chevron Corporation.
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