Indonesia launches multiparty gas swap system to secure domestic supply

Indonesia introduced a multiparty gas swap mechanism Aug. 22, aiming to stabilize domestic supply while fulfilling existing contractual commitments, upstream regulator SKK Migas said in a statement.

Under the agreement, 27 billion Btu/day of gas from the West Natuna Supply Group -- comprising Medco E&P Natuna, Premier Oil Natuna Sea B.V. and Star Energy (Kakap) -- will be redirected to state-owned gas distributor PGN, it said.

The volumes will be physically delivered by Medco E&P Grissik and PetroChina International Jabung from South Sumatra sellers to PGN, it added.

The swap arrangement brings together multiple upstream contractors and buyers -- including Pertamina (Persero), PGN, Sembcorp Gas and Gas Supply -- under the coordination of SKK Migas, the statement said.

"This multiparty swap ensures additional supply for existing domestic industries while keeping other contractual commitments intact," SKK Migas Chairman Djoko Siswanto said.

Siswanto emphasized that the scheme is not intended to supply new industries but to maintain allocations for existing customers amid resource constraints.

He highlighted the long-term challenges, noting that oil and gas remain non-renewable resources and that exploration in Indonesia still faces a 70% dry-hole risk despite recent improvements.

In an information disclosure report released Aug. 15, PGN said that gas distribution from upstream oil and gas contractors had declined in August, temporarily affecting deliveries to several customers in West Java and parts of Sumatra.

The disruption was caused by an unplanned shutdown at existing gas suppliers and delays in finalizing additional gas supplies, affecting required volumes and distribution stability in the impacted areas. The situation has since been resolved.

In May, Medco Energi signed a series of gas agreements positioning the company at the center of Indonesia's swap strategy. Medco E&P Natuna, part of the West Natuna Supply Group, together with Medco E&P Grissik, finalized deals with Pertamina, Premier Oil Natuna and others.

These arrangements redirected volumes originally destined for Singapore to domestic delivery through PGN, in anticipation of potential supply shortfalls in the second half of 2025.