Indonesia's President Joko Widodo earlier this week asked his cabinet members to come up with a strategy to lower gas prices for manufacturers to around $6 per million British thermal units (mmbtu).
Manufacturers have been complaining about gas prices running at about $8-$9 per mmbtu, despite a 2016 rule that ordered energy companies to cut natural gas prices for some industries.
The energy ministry is studying a so-called Domestic Market Obligation (DMO), Tasrif told a media briefing, which would force gas producers to sell some of their output locally at capped prices to ensure cheap supplies for manufacturers.
Gas utility firm PT Perusahaan Gas Negara (PGN) is recalculating the maximum price it should pay for gas supplies in order to be able to cut prices for customers, Djoko Siswanto, acting director general of oil and gas said at the briefing.
Meanwhile, the ministry plans to ask liquefied natural gas (LNG) producers to prioritise PGN as a buyer for their uncommitted gas cargoes, instead of offering them on spot markets, Siswanto said.
Should PGN's offers come in below spot market prices, the government may allow producers to be compensated by slashing the revenue that government receives from gas producing contracts, he said.