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2018•RePEc: Research Papers in EconomicsRequires access

A Long-Run Estimation of Natural Gas Demand in Indonesian Manufacturing Sector: Computable General Equilibrium Model Approach

Tri Widodo, Ardyanto Fitrady, Saiful Alim Rosyadi, Traheka Erdyas Bimanatya

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Abstract

Domestic natural gas utilization in Indonesia suffers from lack of proper infrastructure and high transportation costs. The government might benefit from detailed estimation of demand to anticipate potentially fast-growing natural gas utilization in the future. Using Global Trade Analysis Project - Energy (GTAP-E) model simulation, this paper attempts to present a long-run estimation of natural gas demand in manufacturing sector for year 2025, 2030, and 2035. Chemical industry will remain the largest user of natural gas, followed by electricity, basic metal, and metal industry. To meet these demand, domestic production of natural gas should increase by 36.7 percent and 99.49 percent in 2025 and 2035, respectively. It brings us to the urge of massive investments in natural gas production and distribution.

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What this paper is about

Domestic natural gas utilization in Indonesia suffers from lack of proper infrastructure and high transportation costs. The government might benefit from detailed estimation of demand to anticipate potentially fast-growing natural gas utilization in the future. Using Global Trade Analysis Project - Energy (GTAP-E) model simulation, this paper attempts to present a long-run estimation of natural gas demand in manufacturing sector for year 2025, 2030, and 2035. Chemical industry will remain the largest user of natural gas, followed by electricity, basic metal, and metal industry. To meet these demand, domestic production of natural gas should increase by 36.7 percent and 99.49 percent in 2025 and 2035, respectively. It brings us to the urge of massive investments in natural gas production and distribution.

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Available abstract

Domestic natural gas utilization in Indonesia suffers from lack of proper infrastructure and high transportation costs. The government might benefit from detailed estimation of demand to anticipate potentially fast-growing natural gas utilization in the future. Using Global Trade Analysis Project - Energy (GTAP-E) model simulation, this paper attempts to present a long-run estimation of natural gas demand in manufacturing sector for year 2025, 2030, and 2035. Chemical industry will remain the largest user of natural gas, followed by electricity, basic metal, and metal industry. To meet these demand, domestic production of natural gas should increase by 36.7 percent and 99.49 percent in 2025 and 2035, respectively. It brings us to the urge of massive investments in natural gas production and distribution.

Key concepts: Computable general equilibrium, Natural gas, Estimation, Economics, Production (economics), Natural resource economics, Indonesian, Electricity

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