<![CDATA[Indonesia manages a persistent tension between the role as a major Liquefied Natural Gas (LNG) exporter and its policy commitment to affordable domestic industrial gas. This tension is mediated through a layered regulatory stack comprising Domestic Market Obligation (DMO), which requires producers to reserve about 25% of output for the home market, a price ceiling for priority industrial sectors (Certain Natural Gas Price (Harga Gas Bumi Tertentu, HGBT)) currently US$6.50–7.00/MMBtu, and an allocation mechanism, Specific Industrial Gas Allocation (Alokasi Gas Industri Tertentu, AGIT), governing physical delivery. Therefore, this study aimed to develop a netback valuation model, comparing wellhead value across LNG exports, domestic regasified-LNG, and HGBT-regulated pipeline routes under consistent cost and fiscal assumptions to analyze policy-price wedge. The model estimated that HGBT-directed gas yields producers approximately one-quarter to one-third of the wellhead value achievable through export or regasified-LNG sales. This wedge has widened as international and ICP-linked benchmarks rose while the statutory HGBT rate remained comparatively static. The results showed deteriorating physical realization of HGBT allocations, implying the statutory price increase does not reflect the amount industrial users pay. Consequently, the underlying policy problem is shifting from price-setting toward allocation enforcement and infrastructure investment. This study has significant implications for HGBT fiscal sustainability, upstream investment incentives, and gas value chain strategy. It proposes a netback-indexed pricing formula alongside stronger DMO or AGIT enforcement as design responses.]]>
