Indonesia is considering amending a key 1oil and gas law to make it mandatory for natural gas producers to allocate 25 per cent of their production for domestic use, the energy minister said.

The proposed law is aimed at boosting natural gas supplies for domestic users as reserves dwindle. If ratified, it will affect Indonesia's LNG export plants, vital hard currency earners for a country that is now importing oil.
Rising demand for domestic natural gas from fertiliser producers and power generators has already strained the ability of Asia's only Opec member to export LNG.
"According to our proposed law, natural gas producers must supply 25 per cent of production to the domestic market," Mines and Energy Minister Purnomo Yusgiantoro says.
"However, that does not mean the other 75 per cent of gas production from producers cannot be sold to the domestic market. They can sell to the domestic market as long as the price is acceptable to both the consumer and producer."
In December 2004, Indonesia's constitutional court declared that parts of the landmark law that opened the industry to competition were unconstitutional.
As part of that ruling, the court struck down a section under which producers had to set aside up to 25 per cent of their oil and gas output for the domestic market.
The court had said it was concerned producers would exploit the section by selling minimal amounts only because no floor had been set.
One industry source said the government's move was likely to impact investment in the energy sector, in the face of calls by foreign and private oil firms for Jakarta to improve the oil and gas investment climate.
"How can companies make a decision on investment if they are obligated to sell to the domestic market at uncertain prices," the source said.