Perusahaan Gas Negara Persero Tbk PT : PGN Entrusted by Gov’t to Sell LNG from Sanga-Sanga Block

PGN Entrusted by Gov't to Sell LNG from Sanga-Sanga Block

The Indonesian government has appointed state-owned gas company Perusahaan Gas Negara (IDX:PGAS), also known as PGN, as the seller of LNG produced by Badak LNG Refinery owned by Badak NGL, with gas sourced from Sanga-Sanga Block, East Kalimantan. The appointment of PGN as the seller of the uncommitted state LNG will apply to the sales period of 2018.

"We have welcomed the appointment of PGN as seller of Sanga-Sanga Block state LNG as a sign of trust from the government to us as a state-owned company focused on natural gas business," said Rachmat Hutama, Corporate Secretary of PGN in Jakarta on Wednesday (12/13/2017).

Rachmat said the government's decision to designate PGN as state LNG seller is based on a letter from the Head of Special Unit for Upstream Oil and Gas Business Activities (SKK Migas) Amien Sunaryadi. In a letter dated December 4, 2017, SKK Migas appointed PGN as the seller of uncommited volume LNG from Badak, with gas source from Sanga-Sanga Region.

He said PGN is in charge of carrying out the sale and purchase of LNG with prospective buyers for the period of 2018 while remaining subject to the determination of LNG allocations and prices from the Minister of Energy and Mineral Resources "Furthermore, we can start negotiations with prospective buyers by continuing to coordinate with SKK Migas," Rachmat added.

With this appointment, PGN is responsible for submitting a written approval of the sales mechanism to be used before marketing. In addition, the company is also responsible for preparing and obtaining approval of the sale and purchase agreement, as well as to report the results of the sale each time the payment is made.

As an LNG seller, PGN is also required to bear all costs incurred first. Referring to the letter, the fees and responsibilities will be treated as operating expenses. As an LNG seller, PGN will also not be rewarded.

"We are optimistic with professional management, transparency and accoutability, PGN can contribute more to the country," Rachmat continued.

The Badak NGL LNG refinery processes gas supplies from several oil and gas projects, namely Mahakam Block, Bangka Field, Jangkrik Field, and Sanga-Sanga Block. In 2017, LNG production from this refinery, according to its official website, was recorded at 7.84 million tons with shipments of 10.44 cargo standards.

About PGN

PGN is a state-owned company formed by the Government of the Republic of Indonesia with the aim of building the national economy by prioritizing the needs of the people towards a just and prosperous society materially and spiritually, as stated in the legal basis of the birth of PGN as stated in President Regulation Number 19 Year 1965.

In carrying out the mandate, PGN has pioneered the development of natural gas pipelines since 1974. It is not easy to pioneer the energy conversion when Indonesia is still experiencing the glory of petroleum production. Yet PGN's struggle has yielded its current results. With over 7,278 kilometers of transmission and distribution pipelines successfully being developed, PGN has successfully channeled natural gas to meet domestic demand equivalent to 23 million liters per day. PGN supplies natural gas to power plants, industries, commercial businesses including restaurants, hotels and hospitals, gas refueling stations, as well as households.

In line with the increasing demand for natural gas in the country with limited resources, PGN continues to seek strategic solutions to ensure supply for consumers and prevent the scarcity of natural gas in some areas. Currently PGN is looking for new gas supplies, especially from locations close to existing infrastructure, and seeks to obtain larger volumes to be allocated for domestic market usage.

In an effort to increase transparency and ease of funding for gas infrastructure development, the Government, in 2003, with the approval of the House of Representatives, took steps to make PGN an open company. Currently the Company is a public state-owned company listed on the Indonesia Stock Exchange (IDX). The government owns 56.97% shares in the company, while the remaining 43.03% shares are owned by the public.