Date pgn entrusted by Gov’t to Sell lng from Sanga-Sanga Block
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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-
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.
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.
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