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-

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.

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