0 PGN allots $300m for new gas pipelines

State gas distributor PT Perusahaan Gas Negara (PGN) has set aside US$300 million for part of its project expansion this year, including the construction of gas pipelines in several new areas. PGN was currently in talks with local administrations in Bali, Bandung, West Java, and Kalimantan, about the new pipelines, according to PGN corporate secretary Heri Yusup. The gas supplies would support growing industries in Bandung, while in Bali and Kalimantan, gas would be distributed to meet the needs of both local industries and state utility firm PT PLN, Heri said during a telephone interview on Wednesday. 

“We have two gas distribution options for Bandung. The first is to use existing pipelines around West Java. The second is to convert the gas into compressed natural gas, then transport it by ship. The gas itself would be provided by gas fields in the southern part of Sumatra,” he said. In Bali, PGN plans to source the gas from gas fields in the Madura Strait, while in Kalimantan, the company will use the numerous gas fields on the island. PGN will also use the allocated internal cash to finance the maintenance and development of its existing distribution pipelines. 

One of them is a 30-kilometer-long pipeline connecting Cikande with Rangkasbitung, both in Banten province. “We hope to finish the Cikande-Bitung work by year-end. In the meantime, we will start working on another pipeline connecting Bitung with Cimanggis [West Java]. Right now, we’re preparing the paperwork,” Heri said. PGN runs two main businesses — sales and transmission — in three areas: East Java, Jakarta and several parts of West Java province, and Sumatra. In sales, the company distributes and sells gas from gas suppliers to its own end users. Its three major gas suppliers are state-owned PT Pertamina, US-based ConocoPhillips and Australia-based PT Santos Indonesia. 

Since last September, PGN’s gas price has been set at $8.45 per million metric British thermal units. Meanwhile in transmission, it merely transports gas from gas producers to their clients, such as from PT Medco E&P to PLN. In this business, PGN generates income from transportation costs. About 98 percent of PGN’s total customers comprise households and the remaining 2 percent is industries, including PLN. This year will see PGN expand its network into Lampung province with the construction an 80-kilometer pipeline in the area. The facility, worth $40 million, is expected to commence operations between 2014 and 2015. 

The pipeline is not PGN’s only project in Lampung; the company is also building a floating storage and regasification unit (FSRU) with a capacity of 240 million standard cubic feet per day (mmscfd). The FSRU, whose construction began last year, requires between $200 million and $250 million in total investment, and will start operating commercially in 2015. “Funds for the FSRU investment are coming from our internal cash, and are not included in our 2013 budget,” Heri said. In 2013, PGN aimed to increase gas volume by between 8 percent and 15 percent compared to last year, Heri added, without providing details. 

Between January and September 2012, the company sold around 800 and 820 mmscfd of gas, and transported 878 mmscfd of gas. As of September 2012, its total assets reached $3.61 billion. Its liabilities and equities amounted to $1.53 billion and $2.08 billion, respectively. PGN’s shares, traded under “PGAS”, closed at Rp 4,575 (47 US cents) apiece on Wednesday, unchanged from a day before.

source : the jakarta post