Supply Reduction, PGN Still Pockets 1.84 Billion US Dollars In Revenue

Gas Pipe (Photo: dock. Antara)

JAKARTA - PT Perusahaan Gas Negara Tbk (PGN) recorded an increasing trend of consolidated revenue for 4 years with growth of 8 percent from 2020 2023. This increase is supported by gas trading volume and gas transportation which are the main contributors of approximately 70 percent for the Company's revenue.

Throughout the first six months of 2024, the majority of natural gas volume came from piped gas or 99.6 percent of the contribution was still the main support for PGN's performance. Meanwhile, for the commercialization of LNG regasification by 0.4 percent. Based on gas sources, 38 pweawn came from Pertamina Group and the rest came from other supplier gas including Corridor Block.

PGN's revenue in the first semester of 2024 was recorded at 1.839 billion US dollars, an increase of 3 percent compared to the same period last year (yoy).

At the same time, the cost of revenue increased by only 1 percent to 1.432 billion US dollars in the first semester of 2024 compared to 1.415 billion US dollars in the first semester of 2023 so that gross profit was recorded to have increased 11 percent to 407 million US dollars.

Meanwhile, operating profit rose 3 percent to 293 million US dollars compared to 284 million US dollars yoy.

PGN President Director Arief Setiawan Handoko said, at the bottom line, PGN's net profit managed to grow by 28 percent to 187 million US dollars in the first semester of 2024 compared to 145 million US dollars in the first semester of 2023.

"In the Semester 1-2024 period, EBITDA's achievement was quite stable, amounting to 578 million US dollars contributed by the decrease in foreign exchange gains and the burden of shrinking," he said, Tuesday, September 17.

Meanwhile, the gas and transmission trading business line contributed 73 percent to the company's revenue. As much as 11 percent contributed from the upstream (upstream) business line and the remaining 16 percent was the contribution from other business lines.

"Presenting the precautionary principle in implementing investment plans in the midst of the dynamics of the national and global economy, during Semester 1-2024 the Company's 70 million US dollars of capital expenditure was achieved, of which 44 percent were absorbed by the downstream segment and others, while 56 percent were absorbed by the upstream segment," he explained.

He further said, for now and in the future, pipeline infrastructure with natural gas infrastructure beyond pipeline will be PGN's mainstay scheme in optimizing natural gas utilization.

"Around the operational side, in general the achievement of the natural gas trading segment is also influenced by supply and demand imbalances," he added.

There Is A Decrease In Supply Volume

Arief said there was a decrease in the volume of piped gas supply due to natural decline or a natural decrease in the condition of wells from suppliers in Sumatra and Java as well as the Eid holiday in the second quarter of 2024. These supply challenges need to be anticipated by starting to increase the supply of gas from LNG.

The company continues to implement a measurable strategy and is in line with the government's plan to continue to optimize the use of natural gas as transition energy. For this reason, the company carried out a number of initiatives including by building and adding integrated natural gas infrastructure to encourage the expansion of the user segment," said Arief.

Arief added that a number of these initiatives would encourage the Company's main business reliability in a sustainable and long-term manner.

At the same time, PGN continues to prioritize innovation and solutions to ensure the fulfillment of customer needs, including presenting LNG in the midst of declining natural decline natural gas supply in a number of existing wells.

The development of the Main Infrastructure for 2025-2027 has been prepared by the Company to ensure the Company's business growth. In the midst of challenging situations, taking momentum for economic improvement, accelerating energy transition, and the need to develop future business/derivative products that support reducing carbon emissions (low carbon business).

The increase in the use of LNG has been reflected in the achievement of LNG gas regasification through the Use Agreement Terminal (TUA) of FSRU Lampung. Along with meeting customer needs and optimizing the Lampung FSRU, gas distribution volume reached 65 BBTUD, an increase of 76 percent compared to the January-June 2023 period.

PGN will continue to develop attached core business, namely the development of natural gas transmission and distribution projects. Even so, PGN will also remain adaptive and grow with a number of new initiatives such as improving LNG's business by focusing on efficiency and effectiveness of logistics costs in natural gas distribution," he added.

Synergy Completes Cisem II Project

Arief ensured that PGN was ready to synergize with the government to complete the phase II Cirebon-Semarang natural gas infrastructure project. This network will bring natural gas from East Java to West Java.

According to him, there is a new business initiative in line with the development of the Cisem II Pipeline where PGN will build the Tegal Cilacap Distribution Pipe in the context of the Cilacap Refinery Unit IV gasification. PGN synergizes with PT Kilang Pertamina Internasional (KPI), this project is scheduled to start in 2025 with a volume of commissioning flowing around 51 MMSCFD.

PGN will also be involved in the WNTS-Pemping gas pipeline project strategic project to distribute gas from Natuna Square to the domestic market. The Government's planned construction of the Dumai Sei Mangkei Pipe through APBN funds has the potential to integrate gas pipelines in Sumatra and this will be an opportunity for PGN to take gas supply potential from the Andaman Block. The LNG Arun facility is also planned to be deployed to utilize gas supply from the Andaman Block.

Arief emphasized that the increase in the use of natural gas can be realized from the results of infrastructure integration in Central Java and has been realized through the Onshore Receiving Facility (ORF) facility operated by the Gas Subholding affiliate, namely PT Pertamina Gas (Pertagas). Flowing natural gas from the PEP Jambaran Tiung Biru (JTB) through the Gresik-Semarang section pipeline.

Infrastructure from JTB whose pressure and distribution are carried out at ORF Tambak Rejo is integrated with the completion of the Central Java distribution system which flows natural gas to the Tambak Lorok power plant sector and a number of industries, commercials, and households in Semarang-Demak.

This infrastructure is integrated and strengthens services from the Cirebon-Semarang Phase I (Cisem I) pipeline which serves natural gas needs in the Kendal Special Economic Zone (SEZ), Tambak Aji Industrial Estate, Wijaya Kusuma Industrial Estate, Tambak Lorok IP, as well as households to industry & commercial in Semarang - Demak. The existence of infrastructure is increasing the absorption of Central Java gas from 48 BBTUD to 60-70 BBTUD.

It is hoped that the addition and integration of this number of infrastructure will further meet the natural gas needs of customers, both industry and households. In Central Java, optimizing natural gas infrastructure can at least meet natural gas needs for power plants, as many as 31 industries and commercial, as well as 29 small customers. There is an increase in gas absorption from 0.5 BBTUD to 3.5 BBTUD.

"A number of initiatives are carried out by PGN, of course, based on missions and commitments to continue to consistently provide gas-based energy that provides added value to all customers," he said.

In addition, the LNG Arun tank revitalization project continues to run to achieve the target of making LNG Arun Terminal the leader of the LNG Hub in Asia. One of the early stages is revitalizing the F-6004 tank. Until the second quarter of 2024, the progress of the construction of non-tangki packages has reached 27,227 percent and a tank package of 8,16 percent

In addition to the strategy in efforts to absorb natural gas as transition energy more optimally, this expansion of transmission and distribution will also encourage the profitability aspect of PGN in a long term. This is of course in line with the increasing number of absorption of customers in line with national economic growth.

As of the first semester of 2024, PGN's pipeline network is 13,319 km or an increase of 626 km. The total number of PGN customers is 821,245, consisting of 3,165 industrial and commercial customers, 2,017 small customers, and 816,063 households.

Apart from natural gas transmission infrastructure, the Company will also build infrastructure for other energy transportation through pipes, namely building a fuel oil pipeline (BBM). This effort is carried out through the synergy of the subsidiary, namely PT Pertamina Gas (Pertagas) with PT Pertamina Patra Niaga (PPN) to build a Cikampek Plumpang BBM pipe with a Build Maintenance-Transfer (BMT) scheme with a period of 10 years of operation.

The construction of the pipeline is one of the developments of the Gas Subholding business portfolio in the scope of infrastructure business, especially energy transportation through pipes. Currently, we are in the process of preparing the Cikampek Fuel Pipanization Services Provision Agreement between Pertagas and VAT. This infrastructure will have a volume capacity of 4.6 billion liters per year with a length of 96 km," he concluded.