SOE Ministry Supports PGN Plan to Expand into Upstream Sector

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Thursday, 09 September 2010 21:52

State Enterprise Minister fully supports the plan of State-owned gas distributor PT Perusahaan Gas Negara Tbk (PGN) to expand into upstream gas sector, as a move to maintain future sustainable growth.

“PGN must enter the upstream sector, otherwise it will be pressured by market players that control gas supply,” State Enterprise Ministry’s Secretary, M. Said Didu was quoted by detik.com as saying.

He said if PGN just focuses on existing business, its performance will depend on gas producers, in particular in determining gas purchase price. If it does not expand into upstream gas sector, when gas price declines, it would be difficult for the company to gain profitable margin.

PGN buys gas from gas producers and distributes the commodity to household and industrial customers.

In the first half of 2010, PGN posted revenues of Rp9.5 trillion, or up 5.75 percent from last year’s revenues of Rp9.0 trillion. Revenues from gas distribution rose 7.25 percent to Rp8.71 trillion from Rp8.12 trillion a year earlier. The rise was in line with the rise of gas volume distributed to consumers by 9.4 percent to 827 mmscfd (million standard cubic feet per day) from 756 mmscfd a year earlier.

Income from gas transmission dropped 8.8 percent to Rp800 billion from Rp877 billion in the same period last year. Despite revenues from this activity declined, the volume of gas distributed through its transmission pipelines rose 11.01 percent to 847 mmscfd from 763 mmscfd.

In the first half, PGN posted net profit of Rp4.57 trillion, up 16.2 percent from Rp3.93 trillion a year earlier.

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