PGN Signs LNG Supply MoU with KMJ

Source: www.gulfoilandgas.com 1/25/2024, Location: Asia

PT PGN Tbk ("PGN"), as the Gas Subholding of Pertamina, has signed a Memorandum of Understanding ("MoU") commitment for the supply of Liquefied Natural Gas ("LNG") from domestic sources. This commitment is obtained from PT Karya Mineral Jaya ("KMJ"), with its production source coming from the Bunyu LNG Project located in the Nunukan Working Area (WK Nunukan).

The MoU was signed on Tuesday (23/01/2024) at the PGN Headquarters and conducted by Rosa Permata Sari, the Director of Strategy and Business Development of PGN, and Iriawan Yulianto, the President Director of KMJ.

In the coming years, PGN anticipates an increase in LNG volume in its gas supply portfolio. It follows the dynamics of natural gas pipeline supply volume, which is experiencing a natural decline from several producers.

The production of KMJ's LNG is expected to commence in 2028 with a planned capacity of approximately ±60 MMSCFD. In this regard, PGN is one of the potential buyers interested in purchasing the plant’s production volume.

PGN and KMJ have also agreed to explore other potential collaborations in participating in the LNG infrastructure project development. This is considering not only the need but also the extensive experience of PGN in the natural gas industry, which will have a positive impact on such projects’ implementation.

Rosa Permata Sari, the Director of Strategy and Business Development of PGN, expressed that PGN requires a reliable supply of natural gas from upstream natural gas suppliers in Indonesia to be distributed through PGN's transmission and distribution gas pipeline network. The latest domestic gas balance projections for Indonesia indicate a decline in natural gas production starting in 2024. This condition necessitates PGN to secure a domestic LNG supply, including from WK Nunukan through the Bunyu LNG Project.

The domestic LNG supply is planned to be delivered to the gas Subholding sales regions that already have LNG receiving infrastructure in various locations, such as the LNG Arun Terminal, Floating Storage Regasification Unit (FSRU) in West Java, and Lampung.

"The Gas Subholding welcomes the potential collaboration in supplying and developing gas processing infrastructure into LNG. With the collaboration with KMJ, we hope to enhance the reliability of Gas Subholding services to PGN customers and provide positive benefits to both parties," said Rosa on January 24, 2024.

"The allocation we received is from the Working Area for us to develop and process into LNG. We also warmly welcome the collaboration offer for the infrastructure development because it is crucial for us to manage the assets there. Hopefully, this collaboration will strengthen so in the future, we can sign an LNG Sales and Purchase Agreement (PJB LNG)," said Iriawan Yulianto, the President Director of KMJ.

According to Rosa, the collaboration has the potential to continue in terms of technology acquisition and joint gas infrastructure development with KMJ. Considering PGN is already within the natural gas business ecosystem, communication becomes easier. PGN can support KMJ's growth within this ecosystem.

PGN, as the Gas Subholding, is committed to maintaining a reliable gas supply to customers through both natural gas and LNG supplies. Consistency is also maintained in developing gas infrastructure, including LNG, to support PGN's future business.

Fadjar Djoko Santoso, Vice President of Corporate Communication of PT Pertamina (Persero), stated that Pertamina is working to increase LNG supply for domestic needs. In the energy transition era, Pertamina positions gas as a transitional energy.

"Gas utilization is continuously expanding in various sectors because this energy is more environmentally friendly," concluded Fadjar.

Pertamina, as a leading company in the energy transition, is committed to supporting the Net Zero Emission 2060 target by continuously promoting programs that directly impact the Sustainable Development Goals (SDGs) achievement. All these efforts align with Environmental, Social, and Governance (ESG) implementation across all Pertamina's business lines and operations.


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