PT Perusahaan Gas Negara Tbk (PGN) is designated as the uncommitted LNG liquefied natural gas producer of the PT Badak NGL LNG plant with the Sanga-Sanga Block. PGN becomes an LNG seller only for 2018 only.
This is in accordance with the decision letter of the Special Unit for Upstream Oil and Gas Business Unit (SKK Migas) signed by Head of SKK Migas Amien Sunaryadi on 4 December.
Blogger Agus Purnomo in SKK Migas
Referring to this letter, PGN initially applied to become an LNG seller of the state. Furthermore, there was a meeting which discussed the plan and the delivery of the uncomitted cargo sales strategy from Sanga-Sanga by PGN.
Secretary General and Executor of Duty Director General of Oil and Gas Ministry of Energy and Mineral Resources (ESDM) Ego Syahrial confirmed the decision of appointment of PGN as the seller of LNG. According to him, this decision was taken to open up opportunities for PGN.
"We grant, as long as we can give the best yield for the country, we are open. PGN is one in this field, yes we give it a chance, "he said in Jakarta.
The Letter of SKK of the Oil and Gas appoints PGN as the seller of uncommitted LNG volume of state parts produced from Badak LNG Plant with gas source from Sanga-Sanga Region. In this case, PGN is in charge of carrying out LNG buying and selling with prospective buyers for the period of 2018 subject to the determination of LNG allocations and prices from the Minister of EMR
Furthermore, PGN as an LNG seller may initiate the execution of negotiations, discussions, and/or discussions with potential LNG buyers without creating non-binding documents/agreements. In this regard, LNG sellers should always coordinate and submit reports to SKK Migas.
As an LNG seller, PGN has a number of tasks, ranging from submitting a written approval request on sales mechanisms to be used before marketing, preparing and obtaining approval of the sale and purchase agreement and/or other documents, to reporting the proceeds of each sale.
PGN as an LNG seller is also responsible for firstly assuming all costs and/or liabilities incurred, as well as payment obligations resulting from or in connection with the implementation and/or fulfillment of obligations under the LNG purchase agreement or other related agreements (fees and liabilities). Costs and responsibilities will be treated as operating expenses.
As an LNG seller, PGN will not be rewarded. Previously, all LNG produced by Badak LNG Plant was assigned its sales to Pertamina, from any source of gas. Talked about the potential conflict between Pertamina and PGN regarding this new decision, Ego is optimistic the two government companies will eventually reach an agreement.
The Badak NGL LNG refinery processes gas supplies from several oil and gas projects, namely Mahakam Block, Bangka Field, Jangkrik Field, and includes the Sanga-Sanga Block.
For 2017, LNG production from refineries operating since 1977, according to its official website was recorded at 7.84 million tons with shipments of 140.44 cargo standards.
Assets acquisition
Previously, Pertamina also transferred the assets of the LNG plant in Bontang to Badak NGL. According to Vice Minister of EMR Arcandra Tahar this is due to the change of refinery operators. So far, the government has appointed Pertamina as the refinery operator, which furthermore the company appointed LNG Badak.
"Now that distinguishes, Pertamina does not enter again as an operator. Badak NGL as an operator, "he said.
LNG refinery assets in Bontang, East Kalimantan are state-owned through the State Asset Management Institute (LMAN). However, LMAN can not be a refinery operator, so it is assigned to the NGL Badak. Asset transfer from Pertamina to Badak NGL began on 1 January 2018.
PT Badak NGL is owned by gas producers in East Kalimantan. In detail, Pertamina holds majority ownership of 55%, then Vico 20%, Japan Indonesia LNG Company (Jilco) 15%, and Total Indonesia 10%. Stock ownership has not changed with the asset transfer.
LNG production from Bontang LNG Plant continues to fall every year. In 2015, this refinery LNG production could reach 189 cargoes. However, the production figure dropped to 172 cargoes by 2016 and is expected to fall back to 163 cargoes this year.
Investor Daily, Page-9, Monday, Dec 11, 2017
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