PGN Signs MoU for LNG Supply with KMJ

Jakarta - PT PGN Tbk (“PGN”), as Pertamina’s Gas Subholding, has signed a Memorandum of Understanding (MoU) for the supply of Liquefied Natural Gas (LNG) from domestic sources. This commitment has been secured with PT Karya Mineral Jaya (“KMJ”), whose production source comes from the Bunyu LNG Project located in the Nunukan Working Area (WK Nunukan).

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

In the coming years, PGN anticipates a growing volume of LNG in its gas supply mix, in line with the natural decline of pipeline gas supply volumes from several producers.

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

PGN and KMJ have also agreed to explore other collaboration opportunities, particularly in participation and investment in LNG infrastructure development projects. Given PGN’s extensive experience in the natural gas industry, this partnership is expected to positively impact the project’s implementation.

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

The domestic LNG supply is planned to be distributed to Gas Subholding sales areas equipped with LNG receiving infrastructure, such as the Arun LNG Terminal, the West Java Floating Storage Regasification Unit (FSRU), and the Lampung FSRU.

“Gas Subholding welcomes the potential collaboration in supply provision and the development of infrastructure for processing gas into LNG. Through this collaboration with KMJ, we hope to enhance the reliability of Gas Subholding services for PGN’s customers and create mutual benefits for both parties,” said Rosa (24/1/2024).

“The allocation we received comes from the Working Area, which we will develop and process into LNG. We also welcome the offer of collaboration in infrastructure development, as it is crucial for managing the assets in the area. Hopefully, this partnership will strengthen so that we can eventually sign the LNG Sales and Purchase Agreement,” said KMJ President Director, Iriawan Yulianto.

According to Rosa, the collaboration has the potential to extend to technology mastery and gas infrastructure development with KMJ. Given PGN’s existing presence in the natural gas business ecosystem, communication and collaboration can be facilitated more seamlessly. PGN can support KMJ's needs to grow together within this ecosystem.

As Gas Subholding, PGN is committed to maintaining the reliability of gas supplies to its customers through natural gas and LNG. PGN also consistently develops gas infrastructure, including LNG, to support its business growth in the future.

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