Danantara Urges PGN to Focus on These 2 Businesses; Here's What Analysts Say
Jakarta – The State Investment Management Body Daya Anagata Nusantara (BPI Danantara), or Danantara, has requested that PT Perusahaan Gas Negara Tbk (PGAS), commonly known as PGN, focus its operations on the Midstream and Downstream business segments.
This recommendation is based on PGN’s current core strengths, which lie in its control of midstream infrastructure (transmission pipelines, floating storage and regasification units, regasification terminals) and downstream capabilities (city gas and industrial gas networks).
By concentrating on these segments, PGN is considered capable of mitigating the volatility risk inherent in the upstream sector. The continued development of gas infrastructure by PGN further strengthens its strategic role in ensuring energy availability as a primary driver of Indonesia’s economic growth.
RHB Securities analyst Arandi Pradana, in recent research, stated that as Pertamina’s Gas Subholding, PGN successfully maintained stability in trading volumes and transmission in 2025, despite facing natural decline challenges from conventional pipeline gas wells.
“We project PGN’s gas distribution volume will grow approximately 3 per cent year-on-year to 875 BBTUD in 2026. This growth is driven by stable industrial demand and the addition of new customers in East and Central Java,” Arandi said.
PGN’s strategy of securing LNG cargo as a substitute for declining pipeline gas supplies, particularly from the Corridor Block, represents a tactical move. According to Arandi’s analysis, PGN is targeting approximately 22 LNG cargoes in 2026, which will contribute around 20 per cent of total distribution volume.
“What is notable is the certainty of supply. Of the targeted 22 cargoes, 14 cargoes or the majority have already been secured through contracts from the outset. This provides clear visibility into PGN’s ability to meet customer requirements,” he stated.
Beyond distribution, Arandi is also optimistic about PGN’s gas transmission segment, which is projected to grow 4 per cent year-on-year to reach 1.6 bscfpd, supported by increased trading volumes and more integrated gas flow across regions.
RHB Securities has assigned a NEUTRAL recommendation on PGAS shares with a price target of Rp 2,100, reflecting fair valuation with potential dividend yield of approximately 6 per cent.
Similarly, Ajaib Securities analyst Rizal Rafly believes PGN has successfully proven its relevance as the backbone of Indonesia’s national energy transition. In research titled “Staying Relevant”, Rizal noted that PGN’s position as the dominant operator of gas transmission and distribution in Indonesia provides a competitive advantage that is difficult to undermine.
“Natural gas remains a critical transition fuel amid accelerating renewable energy adoption. With tightening domestic supplies, the role of LNG becomes increasingly vital, estimated to rise to 18–20 per cent of PGN’s supply mix in 2026,” Rizal explained.
He believes PGN has adequate margin resilience through gas blending mechanisms between pipeline gas and LNG. This enables PGN to maintain a competitive average selling price for industry whilst preserving company profitability.
“PGN’s profit performance is defensive in nature. Although there are cost challenges from a larger LNG share, transmission and trading volumes growing by 4 per cent will provide a counterbalance. We see valuation upside supported by improved supply security and stable cash flow,” Rizal said.
Ajaib Securities has issued a BUY recommendation for PGAS shares with a more optimistic price target of Rp 2,500. This target is based on confidence that PGN can manage this supply transition without significantly compromising margins.