PGN sees revenues tripling in 2007
The Jakarta Post, Jakarta
State-owned gas utility company, PT Perusahaan Gas Negara (PGN), on Wednesday projected that revenue from operations to rise three fold in 2007 after completion of its massive pipeline project in 2006, the company's top executive said.
PGN president director WMP Simandjuntak said the company was optimistic for a significant rise in revenues after it completed the construction of a US$1 billion pipeline project. The project will link gas-rich regions in Sumatra with industrial areas in Greater Jakarta, Banten and West Java.
"With the completion of the project, we expect our gas distribution from South Sumatra will reach 950 MMSCFD (million standard cubic feet per day) in 2007 from the current 334 MMSCFD," said Simandjuntak at a public briefing of reporters and investors on Wednesday.
The construction of the project is expected to be completed in mid 2006. Many industrial enterprises in West Java and Banten, the nation's main industrial regions, are expected to switch from oil to gas.
PGN has inked a deal with ConocoPhillips and state-owned oil and gas producer PT Pertamina to supply some 3.3 trillion cubic feet of gas worth Rp 52 trillion (US$5.77 billion) from Sumatra to buyers in Java for a period of 17 years.
Simandjuntak said that around half of the gas volume had buyers, with the remainder expected to be purchased by some 300 industrial plants currently on a waiting list.
PGN is estimated to reap between $200 million and $500 million per annum from the deal, starting in 2007.
PGN also expects to generate higher sales from industrial areas in East Java starting next year, after it signed an agreement with Santos to supply 100 MMSCFD of gas valued at $654 million, and an agreement with Lapindo Brantas to supply 30-50 MMSCFD.
PGN's revenue from gas sales and distribution is estimated to rise to Rp 4.3 trillion this year from Rp 3.6 trillion last year.
However, net profit in the first nine months of this year fell 49 percent to Rp 263.9 billion, from Rp 522.2 billion in the same period last year. The fall was due to foreign exchange losses and interest rate burdens on the company's debts.
Elsewhere, Simandjuntak said the company planned to construct an integrated distribution pipeline that would link the entire island of Java, from Bekasi in West Java to Gresik in East Java, with an investment of $538 million.
The project is scheduled to start in 2008 and be completed by 2010. Gas supply will be derived from regions in Sumatra and Kalimantan.
PGN shares ended higher by Rp 25 to Rp 1,425 on the Jakarta Stock Exchange on Wednesday.