PGN shares up on back of supply agreements
PGN shares up on back of supply agreements
Grace Nirang, Bloomberg, Jakarta
PT Perusahaan Gas Negara, Indonesia's biggest publicly-held
energy company, signed initial agreements to supply natural gas
to 193 companies in West Java.
The state-run distributor will sell 287 million standard cubic
feet of gas a day for seven years to companies including PT
Indofarma, Indonesia's biggest generic-drug maker, from March
2007, Widyatmoko Bapang, corporate secretary at Perusahaan Gas,
told reporters in Jakarta today.
"We believe there is big potential upside on the share price
once the company is able to secure all the gas supply to support
future sales," Adi Hartadi, an analyst at PT Mandiri Sekuritas in
Jakarta, who rates the stock a "buy," wrote in a note to
investors.
Perusahaan Gas, 59 percent government owned, plans to build a
180-kilometer pipeline to take gas from South Sumatra province to
West Java. The company expects to boost sales by as much as 27
percent a year when the pipeline becomes operational in 2006.
The company signed similar preliminary sales contracts with 82
companies in March to sell 117.4 million standard cubic feet of
gas a day. Last year, it signed contracts to sell 333 million
standard cubic feet a day to 95 buyers.
The company's share surged to a record Rp 6,400 at the midday
break in Jakarta. Perusahaan Gas yesterday said it plans to raise
prices by 22 percent in the next two years because of increased
demand for energy.
President-Director W.M.P. Simandjuntak said the company plans
to supply 650 million standard cubic feet of gas a day from
Sumatra to West Java in 2006.
Perusahaan Gas has signed contracts to buy gas from fields
operated by ConocoPhillips and state oil company PT Pertamina,
Simandjuntak said. ConocoPhillips will supply 400 million cubic
feet a day of the fuel while Pertamina will supply another 250
million cubic feet a day starting in 2006.
Perusahaan also talking to PT Medco Energi Internasional to
buy as much as 100 million cubic feet a day of gas for 10 years,
said Nur Soebagjo, director of operations at the company. It is
also negotiating to buy the fuel from state energy company PT
Pertamina and Amerada Hess Corp., he said.