PGN to raise gas prices by 22 percent in 2007
Leony Aurora, The Jakarta Post, Jakarta
State gas distributor PT Perusahaan Gas Negara (PGN) is set to raise gas prices for its industrial customers by 22 percent in 2007, the company's top executive says.
The company will raise prices to US$5.00 per million British thermal units (mmBtu) from $4.50 at present, and to $5.50 by 2007, PGN's president director WMP Simanjuntak said on Thursday.
"The (higher) prices are still some 70 percent cheaper than diesel fuel," Simanjuntak said.
The company, which is 59 percent owned by the government, reasoned that it needed the hike as an incentive for greater production from gas producers.
PGN's shares surged 13 percent from Rp 5,500 to a record Rp 6,200 on Thursday on the news.
The publicly traded company raised prices of natural gas by 15 percent to $4.50 per mmBtu -- comprising the gas and toll fee -- from $3.90 per mmbtu on Oct. 15.
Revenues this year are estimated to rise by 25 percent from Rp 4.4 trillion ($440 million) booked in 2004, Simanjuntak said.
"In 2006, sales will rise by between 30 percent and 35 percent as PGN gets additional gas supply," he added.
PGN will get natural gas amounting to 100 million standard cubic feet per day (mmscfd) from Santos' Maleo field in Madura, East Java, starting July 2006. Its other suppliers, Kodeco and EMP Kangean, a subsidiary of PT Energi Mega Persada, are expected to provide additional supply of 25 mmscfd to East Java customers early next year.
Simanjuntak said that with the operation of its pipeline project connecting South Sumatra and West Java, revenues in 2007 would be triple that of 2004.
The project, comprising two pipelines, will have the total capacity to transport 950 mmscfd, which can be boosted to 1,200 mmscfd by using compressors.
The Phase II pipeline, connecting Grissik in South Sumatra to Rawa Maju in West Java, is expected to start flowing by the end of October next year, and the Phase I route, from Pagardewa to Cilegon in Banten, at the end of March 2007.
PGN has signed deals with ConocoPhillips and Pertamina to provide 400 mmscfd from its field in Grissik and 250 mmscfd from Pagardewa, respectively, starting in 2007 for between 17 and 20 years.
Simanjuntak said that the firm is in talks with ConocoPhillips to secure another 400 mmscfd from the gas producer's Suban 3 field in South Sumatra.
"We are currently negotiating the price," said Simanjuntak. "We hope to get the additional supply in 2007 or 2008, as the demand is high," he said.
PGN is expected to sign memoranda of understanding (MOU) with more than a hundred new customers in West Java today. The gas supply for these industries is expected to reach 240 mmscfd.
The gas distributor's net income in the first nine months of the year rose 20 percent to Rp 427.3 billion from Rp 357.4 billion a year earlier.
Revenue from gas sales and transmission jumped to Rp 3.97 trillion from Rp 3.27 trillion.