Gas 

Transmission and Distribution 
Development in Indonesia

Uji Subroto Santoso
PT PGN (Persero) Tbk.
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Agenda

• PGN’s Business Overview.
• Indonesia Gas Industry
• Natural Gas Development & Utilization

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PGN’s Business Overview

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Company Overview
• PGN is an Indonesia state company in downstream natural gas business activities.  
• PGN controls 87% market share of transmission business  (743.14 MMScfd) and 93% of distribution (551.28 
MMScfd), providing natural gas to its costumers on industrial, commercial and household sector.
• Listed on Indonesia Stock Exchange, and known as PGAS. The Republic of Indonesia currently retains a 55% of 
PGAS shares while the remaining is owned by the public.

GSPA • Retail & Industry 
Retail & Industry 
PGN
PGN Sales (GSA)
Sales (GSA) Customers
Customers
Gas Purchase Distribution
Distribution
Upstream

• IPP
Upstream

SSWJ
SSWJ IPP

GTA •• SSWJ  (PGN)
SSWJ  (PGN) • Chevron
Chevron
•• Grissik –
Grissik – Duri (TGI)
Duri (TGI)
Transportation PGN
PGN •• Grissik –
Grissik – Singapore (TGI)
Singapore (TGI) • Singapore
Singapore
Transmission
Transmission

Gas
Gas Supply
Supply for
for Distribution
Distribution Business
Business Distribution
Distribution –– Sale
Sale of
of Gas
Gas to
to End
End User
User Transmission–Transport
Transmission–Transport Third
Third Party’s
Party’s Gas
Gas
Gas
Gas Sales
Sales &
& Purchase
Purchase Agreement
Agreement Gas
Gas Sales
Sales Agreements
Agreements (GSA)
(GSA) Gas
Gas Transmission
Transmission Contract
Contract (GTA)
(GTA)
(GSPA)
(GSPA) –– Minimum
Minimum pay
pay volumes
volumes –– Long-term
Long-term contract
contract
–Long-term
–Long-term contract
contract –– Price
Price in
in US$
US$ &
& IDR
IDR –– Minimum
Minimum ship-or-pay
ship-or-pay volumes
volumes
–Take-or-pay
–Take-or-pay volumes
volumes –– Tariffs
Tariffs in
in US$
US$
–Fix
–Fix price
price in
in US$
US$

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Strong Distribution
Customer Base
• Three customer categories: Household, Commercial, and Industrial .
• Industrial customers continue to dominate PGN’s customer base and drive PGN’s distribution 
business growth. As of June 30, 2008, sales volume of industrial customers was 544 MMScfd 
or equal to 98.7% of PGN’s sales.

H1 2008 Sales Volume H1 2008 Industrial & Power Plant

by Customer Type Customer Consumption

Chemical 20%
Power Plant 22%
Textile 4%
Food 7%
Ceramic 15%
Fabric Metal 4%
Others 4%
Basic Metal 6%
Glass 8%
Paper 9%
Wood 1%
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Transmission 6

Pipeline Network
Completion  of  the  SSWJ  Gas  Transmission  Pipeline  enables  PGN  and its  60%‐owned  subsidiary,  TGI,  to  operate 
transmission pipelines with a total length of 2109 km with capacity of 1,839 MMScfd. Of the capacity figure, 650 
MMScfd is allocated for PGN internal use.

PLN – Medan Grissik – Singapore

Medan Grissik – Pagardewa – Labuhan Maringgai – Muara Bekasi

– Rawamaju (SSWJ II)
Duri
SU

KALIMANTAN
M
AT
E

SULAWESI
RA

Grissik PAPUA
Pagardewa

Grissik – Duri

Jakarta
JAWA

Pagardewa – Labuhan Maringgai – Cilegon (SSWJ I)

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 Distribution
Pipeline Network
• Extensive distribution network covering 9 major cities in Indonesia
• The network and facilities are managed by three SBUs – Western Java
(SBU I), EasternJava (SBU II) and Northern Sumatra (SBU III)

Medan – SBU III

Capacity = 46 mmscfd

Batam – SBU III

Capacity = 75 mmscfd

SB
U 
III
SU
M

Pekanbaru – SBU III KALIMANTAN

AT

Capacity = 65 mmscfd
E

SULAWESI
RA

PAPUA
Palembang – SBU I
Capacity = 4 mmscfd SB Surabaya & Surrounding – SBU II
U  Capacity = 230 mmscfd
I
Jakarta, Bogor, Banten,
Bekasi & Kerawang – SBU I
JAWA
SBU II
Capacity = 577 mmscfd

Cirebon – SBU I
Capacity = 8 mmscfd

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Indonesia Gas Industry

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Indonesia Gas Reserves

• Indonesia  has  the  largest  proven  natural  gas  reserves  in  Asia  Pacific.  As  of  Jan  2008,  total  gas 
reserves was 170.07 TSCF with  112.47 TSCF proven and 57.60 TSCF potential.
• Majority of the gas reserves are located in Sumatra and Kalimantan which far away from industrial 
areas.

INDONESIA NATURAL GAS RESERVES

(STATUS : 1 JANUARY 2008)

24.06

GAS RESERVES (TSCF)

Source: Directorate General Oil & Gas

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Indonesia Gas Market Outlook

Contracted, Committed and Potential Gas Supply & Demand for Major Regions in Indonesia
REG II (NORTH SUMATERA) (MMSCFD)
R E G II (N O R T H S U M A T E R A ) S o u r c e : D i rj e n M ig a s
Year Y e a r 2007
2007 2009
2009 2011
2011
S u p p ly
Supply 35 3 5 2 7 .5
27.5 101
101
Dem and 2 1 8 .5 2 1 9 .7 2 1 9 .7
Demand 481.5 526.7 535.7
B a la n c e -1 8 3 .5 -1 9 2 .2 - 1 1 8 .7
Balance -446.5 -499.2 -434.7
M edan

Du mai

D u ri
SU

K A L IM A N T A N
M
AT
ER

SU L AW ES I
A

G r i s s ik IR I A N J A Y A

P a ga rd e w a

REG V (EAST JAVA)

R E G V (E A S T J A V A )
J a k a r ta Year 2007 2009 2011
JAW A Year 2007 2009 2011
Supply
S u p p ly 4 1419.8
9 .8 7 9 794.8
4 .8 8 2 1981.9
.9
REG III (CENTRAL,
R E G II I (SOUTH
C E N T SUMATERA
RAL, SOUT&HWEST
SUM ATER JAVA)
A & W EST JAVA)
REG IV (CENTRAL JAVA)
R E G IV (C E N T R A L J A V A ) Dem and
Demand 5 6926.4
5 .4 7 41,155.3
7 .3 9 6 1,351.7
3 .7

Year 2007 2009 2011 Year 2007 2009 2011 B a la n c e - 1 4 5 .6 -4 7 .6 -1 4 1 .7

Year 2007 2009 2011 Year 2007 2009 2011 Balance -506.6 -360.4 -369.7
S u p p ly 2 4 1 3 .8 2 7 6 1 .9 2 7 0 0 .5 S u p p ly 0 .7 1 6 7 .9 195
Supply 2,413.8 2,761.9 3,100.5 Supply
Dem and 2 9 8 1 .6 3 4 9 1 .7 3 4 9 1 .8 D em and 1 40.7
3 1 9167.9
5 .7 1 9195.0
3
Demand
B a l a n c e 3,557.6
- 5 6 7 .8 4,408.6
-7 2 9 .7 4,467.3
-7 9 1 .3 B a la n c e -1 4 2 .3 -2 6 2
Demand 198 256.3 259.9
Balance -1,143.8 -1,646.7 -1,366.8 Balance -197.3 -86.6 -64.9

Source: Directorate General Oil & Gas - 10 - 5

Master Plan of
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Natural Gas Infrastructure

RITJDGBN

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Gas Production and
Utilization in Indonesia
• Natural gas utilization (export and domestic) reached 2.805 TSCF in 2007 and
expected to increase going forward.
• The GoI’s policy to promote domestic gas utilization by implementing Domestic
Market Obligation to gas producers.

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Natural Gas Development & 
Utilization

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Natural Gas
Development and Utilization

Main Factors for natural gas development and utilization

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(1) Gas Supply

ƒ Security of Supply from Gas Producers 
ƒ Certified gas volume
ƒ Supply period
ƒ Attractive Gas Price scheme 

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Gas Market Development

Opportunities & challenges

• pricing dynamic promotes higher gas
demand
• Gas price for industry
• Environmental Issue
• Limited gas infrastructures

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 Pricing Dynamics
Promotes Gas Demand
• Energy  consumption  in  Indonesia  reached  12.3 BScfd  in  Indonesia’s Energy Consumption by Energy Type 
2007.
• Oil  contribution  to  total  energy  consumption  is  declining 
due  to  the  surging  oil  price  and  reducing  oil  subsidies  in 
Indonesia. 
• Oil  subsidy  reduction  generates  a  major  shift  from  oil  to 
gas consumption of domestic industries.

Relative Energy Price (as of November 1, 2008)

Gasoline (non‐subsidized) 17.3
US$/MMBtu
Kerosene (non‐subsidized) 17.3
HSD (non‐subsidized) 15.8 PGN Gas Price Vs HSD Price
Diesel (non‐subsidized) 15.0
Gasoline (subsidized) 17.5
LPG (non‐subsidized) 14.8
HSD (subsidized) 13.9 15.76

MFO (non‐subsidized) 10.7
LPG (subsidized) 11.8 5.49

Kerosene (subsidized) 6.5
USD / MMBtu 11/1/200
Distributed Gas  5.5 8
0 5 10 15 20

Source: Pertamina
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Infrastructure Development

ƒ Optimization and Risk based infrastructure 
development
ƒ Gas pipelines categories as facilities for public 
interest by the law
ƒ Economic feasibility in transmission and distribution 
tender.
ƒ Other non‐pipe gas infrastructure development
ƒ Small scale LNG
ƒ CNG
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Third Parties Access (1)

ƒ Third parties access according Oil & Gas Law
ƒ Regulation by BPH Migas (Downstream Regulatory Agency)
ƒ Purpose of Open Access

ƒ Principles in Open Access implementation 
ƒ Excess capacity
ƒ Technically Possible
ƒ Enhance economics viability

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Third Parties Access (2)

1. Gas Transportation Agreement & Access Arrangement
– Operational philosophy
– Gas Management System
– Regulation related to technical aspect
– Regulation related to legal aspect

2. Transportation Fee
ƒ Based on project economics which is case by case bases
ƒ The fee proposed to the regulatory agency (BPH Migas)

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REMARKS

9 Given its low penetration and infrastructure coverage, natural

gas infrastructure development is a very attractive
investment opportunity in Indonesia
9 Natural gas market in Indonesia is very attractive due to
relatively cheaper gas price compared to oil based product
9 To accelerate nantural gas market development, new natural
gas fields development is required. In addition there is also
possibility to utilize other gas sources like CBM, Coal
Gasification, and Flared Gas.
9 To ensure economics of the gas infrastructure projects, gas
availability with sufficient volume and supply period become
key factors.
9 Small scale LNG and CNG could be utilized as natural gas
transportation mode for remote areas

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Thank You

PT Perusahaan Gas Negara (Persero) Tbk

Jl. K H Zainul Arifin No. 20, Jakarta 11140

Indonesia
Ph: 62 21 6334838    Fax: 62 21 6331632
www.pgn.co.id

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