Gas Quota to Ensure Fair Distribution and Safety of Natural Gas Delivery

Jakarta – PT PGN Tbk plays a crucial role in the equitable distribution of natural gas volumes to customers, ensuring mutual benefit. The natural gas distributed by PGN is sourced from suppliers who engage in production activities across various gas wells. PGN’s Corporate Secretary, Rachmat Hutama, stated that currently, several gas production contracts with PGN are experiencing a decrease in production due to various upstream conditions, including natural decline in well output and the need for regular and unplanned well maintenance.

Given the current supply situation, which is affected by natural decline and other issues in the upstream sector, PGN has decided to implement a gas volume quota for all customers in order to maintain the reliability and safety of the high-risk gas network.

“PGN strives to serve customer needs as optimally as possible. However, given the declining gas supply, we, as the downstream distributor, are working to ensure that gas distribution is fair to all customers. We aim to avoid prioritizing one or two sectors to the detriment of others,” explained Rachmat on May 2, 2024.

In addition to ensuring equitable gas distribution, PGN is also focusing on the safety of the gas network to prevent undesirable incidents. Failing to do so would increase responsibility and risk for the overall gas delivery to all customers.

“We avoid favoring the interests of certain parties and an unreliable gas network. We ask for the cooperation of all customers to comply with the regulations to ensure the safety of gas delivery. This is our primary concern to ensure gas distribution remains safe and reliable,” Rachmat added.

Furthermore, the interests of other customers also have the same right to receive volumes based on available supply, which is currently in a declining position. "We cannot prioritize one or a few customers. Fair energy distribution can strengthen the reliability of the supply chain and optimize natural gas utilization in the domestic downstream sector, which has a multiplier effect on the national economy," he said.

As previously communicated to customers, including through meetings held in late March 2024 with PGN’s management team, the current shortage of natural gas supply has been addressed with LNG alternatives. The volume provided is aligned with customer demand, considering commercial aspects and regulatory price regulations, as well as the dynamics of global energy prices.

“Therefore, it is crucial to maintain the reliability of services, ensure the safety of the gas network, and distribute natural gas fairly to all customers based on the supply PGN receives from suppliers. Both upstream regulators and PGN, as the distributor, are working to provide the best possible gas volume for domestic consumers,” said Rachmat.

Currently, PGN is working to meet the natural gas needs of all customer segments by providing Liquefied Natural Gas (LNG) solutions. Efforts include utilizing the LNG supply allocation from SKK Migas, with PGN planning to launch several LNG cargo shipments in May 2024 to secure the industrial gas supply amidst the current national gas production situation and the continuing industrial demand.

PGN’s role in distributing natural gas volumes adheres to government regulations, such as Kepmen 91K No. 2023, and contracts with suppliers. As a distributor, PGN ensures the safe and reliable delivery of gas to end users, based on available volumes from suppliers and the knowledge of the regulators.

Currently, all stakeholders in the natural gas supply chain are working to increase national gas production through new investments in producing wells and new exploration activities. However, these efforts require time and commercial viability.

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