Indonesia to set up gas distribution special agency

JAKARTA -The government will establish a special agency to coordinate the supply and distribution of gas to remove supply uncertainties caused by the competition among existing gas providers and distributors.

The ministry’s director general for oil and gas, IGN Wiratmaja, said that his office was still preparing for the issuance of a regulation for the agency’s operation, which he termed an aggregator, which would function like a buffer stock agency.

He said that the aggregator would coordinate all gas supply from various gas fields at different prices. The aggregator would then mix the gas and sell it under a price formula set by the government before selling it on to customers, including industrial users, power plants and households.

He said the government could set up a new institution or appoint existing companies, such as state-owned oil company Pertamina’s subsidiary Pertagas and state-owned gas distributor PGN, which are involved in the distribution of gas to consumers.

As a gas distributor, PGN currently has around 6,000 kilometers of transmission and distribution pipelines, which helps the company deliver gas to its domestic buyers, including power plants, industry, commercial businesses, households and gas stations.

Meanwhile, Pertagas also has a wide gas distribution and transmission network and is continuously expanding its infrastructure to tap the growing market. It has also benefited from its status as a subsidiary of Pertamina as the parent firm’s ownership in a number of domestic gas fields has meant better supply certainty.

The two firms’ competition has been increasing over the last few years, particularly after the government said it planned to merge the two companies. Additionally, PGN has become more aggressive in its move to acquire gas fields as part of an attempt to secure supply.

The director for gas at the Downstream Oil and Gas Regulatory Agency (BPH Migas), DjokoSiswanto, revealed that there was also an option for the government to draw clusters to divide operations between the two gas players.

Pertagas president director Hendra Jaya said his company was ready if the government decided to appoint it as the gas aggregator.

“We are ready. Pertamina has also proven itself as an aggregator in the oil business. Therefore, we will benchmark the proven model and make improvements if there are any deficiencies,” Hendra said.

Pertamina is currently running an aggregator function for gasoline, in which the firm collects from various refineries, adds it to imported fuel if necessary, and then distributes the fuel to buyers at a price set by the government.

Meanwhile, PGN sent a strong message to the government over its plan for the gas aggregator function.

“If we are asked whether we are ready [to be the gas aggregator], the answer is PGN has been doing that. The price of gas from PGN is different from the price set by gas traders,” IrwanAndriAtmanto, a PGN spokesman said.