Pertagas Targets 44% Capex Growth in 2016
Jakarta. Indonesia’s second-biggest gas company, Pertamina Gas (Pertagas), is looking to increase capital spending by 44 percent this year as it moves to complete 500 kilometers of new pipelines to boost its customer base, its top executive said.
Indonesia is one of the world’s top gas exporters, yet domestic gas users have suffered from inadequate supply as its infrastructure projects have suffered setbacks.
Gas demand in Southeast Asia’s largest economy has also been tempered by declining prices for rival fuels coal and diesel, which have plunged on abundant supply and demand worries.
Pertagas, a unit of state-owned energy company Pertamina , plans to increase spending to $325 million in 2016 from $225 million in 2015, its president director, Hendra Jaya said in an interview on Tuesday. The bulk of this amount will be allocated to new distribution and transmission pipelines.
“We will develop more gas pipelines, as much as we can,” Hendra told Reuters.
“If they are not built, gas won’t be delivered to consumers and our gas business won’t develop,” he said.
Financing for the projects has been from loans from Pertamina.
“Actually we still have margin that we can generate, although maybe it’s not as much as before,” Hendra said.
Pertagas targets to complete four new gas pipelines in 2016, adding to its existing 2,300 kilometer network on the islands of Java and Sumatra where it sees most growth opportunities. The company also hopes to increase gas trading by 36 percent to 150 billion British thermal units per day (bbtud), Hendra said.
Pertagas is also targetting to increase processing of liquefied petroleum gas (LPG) by 14 percent to 400 tonnes per day, and regassification of liquefied natural gas (LNG) by 13 percent to 85 bbtud.
Indonesian gas prices had been shielded to some extent from declining global crude prices, he said. Crude dropped to an 11-year low on Wednesday.
Government moves to reduce gas prices in North Sumatra were unlikely to impact the company’s profits, as gas supplied to that region only represents 0.3 percent of its 1.4 billion cubic feet per day gas transportation business, Jaya said.
Pertagas is in talks with Indonesia’s main gas distributor, Perusahaan Gas Negara (PGN) and the government after the state-owned enterprise ministry proposed that the two work under a single holding company to improve domestic gas supply and distribution.
However, the issue of sharing pipelines remained unresolved, Jaya said.
Reuters
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