The company, which was established in 1965, was previously known as PT Perusahaan Gas Negara Tbk. When the government decided to form a state-owned enterprises holding in 2018, the majority of Perusahaan Gas Negara's shares were handed over to Pertamina. The company focuses on supporting the government programs in economic development, especially in the usage of natural gas. It also supplies volumes and quality gas for public consumption.

Focusing on gas networks 

PGN has planned to allocate 35% of its US$ 458 million Capex for upstream business, 26% in between and 34% for downstream, while the rest will be allocated for support businesses. The company will use the budget to develop 400,000 gas network for housing, Senipah (East Kalimantan) gas pipe transmission, regasification development in LPG terminal and others.

"The government assigned the company to build 400,000 connections of household gas network, which mostly will be financed by our Capex," PGN President Director Muhamad Haryo Yunianto told investor.id on March 2, 2023.

Yunianto said the company also postponed the Fasken Block divestment plan, which had been under discussion since 2022, due to the sharp volatility of gas prices at the Henry Hub.

"The Fasken Block divestment will help PGN restructure its business into an oil and gas utility company. However, for now, PGN is still benefiting from strong crude oil prices," Mandiri Sekuritas wrote in the Investor Digest.

PGN subsidiary PT PGAS Solution is also realizing the construction of gas networks to serve households and commercial customers in Bintaro, South Tangerang regency. The construction will take place in housing complexes of Villa Melati Mas, Graha Raya and Bintaro Jaya.

PGAS Solution will also target the construction of 35,749 house connections, 203 small customers of micro-, small- and medium-enterprises (MSMEs) and 38 commercials. To facilitate these projects, the firm will dedicate a 37-kilometers pipeline that will reach the Bintaro area. The construction of this pipeline is also part of the cooperation between PGN and PT Jaya Real Property Tbk (JRP).

"PGN expects supports from the local administration and the community for the success of this gas network. The gas network will benefit the community and businesses around those three housing complexes in South Tangerang. It will save household expenses and help them save energy costs for businesses," said PGN Director of Infrastructure and Technology Achmad Muchtasyar.

Risks in gas business

• Price volatility: Sharp price volatility in Henry Hub creates a problem for the company, who is trying to divest one of its blocks, Fasken. This factor affects the firm's decision making process to sell or not. The natural gas price tends to fluctuate, depending on market demand and supply. Gas companies need to manage this volatility by hedging or other strategies to ensure stable profits and avoid financial losses. They also face competition from alternative energy sources, such as solar and wind power, which can impact market share and revenue. PGN may need to adapt its business strategies to remain competitive and profitable in a changing energy landscape.

• Environmental concern: With the increasing awareness of climate change, gas companies are facing pressure to reduce their carbon footprint and adopt cleaner and greener practices. They may face regulatory requirements to lower their emissions or invest in renewable energy sources.