Head of the Program and Communication Division at SKK Migas, Hudi Suryodipuro, said that the national gas company has conveyed the potential additional gas uptake by end buyers sourced from LNG.

Currently, SKK Migas, together with relevant contractors, is discussing allocation requests for the national gas company.

"SKK Migas is committed to prioritizing uncontracted LNG volumes from the Tangguh and Bontang LNG plants for domestic needs, including PGN," Hudi said as quoted by Bisnis.com on Monday, March 11, 2024.

PGN projects that the demand for natural gas in Central Sumatra, South Sumatra, and Western Java from 2024 to 2034 will require an additional gas supply from LNG regasification of 73 billion British thermal units per day (BBtud) up to 355 BBtud. This estimation accounts for 12 percent to 54 percent of the total gas supply for PGN customers in the three regions. This demand arises from a significant decline in natural gas supply from the Corridor Block, South Sumatra, operated by PT Medco Energi Internasional (MEDC).

In addition, Hudi saidd that SKK Migas had received commitments from contractors to increase the supply of gas pipeline volumes to PGN, which has recently seen a decline in realization per year from several contractors in South Sumatra and Jambi for the needs of the surrounding areas, including West Java.

As previously reported, PGN reported the need for additional LNG cargoes to compensate for the dwindling conventional gas supply from upstream sources. Existing supply sources are experiencing natural declines, reflecting the decreasing production of natural gas from long-operating wells.

Based on LNG market price ranges in 2024, the estimated selling price of regasified LNG gas to customers is still lower than the overage penalty. However, prices are subject to change based on LNG market price fluctuations at the time of purchase.

As an alternative gas supply, LNG requires a longer distribution chain compared to piped gas due to additional processes such as cooling, transportation, storage, and regasification. Consequently, PGN is currently exploring the potential for new LNG cargoes to adapt to the dynamics of conventional gas supply from upstream sources.

Rachmat Hutama, PGN secretary, said that one of the potential opportunities currently open is the discovery of around 126 billion cubic feet of gas in place in the Bentu Block, operated by EMP Bentu Limited. "PGN is open to exploring available opportunities and can support efforts to maintain supply resilience. We have conducted intensive communication regarding the Bentu Block," he said.