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Indonesia issues ruling on oil and gas holding entity

JAKARTA ( – The Indonesian government has issued a Government Regulation on additional capital injection into Pertamina, the state-owned diversified energy company, that paves the way for the establishment of an oil and gas holding entity.

Based on the Government Regulation (PP), number 6, 2018, the government sets Pertamina as the holding company. Under the integration plan, the government’s shares in gas distributor PT Perusahaan Gas Negara Tbk (IDX:PGAS) amounting to 13.08 billion units of B-series will be transferred to Pertamina (article 2).

As a consequence, the government control PGN shares through Pertamina.

The holding firm will comprise four sub-holdings, namely, Upstream, Processing, Retail and Gas.

In the sub-holding gas, Pertagas, the gas unit of Pertamina, will be transferred to PGN. The creation of sub-holding will make the development of gas infrastructure in the country to be more effective as there is no need for the two companies to compete. As happened in the past, PGAS, as the largest national gas distributor, often competes with Pertamina’s Pertagas in developing gas infrastructure networks in various locations.

The State-Owned Enterprise Ministry has stated that establishment of an oil & gas holding company will benefit companies involved, the government as well as the investors and the general public.

Among the benefits are including helping create an efficient value chain in the gas industry from upstream, midstream and downstream; improving the supply of gas, savings of expenditure, capital expenditure and operating procedures, increasing liquidity, increasing the investment capacity and financial structure and boost the growth

By integrating the operation of PGAS and Pertagas, both companies could optimize their assets and avoid redundancy as well as creating a larger entity. The integration of both companies is also expected to help boost development of gas infrastructure in the country and ultimately giving wider access to the public to get gas supply.

On Friday (09/03), PGAS shares closed at Rp2,390, fell 40 points or fell 1.65% from previous day’s close. (*)


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