Government appoints PGN to sell LNG from Sanga-Sanga block, Pertamina opposes

The government has appointed state-controlled gas distribution firm PT PGN Tbk to sell the government?s portion of gas output from Sanga-Sanga block which will be processed into LNG at the Bontang LNG plant in East Kalimantan Province, Bisnis Indonesia and Kontan reported on Monday.

Acting Director General of Oil and Gas at the Ministry of Energy and Mineral Resources Ego Syahrial said that the government is giving PGN the opportunity to sell LNG output belonging to the state.

The upstream authority SKK Migas had on December 4 issued decree on the appointment of PGN as the seller of uncommitted LNG cargo from the Bontang plant for the period of 2018 particularly for LNG processed from gas produced at the Sanga-Sanga block. The letter was issued following request made by PGN on October 30.

The Sanga-Sanga block in East Kalimantan is operated by Vico Indonesia, in partnership with Eni and PT Saka Energi Indonesia, an upstream subsidiary of PGN. Vico?s current contract over the block is set to expire later in 2018, and the government has requested Vico and its partners to submit proposal if they are interested for a renewal of the Sanga-Sanga block contract.

Meanwhile, Kontan quoted a source as saying Monday that the joint management group (JMG) which among others arrange the commercial affairs of Bontang LNG plant, has opposed the government?s decision to appoint PGN as the seller of the uncommitted LNG cargo from the plant. The JMG wants the government to appoint instead state-owned oil and gas firm PT Pertamina, which is a key member of the JMG and controls PT Badak NGL, operator of the Bontang plant. (*)