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PT Perusahaan Gas Negara (Persero) Tbk INVESTOR PRESENTATION 9M-2017 Update www.pgn.co.id

PT Perusahaan Gas Negara (Persero) Tbk

INVESTOR PRESENTATION

9M-2017 Update

www.pgn.co.id

DISCLAIMER The information contained in our presentation is intended solely for your personal reference. In

DISCLAIMER

The information contained in our presentation is intended solely for your personal reference. In addition, such information contains projections and forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. These views are based on assumptions subject to various risk. No assurance can be given that further events will occur, that projections will be achieved, or that the Company’s assumptions are correct. Actual results may differ materially from those projected.

Company Vision and Mission

To Become the World - Class Energy Company in Gas

Business in 2020

VISION

MISSION

To increase the Company’s added values for stakeholders

through:

Customers: Energy needs fulfillment solution that is safe, value-added, economic, and increase the competitiveness;

Society: The improvement of welfare and sustainable economic growth through energy independence and environmental conservation efforts;

Shareholders /Investors: The creation of the optimal and sustainable Company’s values through internal and external synergies.

Company Structures

Company Structures PGN is an SOE with main business in natural gas. Currently, the Government of

PGN is an SOE with main business in natural gas. Currently, the Government of Indonesia holds 57% of shares while the remaining 43% is freefloat.

In

business

line with

its

and

effort to strengthen the core

has

expand

further,

PGN

transformed

into

a

synergized

company

comprising

upstream,

downstream

and

supporting business.

It has six subsidiaries and two joint ventures, namely :

PGN’s Subsidiary

Business

PT Saka Energi Indonesia

Upstream

PT PGN LNG Indonesia

Downstream

PT Gagas Energi Indonesia

Downstream

PT Nusantara Regas

Downstream

PT Transportasi Gas Indonesia

Downstream

PT PGAS Telekomunikasi Nusantara

Supporting

PT PGAS Solution

Supporting

PT Permata Graha Nusantara

Supporting

Existing Business Coverage

Distribution

Business

Distribution Business Buying and selling gas to customers by virtue of pipeline infrastructure in three main

Buying and selling gas to customers by virtue of pipeline infrastructure in three main areas in West Java, East Java and North Sumatera.

Transmission

Business

Transporting gas of

customers; suppliers or off-takers through pipeline. The pipeline can also be function as the backbone to

distribution pipeline.

suppliers or off-takers through pipeline. The pipeline can also be function as the backbone to distribution
also be function as the backbone to distribution pipeline. Upstream Business Other Supporting Business Investing
also be function as the backbone to distribution pipeline. Upstream Business Other Supporting Business Investing
also be function as the backbone to distribution pipeline. Upstream Business Other Supporting Business Investing
also be function as the backbone to distribution pipeline. Upstream Business Other Supporting Business Investing
also be function as the backbone to distribution pipeline. Upstream Business Other Supporting Business Investing

Upstream

Business

Other Supporting Business

Investing participating interest in PSC and operating oil and gas

blocks to support

Indonesia production and lifting and to hedge the downstream business

Taking business opportunities along the

natural gas value chain;

LNG, CNG, related gas

business services, fiber optic for telecommunication, management of asset & facilities

chain; LNG, CNG, related gas business services, fiber optic for telecommunication, management of asset & facilities
chain; LNG, CNG, related gas business services, fiber optic for telecommunication, management of asset & facilities

Business Model

The existing business model allows PGN to integrate its gas block in upstream to Gas
The existing business model allows PGN to integrate its gas block in upstream to
Gas Supply
transmission pipeline for offtaker and integrate its LNG FSRU and conventional
gas to distribution pipeline for customers.
At the same time, the supporting businesses provide excellent service in the form
of infrastructures integrity and reliability as well as safety for customers
satisfaction.
Compressor Station
Power Plant
Floating Storage
Regasification Unit
Commercial
Customers
Gas Transport Module
Gas Filling
Station
Mobile Refueling Unit
Household
Customers

Existing Gas Infrastructure

Non-Pipe Gas Infrastructure III Medan Duri Batam 1 2 - 2 FSRU (Lampung dan Jawa
Non-Pipe Gas Infrastructure
III
Medan
Duri
Batam
1
2
- 2 FSRU (Lampung dan Jawa Barat)
- 4 MRU (DKI, Gresik, Bandung)
Palembang
- 1 Cluster CNG (Jateng)
- 10 Gas Fueling Station (DKI, Bogor, Sukabumi,
Purwakarta, Surabaya, Batam, Lampung)
3
Lampung
Jakarta
4
I
II Surabaya
Semarang
Lampung) 3 Lampung Jakarta 4 I II Surabaya Semarang Pipeline Network 7.390 km : Distribution 5.106

Pipeline Network 7.390 km:

Distribution 5.106 km Transmission 2.284 km

1
1
2
2
3 4
3
4

Transmission Pipeline Grissik Duri

Transmission Pipeline Grissik Batam Singapore

Transmission Pipeline SSWJ

Transmission Pipeline Kalija

I II III
I
II
III

Distribution West Java, Lampung, Palembang

Distribusi East Java and Central Java

Distribution North Sumatra, Riau and Kepulauan Riau

Operation

Plan

Business Achievements

Business Achievements Downstream Business Gas Infrastructure U p s t r e a m Business 
Business Achievements Downstream Business Gas Infrastructure U p s t r e a m Business 
Business Achievements Downstream Business Gas Infrastructure U p s t r e a m Business 
Business Achievements Downstream Business Gas Infrastructure U p s t r e a m Business 
Business Achievements Downstream Business Gas Infrastructure U p s t r e a m Business 
Business Achievements Downstream Business Gas Infrastructure U p s t r e a m Business 
Business Achievements Downstream Business Gas Infrastructure U p s t r e a m Business 
Business Achievements Downstream Business Gas Infrastructure U p s t r e a m Business 

Downstream

Business

Gas

Infrastructure

Upstream

Business

Operating in 3 Major Coverage Area, 19 cities and 12 provinces in Indonesia

Transporting and Distributing

Gas 1,502 MMScfd

Developing ±7,390 km length

pipeline network, 2 unit FSRU, 10 Gas Fueling Station, 4 MRU

Total assets 11 blocks (8 blocks in operation, 3 blocks in exploration)

Increasing oil and gas production and lifting to ±36,905 boepd

9M-2017 Highlights

DOWNSTREAM

Distribution volume was 802 MMScfd in Q3-2017 (up 17% QoQ) or 767

MMScfd for 9M-2017.

Average sales price USD

8.56/MMBtu

Average cost of gas USD 6.04/Mmbtu (incl. LNG)

INFRASTRUCTURE

Duri Dumai Transmission

- JV with Pertagas

- Plan of Operation end

2018

Duri Dumai Distribution - Plan of Operation end

2018

UPSTREAM

Overall net lifting ±36,905 boepd

Oil 9,338 bpd

Gas 128 MMScfd

LNG 26 MMScfd

LPG 158 MTPD

REVENUES

Consolidated revenues of USD 2,165 Million

D&T 83%

Upstream 15 %

Others 2%

EBITDA

EBITDA USD 632 Million

D&T 69%

Upstream 31%

OPERATING & NET INCOME

Operating income USD 268

Million

Net income USD 98 Million

CAPEX

Revised from USD 500 Million to ± USD 300 Million

D&T 36%

Upstream 56%

Others 8%

CAPITAL STRUCTURE

PGN maintain a capital

structure within the covenant from its creditors.

Debt to Equity ratio 0.76x

Debt Service ratio 5.9x

WEIGHTED INTEREST RATE

Weighted cost of debt 5.51%

CASH FLOW

Cash and cash equivalent at end of period September 2017 USD 956 million

Financial Performance

9M-2017 and 9M-2016

Consolidated Statement of Comprehensive Income 3,000 9M-2016 2,165 9M-2017 2,000 2,156 1,605 1,491 1,000 632
Consolidated Statement of Comprehensive Income
3,000
9M-2016
2,165
9M-2017
2,000
2,156
1,605
1,491
1,000
632
290
268
642
98
394
263
242
-
Revenues
Cost of Revenues
Operating
Operating
Net Income
EBITDA
Expense
Income
Million USD

Consolidated Statements of Financial Position

8,000 9M-2016 6,307 9M-2017 6,834 6,000 4,503 4,000 4,709 3,161 3,146 2,614 3,664 3,170 1,804
8,000
9M-2016
6,307
9M-2017
6,834
6,000
4,503
4,000
4,709
3,161
3,146
2,614
3,664
3,170
1,804
2,849
2,000
2,125
547
815
-
Current Assets
Non Current
Total Assets
Current
Non Current
Total Liabilities
Total Equity
Assets
Liabilities
Liabilities
Million USD

Financial Performance

Comprehensive Income

30 Sept

30 Sept

Statement

2017

2016

In Million USD

Revenues

2,165

2,156

Cost of Revenues

(1,605)

(1,491)

Gross Profit

560

665

Operating Income

268

394

EBITDA

632

642

Tax Expense

(88)

(50)

Net Income

98

242

83%
83%
15%
15%

Oil and Gas

contributes 15% to the total consolidated revenues

Cash Flow

 

30 Sept 2017

30 Sept

2016

In Million USD

Cash flow from operating

546

437

Cash flow from investment

(232)

(388)

Cash flow from financing

(662)

(8)

Wtd Avg (after tax) 5.51% Fixed Float 98% 2% Total Loan USD 2.41 billion USD
Wtd Avg (after
tax)
5.51%
Fixed
Float
98%
2%
Total Loan USD
2.41 billion
USD
JPY
85%
15%
2%
2%

Distribution

contributes 83% to the total

consolidated revenues

Other Operations

Supporting and joint venture businesses contribute 2%. The businesses included LNG

regasification, finance lease,

technical and maintenance service, office & building management serivice

Financial Performance

Impact of Macroeconomy

Unfavorable market conditions has had a profound impact on Indonesia

industry, not least on the national

gas industry

The contraction in demand of commodities including natural gas

Government’s incentives to maintain competitiveness for national industries and gas users such as

fertilizer, petrochemicals and steel

and gas users such as fertilizer, petrochemicals and steel   30 Sept 30 Sept 2017 2016
 

30 Sept

30 Sept

2017

2016

Financial Ratios

EBITDA Margin (%)

29.2

29.8

Net Debt / EBITDA (x)

2.2

2.5

EBITDA / Interest Expense (x)

5.9

7.6

Debt / Equity (%)

76.1

93.5

ROA (%)

10.0

9.6

ROE (%)

3.2

8.4

ROCE (%)

5.1

6.9

Credit Rating

Rating

Outlook

Moody’s

Baa3

Positive

Standar & Poor’s

BBB-

Stable

Fitch Ratings

BBB-

Positive

Pefindo

idAAA

Stable

Downstream - Distribution Business

Distribution

In 9M-2017, PGN delivered 767 MMscfd, lower by 27 MMScfd from the corresponding period

2016

Regional Distribution I contributed 70%, Regional Distribution II contributed 17% and

Regional Distribution III 13% to the total sales

YoY declining was impacted by lowering consumption in second quarter mainly from power sector and industries

0.0% Wood 0.3% Lifting Oil 0.5% Cement Industrial & Commercial Diversification incl. Power Sector 1.1%
0.0%
Wood
0.3%
Lifting Oil
0.5%
Cement
Industrial & Commercial
Diversification
incl. Power Sector
1.1%
CNG
763 MMScfd
2.1%
Textile
3.2%
Others
3.5%
Basic Metal
4.8%
Glass
4.8%
Paper
6.3%
Fabricated Metal
Five Biggest
10.7%
Ceramic
Segments
10.9%
Food
14.0%
Chemical
37.9%
Power Plant

900

850

800

750

700

650

600

550

500

Year-on-Year Basis 865 824 807 802 803 -3% 793 767 2012 2013 2014 2015 2016
Year-on-Year Basis
865
824
807
802
803
-3%
793
767
2012
2013
2014
2015
2016
9M-16
9M-17
(MMscfd)
180,893 168,973 111,076 96,049 91,590 2013 2014 2015 2016 2017 Customers
180,893
168,973
111,076
96,049
91,590
2013
2014
2015
2016
2017
Customers

Industries and Power Plants

97.1%

of total sales volume

1,739

Customers*

Commercial & SME

2.5%

of total sales volume

1,984

Customers*

Households

0.4%

of total sales volume

177,170

Customers*

*Number of customers as of 30 September 2017

Downstream Gas Sales Price

PGN Average Natural Gas - avg PGN 8.56 Selling Price LPG - 3 kg (Subsidized)
PGN Average
Natural Gas - avg PGN
8.56
Selling
Price
LPG - 3 kg (Subsidized)
7.07
-17%
MFO 180
12.41
+45%
LPG - 50 kg
19.98
+133%
Kerosene
18.13
+111%
IDO/MDF/MDO
17.07
+116%
Gasoline 88
18.61
+1167%
LPG - 12
kg
20.11
+135%
HSD
18.82
+119%
USD/MMBTU
Based on :

Price of Pertamina Depot as of Sept 2017 Exchange Rate IDR 13,492

In nine month period, PGN’s average selling price was USD 8.56/MMBtu

Price of gas remained competitive than other energy sources. However, amid market

competition, PGN offers special and incentive

price which can benefitting the customers from using larger gas volume. The aims is to maintain PGN’s market share

PGN has been diligently approaching other SOE and private sectors to form a synergy of

business in which PGN can provide gas and

related services.

Downstream - Transmission Business

Transmission

In 9M-2017, PGN, KJG, TGI delivered 8 MMscfd, 76 MMScfd, 651 MMScfd respectively. The transmission volume decreased by 8% yoy from the corresponding period 2016

Gas transported from Kepodang field operated by

Petronas through Kalimantan Java pipeline decreased by 19 MMScfd from 95 to 76 MMScfd due to declining reserve from supplier

Gas transported by TGI, the joint venture, to off-taker in Central Sumatera and Singapore decreased by 39 MMScfd from 690 to 651 MMScfd. This was due to

lower absorption of TGI’s customer in Central Sumatra

and Singapore.

of TGI’s customer in Central Sumatra and Singapore. 900 850 800 750 700 650 600 550

900

850

800

750

700

650

600

550

500

Year-on-Year Basis

877 854 852 795 802 789 -8% 736 2012 2013 2014 2015 2016 9M-16 9M-17
877
854
852
795
802
789
-8%
736
2012
2013
2014
2015
2016
9M-16
9M-17
(MMscfd)

Upstream Business Saka Energi Indonesia

At present, PGN’s subsidiary Saka

Energi Indonesia has acquired 11 oil and gas blocks where most of them are in producing stage and located in Indonesia

It operates oil and gas blocks, Pangkah

in East Java while hold participating

interest for the remaining blocks

Muara Bakau block starts producing by first half 2017. Current production 467 MMScfd

Saka Energi has received approval from

SKK Migas for POD of Sidayu 4 well of

Pangkah block

from SKK Migas for POD of Sidayu 4 well of Pangkah block Acquired Oil and Gas

Acquired Oil and Gas Blocks

Aset

%Wi

Operator

Area (Km2)

Status

PSC Expiry

Pangkah

100

SEI

784

Production

2026

Ketapang

20

Petronas

885

Production

2028

Bangkanai

30

Salamander

1,395

Production

2033

South Sesulu

100

SEI

625

Exploration

2039

Fasken (Texas)

36

Swift Energy

8,300 acres

Production

2050

SES

8.9

CNOOC

6,082

Production

2018

Muriah

20

Petronas

2,823

Production

2021

West Bangkanai

30

Salamander

5,463

Exploration

2043

Muara Bakau

11.7

Eni

1,082

Production

2032

Wokam

100

SEI

3,714

Exploration

2040

Sanga-Sanga

37.81

SEI & Vico

1,075

Production

2018

Pangkah

Sanga-

Sanga

Upstream Performance

Oil and Gas Lifting

27,832 boepd 36,905 boepd +33% 4,405 - 21,334 17,398 LNG Gas 1,364 1,828 LPG 9,070
27,832 boepd
36,905 boepd
+33%
4,405
-
21,334
17,398
LNG
Gas
1,364
1,828
LPG
9,070
9,338
Oil
9M-2016
9M-2017

LNG (BBTU)

Muara

Bakau

Sep-16

-

Sep-17

 

2,429

Sanga-

Sanga

Sep-16

-

Sep-17

 

Crude Oil & Condensate (MMBBL)

Sep-16 1.07 Sep-17 0.89 Sep-16 0.60 Sep-17 0.46 Sep-16 0.81 Sep-17 0.76 Sep-16 - Sep-17
Sep-16
1.07
Sep-17
0.89
Sep-16
0.60
Sep-17
0.46
Sep-16
0.81
Sep-17
0.76
Sep-16
-
Sep-17
0.44
9M-16
9M-17
Total Crude Oil Lifting
2.49
2.55
Sanga-Sanga
Ketapang
SES
Pangkah

LPG (MT)

4,786

Sep-16

Sep-17

Sep-16

Sep-17

SES Pangkah LPG (MT) 4,786 Sep-16 Sep-17 Sep-16 Sep-17 32,236 - 1,903 41,131   9M-16 9M-17
SES Pangkah LPG (MT) 4,786 Sep-16 Sep-17 Sep-16 Sep-17 32,236 - 1,903 41,131   9M-16 9M-17

32,236

Pangkah LPG (MT) 4,786 Sep-16 Sep-17 Sep-16 Sep-17 32,236 - 1,903 41,131   9M-16 9M-17 9M-16

-

1,903

41,131

 

9M-16

9M-17

9M-16

9M-17

Total LNG Lifting

0

7,215

Total LPG Lifting

32,236

43,034

Gas (BBTU) Sep-16 10,651 Sep-17 13,198 Sep-16 1,229 Sep-17 1,075 Sep-16 137 Sep-17 1,670 Sep-16
Gas (BBTU)
Sep-16
10,651
Sep-17
13,198
Sep-16
1,229
Sep-17
1,075
Sep-16
137
Sep-17
1,670
Sep-16
4,661
Sep-17
3,844
Sep-16
11,792
Sep-17
10,709
Sep-16
27
Sep-17
1,118
Sep-16
-
Sep-17
3,331
9M-16
9M-17
Total Gas Lifting
28,498
34,946
Sanga-
Sanga
Bangkanai
Fasken
Muriah
Ketapang
SES
Pangkah

Strategy & Plan

Optimization

Customer Intimacy

Designing the plan, development,

• • •

Providing customers the gas and related service as reliable energy

operational , trading by optimising available asets and human capital

Sales force as marketing agency

Fostering relationship with customers

Focused &

Integrated

Integrated gas business based on economic zone develoment

Focus on strengthenning the core business

develoment • Focus on strengthenning the core business Maximizing Value Creation • Encouraging subsidiaries to

Maximizing Value

Creation

Encouraging subsidiaries to create further business opportunity

Priority of investment and

development that gives beneficial impact for long term

PGN GROUP

Infrastructure & Market Development 2020

Development of market by construction of distribution backbone

Delivering gas to RD by developing pipeline or modifying system in station

Customer attachment to build acccess until last mile

Customer Attachment RD III

Potential of 0.70 MMscfd

Plan of operation: 2017 &2018

Development of Transmission Pipeline WNTS -Pemping 16”-5 km; reserved capacity of 40 MMscfd Plan of operation : 2018

Development of Gas Infrastructure in West Java 6-12" : 39 km; Reserved capacity of 14.30
Development of Gas Infrastructure in
West Java
6-12" : 39 km;
Reserved capacity of 14.30 MMscfd
Plan of Operation: 2017
Customer Attachment RD I
Potential of 16.80 MMscfd;
Plan of Operation : 2017 &2018
Market Development in Dumai
16”& 24” – 119 km
Potential of 95 MMscfd
Plan of Operation : 2018

Market Development in Subang 8- 16" - 33 km Potential of 29.64 MMscfd Plan of operation : 2019

Customer Attachment RD II Potential of 6.03 MMscfd; Plan of Operation : 2017 &2018

Development of Gas Infrastructure in East Java 6-10" : 14 km

Potential of 4.30 MMscfd;

Plan of operation: 2017

Delivering Gas to RD II

10-16 " - 2.1 km Reserved Capacity of 60 MMscfd); Gas In: June 7, 2017; Plan of Operation : 2017

Market Development in Gresik, Lamongan and Tuban Phase I : 24" - 11.5 km Potential of 36 MMscfd Plan of Operation: 2017

Evolving Gas Regulation

October 2015

Third Economic Policy Package

Lowering energy price including gasoline, electricity and gas price

May 2016

Presidential Decree No. 40 /2016

Determination of gas price

for seven industries (specific

users)

November 2016

Decree of ESDM Minister No. 40/2016

Gas prices for three specific industries i.e the fertilizer, petrochemical and steel industry

July 2017

Gas Price Amendment CPGL PGN

ESDM Minister approved increased gas price of ConocoPhillips to PGN in Batam Area

February 2016 June 2016 July 2017
February 2016
June 2016
July 2017

Decree of ESDM Minister No. 6 /2016

Guideline and procedure to determine allocation,

utilization and price of gas

Decree of ESDM Minister No. 16 /2016

Procedure for determining the price for specific users

Decree of ESDM Minister No. 45 /2017

Guideline to determine utilization and price of gas for electricity sector

Contact: Investor Relations PT Perusahaan Gas Negara (Persero) Tbk Mid Tower Manhattan 26 t h

Contact:

Investor Relations PT Perusahaan Gas Negara (Persero) Tbk Mid Tower Manhattan 26 th Floor Jl. TB Simatupang Kav. 1-S Jakarta, Indonesia

investor.relations@pgn.co.id +62 21 8064 1111