Ten Billion Dollar Club

Seven companies listed on Indonesia Stock Exchange (IDX) currently have market capitalization over US$10 billion.

They are Astra International (US$19 billion), Telkom Indonesia (US$18.3 billion), Bank Central Asia (US$15.5 billion), Bank Mandiri (US$12.25 billion), Perusahaan Gas Negara (US$11.34 billion), Bank Rakyat Indonesia (US$11.16 billion), and Unilever Indonesia (US$10.4 billion).

Combined, these Seven Giants have market capitalization of US$97.95 billion.

Looks like the 10 Billion Dollar Club will not get new member soon. Why? Because, the eight largest company, United Tractors, only has market cap of US$6.9 billion. Unless this company will grow at least another 45% this year.

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PGN Seeking New Gas Source for Jakarta , Banten Customers

The country’s largest gas distributor PT Perusahaan Gas Negara Tbk (PGN) said that it is currently seeking gas sources to be distributed to its industry customers in Jakarta and Banten after gas received from a unit of Pertamina stopped on Februady 28, as gas sales and purchase contract expired on the day.

Under gas sales and supply contract signed on January 10, 1998 , which was amended on December 16, 2009 , PT Pertamina Hulu Energi (PHE), a unit of state-owned oil and gas company PT Pertamina, distributed up to 1.8 TBTU (trillion british thermal unit) of gas through its ONWJ gas pipeline. As the gas volume has been reached on February 28, the gas supply was then stopped.

The gas supply from ONWJ gas pipeline has been distributed by PGN to 150 industry subscribers in Jakarta and Banten area.

“Considering the impact (of the cease of gas supply) on industry activities in those areas, PGN is weighing a number of options in order to continue gas flow, including options that are being studied jointly with PHE and (upstream oil and gas regulator) BPMigas,” PGN said in a filing to the Indonesian Stock Exchange. PGN however did not disclose a number of options nor impact on its industrial customers before it would get new gas supply. (Roffie Kurniawan)

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PGN-Pertamina JV

Two state-owned companies, PT Perusahaan Gas Negara (PGAS) Tbk and PT Pertamina, have finally signed the JV agreement for LNG floating storage and regasification terminal (FRST) to be built in West Java.

The JV agreement was signed today by PGAS CEO Hendi Prio Santoso and Pertamina CEO Karen Agustiawan, witnessed by SOEs minister Mustafa Abubakar and energy minister Darwin Zahedy Saleh.

According to the agreement, Pertamina controls 60% shares in the JV, while PGAS controls the balance. Pertamina will have its people as CEO and Director for operations of the JV, plus one commissioner, while PGAS will be represented by finance and administration director plus one commissioner.

LNG for the facility will be sourced from East Kalimantan for a combined 11.75 million tons in 11 years. The gas itself will be supplied to state-owned power producer PT Perusahaan Listrik Negara (PLN). The JV will start construction of the FRST this year.

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LNG Receiving Terminals

Two state-owned companies, PT Perusahaan Gas Negara (PGAS) Tbk and Pertamina, decided not to join forces in the construction of two LNG receiving terminals, Detik.com reported. 

Pertamina CEO Karen Agustiawan said Pertamina will build the West Java LNG Terminal, while PGN will build the North Sumatra terminal. Initially, both companies agreed, based on the heads of agreement signed in April 17, 2009, to establish a consortium to build the LNG terminals. In fact, state-owned electricity company PT Perusahaan Listrik Negara (PLN) also wanted to participate in the consortium.

Agustiawan said the West Java terminal will have installed capacity of 200-400 MMSCFD (equals to up to 3 million tons per year), while in North Sumatra with 100-150 MMSCFD. The West Java Terminal is designed to support two combined cycle power plants (Tanjung Priok and Muara Karang).

In East Java, PT Indogas Kriya Dwiguna, a subsidiary of PT Prime Petroservices, has also launched a plan to build LNG receiving terminals in Pesanggaran and Gilimanuk. 

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PGN under pressure to reroute pipeline

Banten Province legislative (DPRD) asked PT Perusahaan Gas Negara (PGN) Tbk to re-route the gas pipeline, Tempointeraktif.com reported. What a mess if PGN should accommodate that especially because the company is already three months behind schedule which pushed the share price down significantly last month. The company is constructing the pipeline along the side of the Jakarta-Merak turnpike. DPRD asked PGN to use new route, along the side of Jakarta-Merak railway instead.

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PGN updates

As predicted, state-owned oil & gas company PT Pertamina has demanded renegotiation with PGN due to major delay of South Sumatra West Java gas pipeline. Financial impact for Pertamina is huge because the company should service USD270 million loan to JBIC. In contrast to PGN management's explanation that the delay is three months, Pertamina claims the delay is actually nine months.

"The initial schedule for operation was June 2006, but now PGN says March 2007," Rony Gunawan, Pertamina executive said.
PGN rejected the demand for price negotiation but willing to pay compensation (fines & take/pay clause). Pertamina plans to supply 250 MMSCFD. Slightly lower compensation would go to ConocoPhillips which supplies 230 MMSCFD as no fines applied.
The biggest chunk of the compensation will be for PGN's unability to absorb minimum 80% of gas supply under the take/pay clause. Under the contract with gas suppliers, PGN should absorb at least 150 MMSCFD in the first year of SSWJ pipeline. So, 80% means 120 MMSCFD. PGN revised its plan that the first three months, the company could only absorb 30 MMSCFD.
I think PGN should explain in details all the compensations to Pertamina & ConocoPhillips, financially. PGN did explain the issue in analyst meeting early this week that the low absorption this year would be compensated with bigger gas take next year (make-up gas). But when asked whether PGN should pay, the management said yes, but in 2008.
Meanwhile, Bapepam has started insider trading investigation over PGN shares that led the 40% crash last week.

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PGN crash, insider trading

I got some calls early Friday after I posted the information about major delay of gas pipeline linking South Sumatra & West Java (SSWJ) built by PT Perusahaan Gas Negara (PGN) Tbk. I didn't realize that information had been around for a while and triggered almost 38% drop in the share price. I got the information on Thursday evening, like everybody else.

"It's a mini Enron," an analyst at European-based investment bank said.
"What's up?"
"Just imagine almost 40% drop in days after government divested 5% shares at Rp11,300."
"I thought the whole market has been under global pressure."
"No, it's specific Indonesia & PGN. Some of us think PGN might hide more information about its performance in their balance sheet!"
"I heard the management with their MSOP & employees with their ESOP had the information kept for themselves for so long. You gotta investigate this, a potential insider trading case," an analyst for US-based firm said.
"Wish I could. Do you have data to support?"
"We could provide!"
"That's great. BTW, it must be a blessing in disguise for the Malaysian investor who claimed that he offered to buy PGN shares at Rp12,000 and government's advisors declined the offer, right?"
On Friday, right after many aware of the PGN situation, 186 million shares changed hands to make it the single largest transaction in the market at Rp1.4 trillion. Macquarie Securities dumped 57 million shares, followed by Deutsche and CLSA at 17 million and 14.7 million shares respectively.
On Sunday, PGN management denied accusations of hiding material information, including the 3-month delay of SSWJ.
It looks all fine if you read the press statement. PGN predicts gas delivery would increase significantly from 338 MMSCFD in 2006 to 555 MMSCFD in 2007 and 919 MMSCFD in 2008. But the management didn't disclose financial impact of the delay, including claims from third-parties (gas suppliers & customers).

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Corporate actions update

PT Bank Artha Graha controlled by Tommy Winata & Sugianto Kusuma to issue new shares in a bid to strengthen the bank's capital. The 840 million shares are offered at nominal value of Rp110.88. As of August, the bank has total asset of Rp10.2 trillion.

Meanwhile PT Perusahaan Gas Negara (PGN) Tbk reported the delay of three months of commercial operation of South Sumatra West Java gas pipeline from initial schedule by December 2006. PGN argued the delay was mainly due to social problems, especially land acquisition, in its early stage of construction.
DIA Holdings, a minority shareholder of nickel producer PT Inco Tbk, plans to file lawsuit against CVRD (which acquired INCO Ltd in October 2006), PT Inco Tbk, and Bapepam.

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PGN divestment closed at Rp11,350, behind the story

MSOE Sugiharto had finally decided to sell 185 million shares of PT PGN Tbk at Rp11,350, slightly above majority of submission at Rp11,300. As a result, the so-called Malaysia investor's offer at Rp12,000 dropped. What's up?

Bookbuilders (Danareksa, Bahana & Credit Suisse) had apparently met the 'investor' from Malaysia who wrote a letter to minister Sugiharto that he could buy PGN shares at Rp12,000 with closing date of transaction on December 22.
"But when we confronted him with some questions, he sais just ignore his letter to the minister and let's talk. He claimed that he has the money, but payment should be extended to two months," one investment banker involved in the transaction said.
The Malaysia investor has close friend HL, who is also the confidante of minister Sugiharto.
"Well, it looks good, but with the potential increase in share price in two months, you could easily suspect of something if you receive such offer," he further said.
But the Malaysian denied that. "The truth, brokerage firms hired by government asked as to put on the table last night at the amount of USD247 million while the mechanism is T+3," representative of the Malaysian I met this morning said.
"We have no connection with HL. We have direct relation with the minister himself," he said.
"I'm not surprised if later on you'll find Credit Suisse take all the benefits of this transaction. We told them that we have OSK behind us to support, not CIMB nor PNM, but they just didn't care," he complained.
When I asked him why not bought the shares in the market at cheaper price, he said, " because we know government will divest 5.31% shares and then we sent the offering letter last Thursday."
It means this guy got information from the ministry prior to the bookbuilding. The question, why the Malaysian guy didn't submit offer to bookbuilders?
"My analysis, Sugiharto's connection like AS mounts pressure like...see, Jamsostek and Malaysia's PNB are behind this investor, so you better entertain them. But if the guy is a qualified investor, he should have submitted the offer to bookbuilders, not to Sugiharto," an analyst said.
Hm...interesting. Let's wait what Sugiharto will say this afternoon.
Antara quoted M Said Didu, secretary to the ministry of SOEs, saying the Rp11,350/share already a record for Indonesia because this is the first time such divestment got premium price. He should read archives!

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PGN divestment turns sweet & sour for Sugiharto

After more than one year of suspension, government finally divests 185.8 million shares of PT Perusahaan Gas Negara (PGN) Tbk, represents 5.31% outstanding shares, through bookbuilding process handled by Danareksa, Bahana, and Credit Suisse on Thursday.

The state-owned investment bank received huge demand from investors with 1.9 times of amount of shares on sale with average price of Rp11.300 per share, even though government actually offered 5% discount from Tuesday's closing. But things changed quickly when one investor, reportedly from Malaysia, submitted an offer to buy the whole shares at Rp12,150 which is 7% premium.
It was 3PM on Thursday. Danareksa stunned with the information because this 'ghost' investor was said to have direct deal with officers at the state-owned enterprises ministry.
"The bookrunners then start to ask who the hell is the guy. We're confused because if we quote the price at Rp11,300 while public get the information that someone actually offered better price for the government, we'll be under public pressure. But if we sell all the shares to that 'ghost' investor, the question is what kind of deal he/she has with the ministry," a dealer at Danareksa said.
"I'm not surprised if the Malaysian investor is the one with under-the-table agreement with certain officers. Or may be there is no Malaysian investor, but a proxy investor," said an investment banker in Jakarta.
"We're quite suspicious with the transaction. We even heard the so-called Malaysian investor was ready to buy at Rp14,000/share. But you know, it's just too good to be true," a Tempo editor said.
But the Rp11.300 is clearly not the best price. It reflects almost 17% discount from PGN's highest price this year. Politicians have something to play, especially those who want to mount pressure toward Sugiharto.
Kompas in its Friday edition quoted two legislators from PAN, Drajad Wibowo & Didiek J. Rachbini, criticizing government's failure to get the best price. They called it too low, too slow.
At the same time, these guys indirectly defended Sugiharto calling the divestment shown poor coordination about privatization and the intention behind it, which is merely to fill budget gap (this year's target is Rp3 trillion from privatization).
"Sugiharto might be blamed or charged for potential loss to the state and it's a corruption, but he could defend himself saying he sell PGN to meet the target set under the 2006 budget law and blame his colleagues in the cabinet. Blame games," a political analyst said.
This is big game. Those who have information about when Sugiharto will push the button might have bought PGN shares at very low price in the last few months and get the upside.
"The shares must have been swept at cheap price, and will get huge amount from the upside once Sugiharto push the button," other investment banker said.
That's a conspiracy theory. JSX suspended PGN shares trading on Wednesday. Prior to the placement, government controls 59.357% shares of PGN. The second largest shareholder is RS + Co International Ltd at 8.843%.

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SBY vs JK in the brawl over SOEs

Below is the list of brawls between SBY & JK over important issues at state-owned enterprises, including the management selection (member of the board of directors plus commissioners). It's almost similar with their competition in overseas trips (state visits). It's everywhere! Anybody has the original version of SBY & JK memorandum of understanding on how they would share the power when they decided to join forces in 2004 election?

The recent 'mini' reshuffle at the state-owned oil and gas company PT Pertamina could well explain the brawl. "It's clear that the former chairman of board of commissioner Martiono Hadianto couldn't get along with board of directors. Internally, we could sense that," one Pertamina executive told me this morning.
"The replacement is not merely a management issue, it's a political issue. Everybody knows Martiono was seen as VP's man, while his successor has close relationship with the president," said one executive at SOE who happens to be proposed by MSOE Sugiharto as commissioner at Pertamina but failed to get approval from The Final Evaluation Team (TPA, which selects executives for SOEs).
"Now the balance at Pertamina is two VP's men and two president's men, another one represents SOE Ministry who happens to be close confidante of Sugiharto," executive at the MSOE said.
A week before that, major shakeup occured at another giant SOE, PT Perusahaan Gas Negara (PGN) Tbk. This time, Sutikno named as the new CEO, replacing WMP Simanjuntak (appointed president commissioner).
"Some says Sutikno got the position thanks to strong lobby from PAN's chairman Sutrisno Bachir. But don't expect they'll confirm that. Sutikno is known for his close relationship with Amien Rais, key patron leader of PAN. So, this is a political bargaining as well," another SOE executive said.
But where is the brawl?
"Actually, VP proposed other candidate for PGN but TPA picked Sutikno. As a result, there is on-going battle for other posts still vacant," the executive said.
The ugliest brawl is actually at PT Tambang Batubara Bukit Asam Tbk, the state-owned coal producer. TPA has yet to decide the executives and leaving the company in the hands of board of commissioners for almost one month now.
Similar situations have been emerged at other giant SOEs like PT Telkom Tbk and PT PLN. Look at how the board of commissioner of Telkom led by Tanri Abeng (key ally of VP) sent a letter to Sugiharto in late August asking for Arwin's replacement.

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Energi resumes Kangean gas

PT Energi Mega Persada Tbk has resumed gas production and delivery from Kangean block in East Java eight days after the stoppage due to gas pipeline blast in the mudflow-covered area of Sidoarjo, East Java. Energi resumed gas delivery at minimum rate of 45 MMSCFD. Meanwhile, Santos Maleo, delivers additional 22 MMSCFD to meet the demand of PT Perusahaan Gas Negara (PGN) Tbk customers.

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Counting the losses

As thousands of displaced people (due to hot mudflow from gas field operated by Lapindo Brantas Inc) went on protest yesterday for months of gross neglience over the promised compensation and 12 people killed in a gas pipeline burst in the area covered by Lapindo mud, we're increasingly bussy in counting the losses and yet we have no idea who will pay. Why don't establish an escrow account, funded by Bakrie (if that's the commitment) with tight independent supervision to underwrite the costs?

Some was cynical when Greenomics claimed the cost incurred of hot mudflow could be billions of US dollars calling the NGO of exagerating. Government then put the estimated cost of US$150 million till March 2007. This magic number is being used by Lapindo-related parties as the total liabilities in their hands over the disaster.
But look at the claims so far. PT Jasa Marga, the state-owned turnpike operator, stated today that the cost to build a new toll road in the area would be Rp1.5 trillion and no way the company would finance that. "Lapindo should bear the cost," said Frans Sutikno, CEO of Jasa Marga.
I'm afraid the state-owned railway operator PT Kereta Api Indonesia would spend billions of rupiah to re-route the track. And the residents who lost their land claimed compensation of Rp1 million/square meter. Millions of toll road users have been suffered huge mental problems and economic losses due to the closure of the turnpike.
Millions of cubic metres of hot mud has spewed from the site, flooding over 400 hectares, swallowing eight entire villages, hectares of rice paddy fields and numerous factories in East Java, and displacing more than 10,000 people.
The gas pipeline burst is apparently the worst so far, killing 12 innocent people and injured 16 others.
As reported by Tempointeraktif.com, state-owned gas distribution company PT PGN Tbk recorded billions of rupiah of losses in the last few days. At least 244 companies, 74 hotels, and 1,090 households got no gas supply due to the explosion.
Paper manufacturer PT Kertas Leces, a state-owned company, reported Rp500 million losses in two days only. Industrial gases producer PT Samator had to stop its hydrogen, hydrogen peroxide, and carbondioxide facilities with billions of rupiah of losses. Who will pay all of these? Can we just separate the pipeline burst from the mudflow? When would all of these going to end or an endless mess? Is it possible that the worst is yet to come?
On the other end, PT Energi Mega Persada (the parent company of Lapindo Brantas Inc) filed bad and good news late last week. The first, bad one, due to the pipeline burst, Energi had shutdown gas production in Kangean Block. The second, the same day of the explosion, EMP Kangean which operates the block, had successfully started oil production in Sepanjang Islands at the volume of 9,000 barrel per day (generating cash of USD450,000/day). These evenly announcements have resulted in stable price of Energi shares at Rp500. What an odd world we livin! When many people could only count losses, small number of people still manage to calculate the benefits!

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Debt & equity market highlights

ING NV provided US$100 million bridging loan to PT Perusahaan Gas Negara (PGN) Tbk to finance the Sumatra-West Java pipeline project. The 5-month loan is part of US$225 million loan committed by ADB Consortium (including ING).

PT Kalbe Farma Tbk is expanding its factories in Bekasi, West Java with additional investment of Rp70 billion. The new plant will produce 4.73 billion tablets, 670 million capsules, etc.
PT Multibreeder Adirama Indonesia Tbk, meanwhile, is also expanding its facilities with Rp36 billion investment.
Paper manufacturer PT Suparma Tbk is building a new tissue paper plant with installed capacity of 15,000 tones/year in Surabaya, East Java with Rp65 billion investment.
Textile producer PT Karwell Indonesia Tbk is expanding facilities in Bekasi, West Java with Rp26 billion investment.

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Sutikno, new PGN CEO

Sutikno has been appointed chief executive officer (CEO) of state-owned gas transmission & distribution company PT Perusahaan Gas Negara (PGN) Tbk replacing WMP Simanjuntak.

Sutikno was director for administration & general affairs at PGN. He earned master degree in social science from University of Indonesia. Prior to his promotion as director of general affairs in 2001, Sutikno was head of budget division at PGN.
Shareholders meeting also appointed Simanjuntak as commissioner of the company. Djoko Pramono maintained his position as finance director, while Nursubagjo Prijono (director of operations) entered the mandatory retirement.

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Santos delivers Maleo gas to PGN

Santos (Madura Offshore) Pty Ltd, a subsidiary of Australia-listed Santos, has started gas supply of 100 MMSCFD from its Maleo gas field in Madura offshore to PT Perusahaan Gas Negara (PGN) Tbk on Sunday, PGN reported to JSX on Monday.

Under the gas contract signed in May 2005, Santos would supply 243 billion cubic feet (BCF) of gas to PGN in 12 years worth US$550 million. PGN then distributes the gas through its transmission pipeline (East Java Gas Pipeline). The gas supply would reduce diesel oil consumption in East Java by 6.75 million kilo liter (KL). As for PGN, the gas supply would boost its distribution volume by 400 MMSCFD or 29% by the end of 2006.
Santos is the holder of 18% participating interest in Brantas PSC operated by Lapindo Brantas Inc. Brantas PSC is in limbo on unstoppable mudflow at Banjar Panji-1 drilling since May 2006.

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Petronas & Bakrie

Few months ago, Malaysia's Petronas signed the MoU to set up a consortium to bid for the development of gas pipeline from East Kalimantan to East Java. Yesterday, the consortium won the bid, beating listed state-owned gas transmission company PT Perusahaan Gas Negara (PGN) Tbk. How serious is Petronas?

While no details of share ownership in the Bakrie consortium, Petronas will likely play a key role in the pipeline and would only strengthen the Malaysian grip in Indonesian gas transmission business.
In 2002, PETRONAS International Corporation Ltd. (PICL) through Transasia Pipeline Company Pvt. Ltd. (Transasia), acquired 40 per cent stake in PT Transportasi Gas Indonesia (TGI). TGI is a subsidiary of PT Perusahaan Gas Negara (PGN), Indonesia's state-owned gas transmission company.
TGI currently owns and operates the 536-km Grissik-Duri transmission pipeline. The Grissik-Duri pipeline runs from the Corridor Block gas plant to the Duri Oil field. Its current throughput capacity is at 430 mmscfd.
Apart from the Grissik-Duri pipeline, TGI also own and operate the Grissik-Batam-Singapore pipeline. The 468-km pipeline transport gas from Sumatera to Singapore at a capacity of 350 mmscfd.
Transasia is a joint venture company incorporated in the Mauritius comprising a consortium involving PICL (35 per cent), CONOCO Indonesia Holdings Ltd (35 per cent), SPC Indo-Pipeline Co. Ltd. (15 per cent) and Talisman Transgasindo Ltd. (15 per cent). PICL is a wholly-owned international investment arm of PETRONAS.
The interest in TGI marks PETRONAS' entry into the gas transportation business in Indonesia and signifies an important move for PETRONAS in the diversification and expansion of its business portfolio in Indonesia, in line with its long-term investment commitment in that country.
PETRONAS' other activities in Indonesia include upstream business and oil trading. Its exploration and production arm PETRONAS Carigali Sdn Bhd currently has interests in the Jabung block onshore Sumatera and the Tanjung Aru block offshore Kalimantan, and operates the Ketapang and Karapan blocks offshore Java. Recently, PETRONAS started receiving natural gas from Indonesia, transported via pipeline from West Natuna in Indonesian waters to its facilities offshore Terengganu.
Petronas also owns North East Madura IV Ltd. a production-sharing contract for the North East Madura Offshore Block IV.
In 2004, Petronas Carigali Overseas Sdn. acquired Muriah Block PSC held by a unit of oil major BP PLC. Last month Petronas Carigali was awarded the Lampung 2 block in South Sumatra.
Bakrie, on the other side, involved in most of PGN's gas pipeline projects as pipe supplier. The East Kalimantan-East Java gas pipeline would ultimately boost Bakrie's pipe manufacturing business. So, Indonesia's pipeline projects are pretty much in the same hands.

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Kalimantan-Java pipeline: The Winner is...

The downstream oil and gas regulatory body (BPH Migas) is scheduled to announce the winner of the tender to build a 1,219 km gas pipeline transmission from East Kalimantan to Java Island by the end of this week. Could it be Bakrie Group, PGN or Barata?

Some newspapers reported earlier that BPH Migas has picked PT Perusahaan Gas Negara (PGN) Tbk, the listed state-owned gas transmission company, as the winner. But BPH Migas declined to confirm that.
PGN is teaming up with China's CNOOC and financial support from Asian Development Bank (ADB). It's not clear who support Bakrie's financing in the project.
Bakrie, meanwhile, is trying hard to convince public that its offer is better than PGN with cheaper cost. The pipeline is estimated to cost US$1.2 billion.
Bakrie offered gas transmission tariff of US$0.769/MMBTU with IRR 12.29%, Barata tariff at US$1.1/MMBTU with IRR 14.4%, and PGN at US$0.98/MMBTU with IRR 12%.
The bidding was a bit nasty when PGN claimed that its bidding document had been leaked to its competitors.
Read my previous posts on this topic:
1) East Kalimantan-Java gas pipeline
2) Clash of the Titans in Indonesian gas

3) Bakrie company bags US$84 million

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Lapindo Brantas spillover Energy-Bumi merger

Minister for environmental affairs Rachmat Witoelar threathened to terminate the operation of Lapindo Brantas in East Java for its failure to apply prudent operating measures that led to massive pollution from an East Java gas well.

Blame games at play, as usual. Lapindo's shareholder PT Medco E & P Brantas, a unit of the listed PT Medco Energi Internasional Tbk, said in a letter to Lapindo that it had reminded the firm on May 18 to set casing at a depth of 8,500 feet, as agreed in the drilling program, The Jakarta Post wrote today.
Lapindo Brantas Inc is a subsidiary of listed PT Energi Mega Persada Tbk (closely linked to Bakrie Family). This company is the designated operator of the Brantas PSC and it owns a 50% participating interest. Other shareholders at Brantas PSC are Medco (32%) and Australian Santos (18%).
Having purchased its participating interest in the mid-1990's, EMP built the Brantas PSC to be the single largest supplier of gas to the East Java PGN distribution network by 2004 from the Wunut Field.
According to Energi's annual report 2005, last year Brantas PSC produced average of 51 MMSCFD of natural gas and 14 barrel oil per day, almost half of Energi's total gas production.
Brantas PSC has up to 7 oil and gas prospects with contingent resources of up to 66 bcf under a contract mature in 2020. With prospective oil reserves of 244 million barrel and 1.35 BCF of natural gas, Brantas PSC is one of EMP's important source of income.
Oil production from the discovery in Tanggulangin field at Brantas PSC is expected to reach over 3,000 bopd by 2007.
With such significance, the question is whether Witoelar is serious enough to close down Lapindo Brantas operation. But as quoted by The Jakarta Post, Witoelar said his ministry has no authority to order Lapindo to halt its operations, asides from giving a recommendation to do so to the Energy and Mineral Resources Ministry and the Oil and Gas Regulatory Body (BP Migas) which issued the exploration license.
Closing down the company's operation may create another problem, gas scarcity for electricity generating company PLN. Punishments should be strong enough to push this company implement stringent measures in its future operation.
Whatever the government decision might be, the catastrophe potentially will influence the planned merger of Energi with PT Bumi Resources Tbk. The rehabilitation might take few months and not to mention potential litigation toward the company.

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PGN directors get Rp7bn bonus

This is the time to calculate the bonuses for the management of our state-owned companies. Let me start with PT Perusahaan Gas Negara (PGN) Tbk, the third largest company at Jakarta Stock Exchange (JSX) by market capitalization (Rp46 trillion or around US$5 billion), the second biggest listed SOE behind PT Telkom Tbk.

The shareholders meeting last week agreed to give Rp7 billion bonus to the management. Here's the breakdown:
President director WMP Simandjuntak: Rp999 million (US$108,500);
Directors: 90% of the president
President commissioner: 40% of the president director
Commissioners: 36% of the president director
How much is the salary? PGN's president director net salary: Rp55 million (US$6,000) per month. Others follow the formula for bonus payment. But don't ask how much these guys really make each month...it's totally different issue. We have to add the benefits, including Golf memberships, and hopefully no more under-the-table payments from suppliers or business partners...But if they still make money from such practices...the amount could be multiplied hundreds times.

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