Company update:
Perusahaan Gas Negara (PGAS IJ, BUY, TP: IDR3,500),
Site Visit To FSRU Lampung
We recently visited PGN’s floating storage regasification unit (FSRU) Lampung – a massive vessel with the length of three football fields and is connected to PGN’s existing gas distribution network through a subsea pipeline. Subject to sufficiency of receiving terminals, the FSRU is mobile and transferable to other locations within Indonesian waters. Our question and answer session with PGN’s staff is useful and provides additional insight into its operations and financial position.
¨ FRSU specification. Perusahaan Gas
Negara’s (PGN) FSRU is one of the largest in the world, with the length of
three football fields. Its liquefied natural gas (LNG) storage tanks have a
combined capacity of 170,000 cubic metres, or about six million standard cubic
feet (mmscf). In addition, it has the capacity to regasify 45-240mmscf of LNG a
day. The FSRU is connected to a subsea pipeline, which in turn connects to a
terminal of PGN’s South Sumatra-West Java transmission pipeline. The investment
cost of FSRU in generally cheaper than that of a land storage regasification
unit (LSRU) of the same capacity.
¨ PGN can source its
LNG from
either Bontang (East Kalimantan) or Tangguh (West Papua). Currently, PGN
sources its LNG from Tangguh only, as the supply comes with vessel deliveries;
whereas for supply from Bontang, buyers have to arrange their own
transportation. The LNG was earmarked for two power plants owned by Perusahaan
Listrik Negara, located in Muara Karang and Tanjung Piok, However, the offtake
by these power plants was subsequently cancelled, due to disagreements in
pricing.
¨ Scheduled to absorb
eight cargoes this year. The pricing mechanism of Tangguh LNG is based on “N
minus three” (current month pricing refers to the crude oil price three months
before), premised on a slope of 12.4% on Indonesian monthly realised export
price plus USD0.25/million British thermal units (mmbtu). Management guided
blended gas cost of USD5.60/mmbtu for these cargoes (inclusive of
transportation and regasification), assuming Brent oil price to average at
USD43/barrel (bbl) in FY16.
¨ To cover FSRU’s cash
operating cost.
The cargoes absorbed will be taken in as part of PGN’s gas supply portfolio,
replacing some of its conventional pipe gas supplies. By doing this, PGN would
be able to partially cover the cash operating cost of the FSRU amounting to
c.USD130,000/day, potentially narrowing the losses from this segment. We
believe this is viable now as the lower average oil price this year and better
pricing structure lead to limited impact on its overall gas cost.
¨ Potential benefits. The FSRU, which has
been a burden to PGN since its inception, was chartered since 2014 with the
intention of solving PGN’s conventional pipe gas supply bottleneck and
fulfilling future natural gas demand of Indonesia. With LNG prices on a
downtrend due to an oversupply and the formation of an Asian-based spot market,
we believe the FSRU would be useful when demand for natural gas improves and
crude oil prices recover.
Kindly click the following link for the full report: Perusahaan Gas Negara : Site Visit To FSRU Lampung
Best regards,
Norman Choong, CFA
Assistant Vice
President
Research Analyst – Utilities,
Oil & Gas, Poultry
PT. RHB Securities
Indonesia
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