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tate gas distributor firm PT PGN announced over the weekend that it had signed an agreement with local gas company PT Indogas Kriya Dwiguna to add gas supply for users in East Java.

Through the agreement, the two companies cemented their commitments to manage and utilize a 20 billion British thermal unit per day (BBUTD) gas supply from the Terang Sirasun Batur gas field. Delivery will begin in January 2012.

The gas field is currently operated by PT Kangean Energy Indonesia, a subsidiary of Indonesia’s second largest publicly listed domestic oil and gas company, PT Energy Mega Persada.

“The gas is planned to be channelled through the East Java Gas Pipeline [EJGP], operated by PT Pertamina Gas. The receiving station will be at Waru, East Java,” a company press statement said.

The statement continued that the agreement was made to anticipate an expected gas supply decline from the Maleo field, operated by Santos. The supply was estimated to fall from 122 bbtud to 110 bbtud in July this year and 100 bbtud in January 2012.

PGN also announced that the company had signed a memorandum of understanding (MoU) with Malaysia-based oil and gas firm Petroliam National Berhad (Petronas) in an attempt to explore business opportunities and cooperation in various gas-related sectors.

“This is a move from PGN in expanding its businesses through cooperation with companies with global reputations,” the statement said.

PGN currently operates more than 5,800 kilometers of transmission and distribution pipeline networks across Indonesia. The firm had channeled 1,674 million standard cubic feet of gas per day (MMSCFD) as of the third quarter of 2010.

To meet soaring domestic gas demand, PGN and state oil and gas company PT Pertamina have started the development of two floating storage and re-gasification units (FSRU) in Belawan, North Sumatra and West Java.

PGN’s market capitalization in January 2011 reached Rp 102.4 trillion (US$12.07 billion), the fourth largest among publicly listed state-owned companies.

The gas distributor earlier said that it had allocated around $250 million funds for acquiring several gas blocks in Sumatra this year to start developing upstream businesses.

In the statement, PGN president director Hendi Priyo Santoso reported that his firm had cooperated with several other state-owned enterprises, universities and related parties to conduct empowerment programs with a total value of Rp 177.4 billion for 2011.

“There are three programs, which are economic empowerment, improving people’s living standards and environmental preservation,” he said, citing cooperation with state plantation companies PT Perkebunan Nusantara X and XI.

PGN also cooperated with state seed companies PT Pertani and PT Sang Hyang Seri to improve agricultural productivity by providing loans to farmers and improving their capabilities through training in a bid to strengthen food security.