The Jakarta Post
Gas distributor PT Perusahaan Gas Negara (PGN) is looking to cancel most of its capital expenditure planned for this year to secure its cash flow amid weak global oil prices.
The publicly listed company has asked its board of commissioners for permission to only disburse between 40 and 44 percent of the initially budgeted US$705 million in capital expenditure for this year, according to PGN finance director Arie Nobelta Kaban.
“We will prioritize [spending] on projects that will generate short-term revenue,” he told the press on Friday, estimating that 10 percent of the budget has been disbursed as of June.
The company will focus spending on building a new piping system for the 50-year-old Rokan Block in Riau and on exploiting the oil-rich Pangkah Block in East Java.
PGN’s parent company, state-owned oil and gas company Pertamina, ordered the new piping system prior to taking over Indonesia’s second-most productive oil block from United States-based Chevron next year.
Meanwhile, PGN’s upstream subsidiary, PT Saka Energi Indonesia, is the sole operator of the Pangkah Block that produced 3,024 barrels of oil per day in the first quarter, making it the company’s most productive oil block.
Company cash reserves stood at $1.35 billion in March, up 29.3 percent from December 2019, according to PGN’s latest available financial report.
Even though oil prices have rebounded since March, analysts expect the international oil price benchmark Brent to remain below $50 per barrel, lower than last year’s average.
PGN saw its net profit fall by 31.8 percent year-on-year to $56.48 million in the Jan-March period this year, the report also shows.