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Indonesia: New downstream gas aggregator

Indonesia is drafting a new presidential regulation on the management of downstream gas business

Oene MarseilleEmir Nurmansyah

Indonesia is drafting a new presidential regulation on the management of downstream gas business.

One notable feature in the draft regulation is the establishment of the Badan Penyangga Gas (BPG). It is anticipated that the BPG will perform a gas aggregator role as well as additional management functions in the downstream gas industry. The BPG would have the ability to purchase gas from upstream gas companies and distribute the gas to the end customers. It would also have the authority to import natural gas, make recommendations to the relevant ministry with regard to the retail prices to be charged to the different classes of customers, and develop gas transmission and distribution infrastructures.

Additionally, the BPG would be provided with the authority to issue hak khusus, meaning 'special rights'. These are licences granted to downstream gas companies to conduct, among other things, the business of transporting gas through pipelines.

Under the existing licensing regime, the granting of hak khusus falls within the authority of the downstream oil and gas agency (BPH Migas). BPH Migas is a governmental agency tasked with regulating the downstream oil and gas business in Indonesia.

Under the draft regulation, it is anticipated that the BPG will be a state-owned enterprise appointed by the relevant ministry. Both PT Pertamina (the state-owned oil and gas company) and PT PGN (the state-owned gas company) have expressed an interest in acting as the BPG. It is also possible that a joint venture could be formed between PT Pertamina and PT PGN to act as the BPG. BPH Migas is also in the running, having also indicated its interest in being the BPG.

As of the date of this article, the draft regulation has not been passed into law, and the identity of the BPG has not been revealed.

Oene Marseille and Emir Nurmansyah

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