PGN to File Lawsuit against Petronas for Business Woes

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  • TEMPO.CO, Yogyakarta - State-owned gas distributor Perusahaan Gas Negara (PGN) is set to file an arbitrary action against Petronas Carigali Muriah Ltd, which is a part of a Malaysian energy company Petronas, to the Hong Kong International Chambers of Commerce (ICC). 

    The lawsuit is related to the business dispute between both companies on the Muriah Block, 180 kilometers from the Semarang coastline in Central Java.  

    “We plan to file the lawsuit by the end of July 2018,” said Kalimantan Jawa Gas (KJG) Secretary Toto Yulianto on Thursday, August 2. KJG is PGN’s sister company that operates the Kalimantan-Java transmission pipelines.  

    The business deal states that Petronas will act as the pipeline user while KJG owns and constructed the Kalimantan-Java pipeline. State-run electricity company PLN is the buyer of the gas produced by Petronas. The problem started after the realization of the gas distribution from Petronas to PLN had always been below the committed volume in the last three years, which was agreed in the Gas Transportation Agreement (GTA). 

    The GTA deal states that Petronas must deliver 116 million standard cubic feet of gas each day (MMSCFD) to PLN through KJG’s gas pipeline over a 12-year span. However, Toto stated that the number had always been between 75-90 MMFCFD. 

    Toto said that there is a legal consequence for Petronas in their inability to realize 90 percent gas accordingly to the GTA deal, which is calculated to be 104 MMSCFD per year.