JAKARTA — PT Perusahaan Gas Negara Tbk (PGN), the gas subsidiary of state-owned energy company Pertamina, is set to undergo a major transformation of its business model.
The company will be directed to move away from upstream oil and gas activities and focus instead on midstream and downstream gas businesses, including the distribution of natural gas to households.
Dony Oskaria, Chief Operating Officer of Indonesia’s sovereign investment agency Danantara, said PGN would no longer be allowed to expand into upstream activities as part of the restructuring.
“PGN, starting this year, is no longer allowed to play in upstream. They will focus specifically on midstream and downstream. Their task is to distribute gas all the way to households. We will start the trial in Batam,” Dony said.
The initial pilot project will be carried out in Batam, where PGN is expected to develop a gas pipeline network connecting directly to residential areas.
“In Batam, we will build pipelines to all houses. We want PGN to become the national gas company, responsible for gas distribution. Therefore, PGN will no longer operate in upstream,” Dony said.
The move represents a broader effort by Danantara to restructure the business models of state-owned enterprises rather than focusing solely on their financial condition.
Dony said Danantara wants companies to have a clear and sustainable business model before providing additional capital.
“We usually conduct financial restructuring. I said I don’t want only financial restructuring; I want business restructuring. We have to change and make sure the business is right first, and only then inject equity if they need it,” he said.
The restructuring is part of Danantara’s broader effort to streamline Indonesia’s state-owned enterprise ecosystem through measures including mergers, consolidation, liquidation and divestment.
For PGN, the transformation is expected to redefine its role in Indonesia’s gas industry, shifting its focus from upstream operations toward becoming a key player in the distribution of natural gas to end consumers.
The strategy could ultimately position PGN as Indonesia’s primary gas distribution company, with household gas networks becoming one of its key areas of expansion.
