Perusahaan Gas Negara (PGAS) signed a head of agreement (HoA) with Pertamina, the state-owned oil and gas company (not listed) and Perusahaan Listrik Negara (PLN), the state-owned power company (not listed) for the development of LNG (liquified natural gas) regasification terminal.
The HoA covers the development of the LNG receiving terminal in West Java, which includes floating storage and regasification unit. The gas will be sold to the domestic market, primarily to PLN. They are looking at LNG supply of 11.75 mn tonnes per annum from Kalimantan for 11 years.
This project is for securing gas supply for PGAS in the future. We do not expect the project to come on stream in 2012 as indicated previously by PGAS.
We have retained our OUTPERFORM rating on the stock. PGAS is one of Indonesian companies which would have volume growth and strong cash flow this year.
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