Perusahaan Gas Negara
Sizable underserved demand at PLTGU Tanjung Priok - 1.5km of the SSWJ - ALERT . Supply to Tanjung Priok started: As contracted between PGAS and Indonesia Power, 30MMScfd of gas supply will flow into PLTGU Tanjung Priok starting Oct 5, 2009. The supply contract is for 3 years at a similar rate to PGAS' industrial customers: at currently US$5.50/MMbtu. PLTGU Tanjung Priok was formerly a diesel power plant that has been converted into a combined cycle (gas & diesel) power plant. It currently has 2 block turbines with 1,180MW capacity. The current gas requirement is about 180MMScfd but only 90MMScfd of gas needed is secured: 30MMScfd by PGAS and 60MMScfd temporary supply by Pertamina. . By FY12, 280MMScfd needed at Tanjung Priok: By 2012, the capacity at the PLTGU Tanjung Priok will expand by an additional 740MW, which will require additional 100MMScfd of gas supply. In total, PLTGU Tanjung Priok will require 280 MMScfd of gas when fully operational; while currently only 90MMScfd of gas is secured. . Tj Priok - 1.5km from SSWJ: We view PGAS as well positioned to serve the sizable increased gas demand at Tanjung Priok within the next 2 years on the back of: (1) About 250MMScfd of contracted gas supply with Conoco Philips and Pertamina yet to be utilized. (2) PLTGU Tanjung Priok is only located 1.5km from the SSWJ pipeline. (3) Tanjung Priok is a short distance from the planned LNG receiving terminal of Muara Karang (both are in North Jakarta). . Could result to upside to volume and PT: If PGAS is able to secure 220MMScfd out of 280MMScfd available gas demand, it could provide upside to our volume forecast of about 50-60MMScfd p.a. If the supply to PLN is raised as outlined in Table 1, the Jun-10 PT of PGAS could be adjusted upwards by 4.26% from currently Rp4,700 to Rp4,900, based on our current price target methodology. . Maintain OW and Jun-10 PT of Rp4,700: With the sizable unserved demand present at PLTGU Tanjung Priok, we maintain OW and our DCF based Jun-10 PT of Rp4,700: assuming a risk-free rate of 10.5%, a risk premium of 5.5%, and a terminal growth rate of 5.5%. Risks: (1) Margin compression from higher cost of gas. (2) Execution risks: project delay, unable to secure gas source, etc. This e-mail is confidential and intended only for the use of the individual or entity named above and may contain information that is priviledged. If you are not the intended recipient, you are notified that any dissemination, distribution or copying of this e-mail is strictly prohibited. You may from time to time be provided with investment and financial related information and reports, including but not limited to, research reports and market or securities specific analysis. Please note that the information is provided to you for information only. All of the information report and analysis made should be taken as having been prepared for the purpose of general circulation and without regard to any specific investment objective, financial situation or the needs of any particular person who may receive the information, report or analysis (including yourself). Any recommendation or advice that may be expressed in or inferred from such information, reports or analysis therefore does not take into account and may not be suitable for your investment objectives, financial situation and particular needs
