ASIATODAY.ID, JAKARTA – Pertamina Group entity, PT Perusahaan Gas Negara Tbk., (PGN) Indonesia is being hit by force majeure with a potential loss of IDR 15 trillion. This happened due to the Liquified Natural Gas (LNG) contract with Gunvor Singapore Pte Ltd, regarding problems with sending LNG cargo to Gunvor.
PGN management said that at the time of reporting, Gunvor had submitted a response which essentially disagreed with the force majeure claim submitted by PGN. However, PGN is still coordinating with Gunvor to update developments regarding force majeure conditions.
Meanwhile, PGN management cannot explain the details of the Master LNG Sale and Purchase Agreement (MSPA) and Confirmation Notice (CN) between the company and Gunvor to the public due to a confidentiality clause.
PGN management is also aware, as is generally the case in agreements, that if there is a force majeure condition, there may be potential for legal action.
“However, up to the time of reporting, PGN could not confirm whether Gunvor would file a lawsuit,” wrote management in its explanation to the Indonesian Stock Exchange (BEI) quoted Friday, November 24 2023.
PGN emphasized that currently it cannot convey the long-term impact of force majeure conditions and is still trying to find the best way to resolve force majeure.
As for the financial reports as of December 31 2022, March 31 2023, June 30 2023 and September 30 2023, PGN has formed a provision for the company’s LNG contract with Gunvor of up to US$61.2 million.
PGN estimates the economic value of all long-term LNG purchase contract commitments with Gunvor (2024-2027), in accordance with PSAK 57 criteria regarding provisions, contingent liabilities and contingent assets, measured and presented as provisions for onerous LNG contracts in the interim consolidated financial statements 30 June 2023 amounting to US$61.27 million.
In addition, PGN also recorded a provision in the interim consolidated statement of profit and loss in the financial report ending 30 June 2023 amounting to US$4.41 million, and in the financial report ending 31 December 2023 amounting to US$56.85 million.
In previous information disclosures, PGN explained that the problem with sending LNG cargo to Gunvor was no less than a few months in 2024. PGN will provide further notification if there are developments regarding force majeure conditions.
For your information, the event behind this force majeure condition is PGN, which is a subholding of Pertamina. As a form of implementation of the subholding duties of State-Owned Enterprises, Pertamina’s LNG business will be transferred to PGN.
On the other hand, PGN and Gunvor signed the MSPA and CN with the aim that PGN would sell certain LNG from Pertamina’s portfolio to Gunvor. During its development, a force majeure condition occurred, namely an obstacle that caused a delay in the LNG portfolio innovation process from Pertamina to PGN.
This then resulted in problems in sending LNG cargo to Gunvor. (AT Network)
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