IDX-listed gas distribution firm PT Perusahaan Gas Negara Tbk (IDX: PGAS), better known as PGN, has strengthened its position in an ongoing arbitration dispute with Gunvor Singapore Pte Ltd., its CEO Arief Setiawan Handoko said on Wednesday.
PGN is facing arbitration in the London Court of International Arbitration after Gunvor took legal action over delayed LNG shipments. The dispute centers around a Master LNG Sales & Purchase Agreement between the two parties, with Gunvor claiming losses of US$74 million.
"We now consider our position to be stronger," Arief said in a hearing with the Commission VI of the House of Representatives on Wednesday, referring to new evidence concerning PGN’s commitment to deliver LNG cargoes throughout 2024. However, he added that the chances of winning the case remain 50:50.
Under the contract, PGN was obligated to deliver eight LNG cargoes annually from January 2024 to December 2027. While PGN failed to meet the first two deliveries, Gunvor later rejected shipments of the third, fourth, and fifth cargoes. Arief said Gunvor cited alternative LNG sources, despite being contractually bound to procure LNG from PGN.
Read also : Gunvor takes PGN to arbitration over LNG supply dispute
“We have shown that we were ready to deliver, but they refused to accept,” Arief said. "The agreement requires them to purchase from us and disclose their buyers, which they have not done."
The LNG shipments were originally intended for Japan, but Gunvor has instead redirected the cargoes to other markets, including China and Korea, further supporting PGN’s position, according to Arief.
PGN, which has set aside provisions of US$72.02 million for the LNG contract in its financial report for September 2024, is now facing a legal challenge for the full $74 million claim from Gunvor. The state-owned firm had earlier set aside US$68.54 million for the same contract in 2023.
Gunvor has not yet responded to a request for comment on the ongoing arbitration. The company has not provided details on its alternative LNG supply contracts either.
PGN, which was established to oversee Indonesia’s natural gas distribution, remains engaged in discussions to resolve the issue while adhering to the ongoing legal process.
Editing by Reiner Simanjuntak
