Indonesia’s constrained domestic gas supply is creating a mixed bag of fortunes for key players in the energy sector. While it poses challenges for PT Medco Energi Internasional Tbk. (MEDC) and PT Perusahaan Gas Negara Tbk. (PGAS), the simultaneous global surge in demand for liquefied natural gas (LNG) is proving to be a significant tailwind for PT GTS Internasional Tbk. (GTSI), a prominent LNG shipping provider.
According to Sukarno Alatas, Senior Analyst at Kiwoom Sekuritas, Medco’s revenue is facing potential headwinds. The company is compelled to divert a portion of its gas export quota to supply PGAS as part of the government’s Harga Gas Bumi Tertentu (HGBT) program, which mandates specific affordable gas prices. This strategic reallocation, though crucial for domestic energy security, is expected to temper Medco’s profitability due to the lower pricing of HGBT supplies. Nevertheless, Medco’s diversified oil and gas portfolio, coupled with stable oil prices, is anticipated to mitigate some of this financial pressure.
Financial reports for the first half of 2025 reveal a slight dip in Medco’s total revenue, which decreased from US$1.16 billion to US$1.14 billion. This contraction was primarily driven by a decline in income from customer contracts, falling from US$1.14 billion to US$1.11 billion. Concurrently, other financial income also saw a modest reduction, from US$24.31 million to US$23.63 million.
For PGAS, despite securing gas supplies from Medco, Alatas suggests its position isn’t entirely advantageous. The persistent limitations in domestic gas supply necessitate a greater reliance on the regasification of more expensive liquefied natural gas (LNG). This operational shift is expected to compress PGAS’s revenue margins, posing a significant challenge to the company’s profitability.
In the first three months of 2025, PGAS managed to achieve a modest 1.81% year-on-year growth in revenue, reaching US$966.56 million. However, this positive top-line performance was largely offset by a substantial 11.98% year-on-year increase in the cost of revenue, which climbed to US$825.95 million. On a brighter note, there’s potential for PGAS to see an uplift in third-party regasification service revenue, driven by the current abundance of global LNG. While revenue from related-party regasification services grew from US$26.26 million to US$40.49 million in the first quarter, revenue from third-party regasification services contracted from US$12.54 million to US$6.57 million.
The global LNG market presents a contrasting narrative. The International Energy Agency (IEA) forecasts a significant surge in LNG supply, projecting a 7% increase, equivalent to 40 billion cubic meters per year, by 2026. This expansion comes in the wake of the 2022 energy crisis, which saw nations worldwide intensely compete for relatively tight global LNG supplies after Europe lost a substantial portion of pipeline gas flows from Russia. The IEA anticipates this increased production will fuel record gas demand next year, particularly in price-sensitive Asian markets, as well as in Africa and the Middle East.
This dynamic environment—marked by limited domestic gas supply and a flourishing global LNG market—is seen by Sukarno Alatas as a clear catalyst for gas shipping companies like PT GTS Internasional Tbk. (GTSI). “GTSI is seizing this momentum as industrial sectors increasingly pivot towards LNG,” he stated.
Alatas highlighted that this favorable trend is clearly reflected in GTSI’s financial performance for the first half of 2025. Revenue from its LNG vessel charter services experienced a robust increase, climbing from US$14.86 million to US$16.69 million. This significant growth propelled the company’s total revenue from US$15.28 million to US$17.01 million. The strong top-line expansion translated into a substantial boost in net profit attributable to the parent entity, a company linked to Tommy Soeharto, which soared from US$2.76 million to US$3.75 million.
The current market conditions are distinctly influencing the performance outlook for these three key listed entities. Kiwoom Sekuritas maintains that MEDC’s medium-term prospects remain sound despite short-term pressures, thus recommending a “Hold” position. Conversely, PGAS faces significant margin challenges, leading Kiwoom Sekuritas to advise a “Neutral” stance while awaiting greater certainty regarding domestic supply dynamics. In stark contrast, GTSI is identified by Kiwoom Sekuritas as a direct beneficiary of the burgeoning LNG trend, with strong potential for sustained profit growth. Furthermore, GTSI is considered undervalued, boasting a Price-to-Earnings (PE) ratio of 10 times and a Price-to-Book Value (PBV) of 1.33 times. “It is worth considering as a trading buy for investors with a high-risk appetite, with a target price of Rp78,” Alatas concluded.
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Summary
Indonesia’s constrained domestic gas supply creates mixed fortunes for energy players. PT Medco Energi Internasional Tbk. (MEDC) faces tempered profitability due to diverting gas export quotas to PT Perusahaan Gas Negara Tbk. (PGAS) at lower mandated prices. PGAS, despite securing some supply, experiences compressed revenue margins due to its reliance on more expensive liquefied natural gas (LNG) regasification to meet demand.
Conversely, PT GTS Internasional Tbk. (GTSI), an LNG shipping provider, is significantly benefiting from the booming global LNG market. The International Energy Agency forecasts a 7% increase in global LNG supply by 2026, driving GTSI’s strong revenue and net profit growth. Kiwoom Sekuritas recommends GTSI as a “trading buy,” identifying it as a direct beneficiary and an undervalued stock.