Digital Integration, Success Story of Accelerating Business Integration of Two Biggest Midstream-Downstream Natural Gas Company in Indonesia

Abstract

To achieve 24% portion of natural gas in targeted national energy mix in 2050, Indonesia government has integrated Pertagas, biggest transmission company into PGN, biggest distribution company under Oil & Gas Holding Pertamina. But survey from PWC in 2004 resulted that around 75% post-merger companies reported integration difficulties, especially both companies have long history of competition. Even more, government mandated 6 USD gas price policy at plant gate, which create enormous urgency to accelerate pipeline and digital integration in the most efficient way. Especially, in this pandemic era, midstream industry needs to foster digital transformation by rethinking outdated business models and strategically applying technology to change rather than focusing on simply cutting costs. From this integration, Pertagas with more than 2,418 km pipeline in 12 provinces spread from Sumatra, Java and Kalimantan has a big potency to be synergized with PGN, as Sub Holding Gas with the total of 10,169 km of pipeline which represent 96% of national gas infrastructure. During 2020. Both companies resulted more than 1.255 MMSCFD of transported gas and 828 BBTUD of sales gas to more than 460 thousand customers. So, PGN and Pertagas management has high expectation on this digital integration to transform from previous fragmented pipeline to be interconnected network to give flexibility in reaching unmet growing demand of strategic industry like refinery, fertilizer, electricity, steel and petrochemical in post-COVID recovery. In this paper, will be described the challenges and its solutions as a success story in digital integration. The important steps start from strategy development, digital assessment, creating coalition, culture acculturation, and change management are explained as guiding pathway for sustainable implementation. It will also portray the measured benefit and value from investment cost efficiency, time effectiveness from the initiation until launched, billing improvement, product development, and up to developed real-time integrated management dashboard for better decision making and part of the milestone for future National Dispatching Center for optimizing Sub Holding Gas portfolio of gas supply and subsidiary's infrastructure to meet growing Indonesia's demand.