Andalas Energy & Power (ADL) – Gas to Power Update

Andalas Energy and Power Plc (ADL), is pleased to provide an update on its landmark agreement with PT Pertamina (Persero) (‘Pertamina’).  The Agreement sees both parties working in cooperation to fast-track the commercialisation of marginal gas fields within Pertamina’s acreage in the Sumatran provinces of Jambi, Riau and South Sumatra, via the roll-out of the Company’s gas to power strategy (see announcement of 1 September 2016 for further details).

Highlights:

• Material progress continues to be made under our cooperation agreement with Pertamina;
• Award of conceptual design contract to engineering subsidiary of PLN over first project;
• Preliminary assessments of the first project demonstrate strong economic fundamentals for both the upstream and the power generation; and
• The unexploited gas discoveries in Riau, Jambi and South Sumatra total 5.1 trillion cubic feet, highlighting the depth of opportunity from which to replicate the gas to power model.

Pertamina and Andalas have been focussing their efforts towards identifying projects capable of monetising existing gas discoveries through in-situ power generation.  The Company has conducted an exhaustive study of the inventory of discovered gas on the island of Sumatra, which is the ‘engine room’ of the country’s oil and gas industry.

The first joint gas to power project has been selected by Andalas and Pertamina.  The project is located within the target area and is founded on an existing conventional gas discovery that is close to infrastructure and power demand centres.  It is clear that further suitable developments exist from which to select the remaining four projects that are envisioned under the cooperation agreement.

As a critical step in the approval process of the project, PLN E, the engineering subsidiary of the national electricity company, PLN, was contracted on 1^st November 2016, to develop the conceptual design study for the power plant for the project, which is scheduled to take up to three months.

The study will incorporate the following:

• Electrical power system study of the target area
• Site identification for the proposed power plant
• Conceptual design of the power plant
• Project implementation plan
• Economic analysis: project finance, project cost estimates, etc.

The study will form part of Andalas and Pertamina’s joint submission to PLN, following the acceptance of which, the necessary project approvals can be sought.  In conjunction Andalas and Pertamina will execute a consortium agreement to set out Andalas’ economic interests in the first project.  Andalas will keep shareholders informed as to the progress being made towards these objectives.

Dave Whitby, CEO of Andalas Energy and Power, commented “We are very encouraged by the continued progress being made under our cooperation agreement with Pertamina.  We have matured the relationship with Pertamina from initial meetings in summer, through to our milestone cooperation agreement in September, into the studies and project evaluation required to secure a first joint project.

“Since signing the agreement with Pertamina, we have been struck by the abundance of undeveloped gas discoveries in Riau, Jambi and South Sumatra.  We believe our relationship with Pertamina has the potential to give Andalas access to an inventory of projects that far exceeds the value that we can derive from our interest in our first standalone asset at Tuba Obi East, which in itself has an estimated 43.7BCF of gas capable of supporting its own 25MW power plant.”

**ENDS**

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