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Indonesia Natural Gas Key to Greater Energy Access and Sustainability – Andalas Energy & Power (ADL)
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Renewable energy is important, but natural gas is key to improving access to energy and more sustainable fuel resources. There is little doubt that natural gas can help improve access to electricity around the globe.
There have been many compelling cases that demonstrate the importance of natural gas in enabling sustainable energy policies in the future, especially in the United States.
It is believed that the fuel will solve grand global energy challenges. Electricity generated from natural gas-fired power plants can help the world meet strong growth in energy demand and civilizational expansion, as well as enable the replacement of older and less environmentally friendly power-generation technology.
Energy sustainability for a nation relies on access, affordability and environmental responsibility. These three pillars are all equally important and cannot be separated from one another. As noted, energy security challenges begin with access.
Experts say the global energy challenge for the next 50 years is finding ways to meet the needs of an estimated 2 billion people in areas with poor energy access.
The International Energy Agency estimates that about 80 percent of the world’s energy supply until 2050 will consist of fossil fuels.
Through the deployment of advanced natural gas combined-cycle technologies, not only can the cost profile for power generation be improved, but also efficiency and its environmental footprint.
Natural gas has led to significant growth in new electricity generation capacity in the United States, as it provides the most effective way to achieve comprehensive energy sustainability today, as well as in the future.
Indonesia
Indonesia is one of the world’s biggest liquefied natural gas exporters, along with Qatar, Australia and Malaysia.
Natural gas produced by Indonesia is consumed in Japan, South Korea, Britain and several countries in southern Europe.
Indonesia has enormous natural gas reserves. According to the BP Statistical Review, the archipelago had 103.3 trillion cubic feet of natural gas, or the equivalent to 1.6 percent of the total world’s reserves, in 2014.
The government has stated clearly that more gas should be allocated to the domestic market, because compared with diesel, gas is cheaper and cleaner when used for power generation.
That means the state can save trillions of rupiah from such conversion. From an environmental point of view, gas offers several competitive advantages, as it is generally odorless, nontoxic and non-corrosive.
President Joko “Jokowi” Widodo’s administration has set a target to develop 35,000 megawatts of new power generation capacity in five years to support the government’s target of 7 percent economic growth by 2019.
Of this figure, as much as 13,400 MW will be generated by natural gas-fired power plants, local media previously reported. State utility company Perusahaan Listrik Negara (PLN) has estimated that the nation would require about 1,250 billion British thermal units per day of natural gas to meet the 35,000 MW target.
However, despite its vast natural gas resources and this being one of its key exports, Indonesia’s gas production has started to dwindle.
In a report published by General Electric titled “The Age of Gas,” the American diversified conglomerate suggested that the Indonesian government pays more attention to the sector.
The report stated that a failure by utility companies in any specific country to make additional investment in power sources would put pressure on governments and populations.
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Indonesia state owned PLN under pressure to expedite contract agreements with smaller independent power producers – Andalas Energy & Power
The government’s 35,000 megawatt (MW) electricity procurement program has continued to show sluggish progress, as development contracts for half the targeted capacity have yet to be completed more than a year after the launch of the flagship program.
The ambitious program, with a completion target of 2019, will require the construction of 219 power plants and 737 transmission facilities consisting of 75,000 towers, 1,375 main stations, 2,600 transformers using 300,000 kilometers of aluminium cable.
The program is expected to help increase the national electrification ratio to 97 percent by 2019, up from the current ratio of 88.3 percent.
However, the latest data presented by state-owned electricity firm PLN shows that as of September, only 232 MW of the total 36,722 MW targeted to be procured had reached its commercial operating date, or was already in operation.
Furthermore, PLN still needed to wrap up 17,984 MW worth of development contracts for power plants to get the program moving.
Up to 11,729 MW comprises power purchase agreements (PPA), while the remainder are PLN’s engineering, procurement and construction (EPC) contracts.
Even so, the state-owned firm has only targeted the completion of 14,069 MW worth of development contracts, with PPA’s making up the majority of the contracts targeted.
PLN president director Sofyan Basir noted that there were several setbacks in the wrapping up of development contracts because of the recent revision of PLN’s electricity procurement business plan (RUPTL) for 2016-2025.
“We have had to rearrange the positions of several power plants of our EPC. However, we will try to make up for it by expediting contract agreements for both EPC and IPP [independent power producers] of smaller projects in the outer regions,” he said during a hearing with the House of Representatives Commission VII overseeing energy on Thursday.
PLN also wrapped up on Thursday the contract tender for the Jawa I steam-fueled power plant project. The project, which will result in two power plants with a capacity of 800 MW each, was won by a consortium made up of state-owned oil and gas company Pertamina, Japan’s diversified group Marubeni Corp. and Sojitz Corp.
An estimated investment of US$2 billion will be needed for the construction of Jawa I, which is expected to start operating by 2019.
Despite the setback, the government is positive that the targeted contracts will be wrapped up by the end of the year. The Energy and Mineral Resources Ministry’s electricity development program director, Alihuddin Sitompul, said the government had learned its lesson and had given PLN full authority over the contract auctions and the ability to directly appoint IPPs for renewable energy, mouth-mine and marginal gas power plants.
PLN may also be hinging its success on mobile power plants (MPPs), which make up around 4,000 MW of the project, as they can also be assigned through direct appointments and take less than six months to be operational.
Full story here
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 1st 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**
For further information, please contact:
| David Whitby | Andalas Energy and Power Plc | Tel: +62 21 2783 2316 |
| Sarah Wharry Craig Francis |
Cantor Fitzgerald Europe (Nominated Adviser and Joint Broker) |
Tel: +44 20 7894 7000 |
|
Lucy Williams Charles Goodfellow |
Peterhouse Corporate Finance Limited (Joint Broker) |
Tel: +44 20 7469 0930 |
| Colin Rowbury | Cornhill Capital (Joint Broker) | Tel: +44 20 7710 9610 |
|
Frank Buhagiar Susie Geliher
Alan Green |
St Brides Partners Limited
Brand Communications |
Tel: +44 20 7236 1177
Tel: +44 7976 431608 |
Indonesia to import gas starting in 2019 – Petromindo.com
by Febry Silvan, Petromindo.com
Indonesia is projected to import gas in 2019 for the first time in the country’s history, according to senior official of the ministry of energy and mineral resources.
Indonesia’s import needs in 2019 will amount to 1,777 mmscfd based on the country’s gas balance through 2030, Director of Program Oversight Agus Cahyono Adi said on the sidelines of the Gas Indonesia Summit and Exhibition 2016 at Shangri La hotel in Jakarta on Wednesday.
“It is predicted that Indonesia will import LNG starting in 2019, albeit in small volume. I don’t remember the exact volume, but it is around the figures,” he said.
Agus said the figures are temporary estimation by the government at present. The figures will change in case of gas discoveries.
Revolving blackouts loom as power shortages worsen across Indonesia – Jakarta Post
On September 2nd 2015, CEB Resources updated the market, saying it had agreed with PT Akar Golindo (PTAG) to assess the technical and commercial opportunities for monetising gas in and around the Tuba Obi East oil and gas concession in the South Sumatran Basin. The studies investigated both the potential to sell the gas directly to the Singapore market, the Duri steam-flood project, or other buyers via the major transmission gas pipeline, about 12 kilometres away. Alternatively there is the opportunity to monetise the gas via the construction and operation of an independent power plant, selling electricity into the Sumatran power grid.
CEB sees the gas and power market in Indonesia as an opportunity that should form part of its long-term balanced asset portfolio. Importantly the gas price is independent of the oil price. This was demonstrated in January this year when a Sumatran gas project secured a long-term gas sales contract at US$ 9.45 per Million British Thermal Units (MMBTU), which is amongst the highest gas prices in the world. Similarly, the demand for electricity continues to rise sharply with the country’s electricity provider PLN setting the ambitious goal of increasing supply by some 35,000 MW over the next 4 years. With only 9,000 MW having been firmed up thus far, CEB believes that investment in this sector is particularly attractive.
Yesterday an article was published in the Jakarta Post warning that revolving blackouts are likely given the power shortages that exist – again highlighting the market potential. Alihuddin Sitompul, director at the Energy & Mineral Resources directorate general for Electricity said, “We are currently pushing our power plants to the limits of their operation in order to catch up with growing demand.” He added, “We have to rest some of the plants, yet that simply means supply will become a nagging concern.”
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