Indonesia rejects development plan for LNG project

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Feb. 2 -- Indonesia’s upstream oil and gas regulator BPMigas rejected a plan of development for an LNG project proposed by Energy Equity Epic Sengkang (EEES), a wholly owned subsidiary of Energy World Corp. (EWC).

“The plan of development is not backed up with valid data,” said BPMigas Chairman R. Priyono, adding, “How can we approve the plan of development if we don’t even know the reserve data?”

Priyono said BPMigas rejected EEES’s work program and budget for development of new gas reserves because they don’t follow the standard operating procedures. “It’s strange they want to drill without an initial seismic survey,” Priyono said.

EWC’s general counsel Thompson Situmorang said a 3D seismic survey would be expensive for a marginal field like Sengkang. “We propose a mini-seismic method, which will be more economical and cause no harm for the environment, but BPMigas has not agreed yet,” he said.

Thompson claimed the development plan is “still under discussion” with government officials.

EEES holds the production-sharing contract for the Sengkang Block, which is estimated to hold reserves of 2-4 tcf of recoverable gas. Currently, the gas is being used to fuel the 195-Mw gas-fired combined-cycle Sengkang Power Plant operated by EWC subsidiary PT Energi Sengkang.

EWC is considering construction of an LNG plant near the Sengkang block, built with an initial production capacity of 2 million tonnes/year and later rising to 5 million tpy, according to EWC Chief Executive Stewart Elliot.

Elliot said the company had additional reserves that could be processed by the proposed LNG plant, a point reiterated by EWC Executive Director Brian Allen.

During a hearing with the House of Representatives Commission VII overseeing energy and mineral resources, Allen said the new reserves would be able to provide 300-500 bcf of gas for the proposed LNG plant

Allen said the proposed LNG development would cost EWC $500 million and “a small percentage” of the LNG would be exported to finance the construction and operation of the facility.

According to analyst BMI, rejection of the EEES proposal will set back plans for the liquefaction plant and is likely to delay the launch of LNG supplies to state-owned gas distributor PT Perusahaan Gas Negara (PGN).

BMI said PGN, following an agreement signed last September, had hoped to purchase 1.5-5 million tpy of LNG from Sengkang to feed its planned regasification terminals in North Sumatra and Java.

EWC owns 100% of the Sengkang production-sharing contract. The project has a take-or-pay power sales contract until 2022 to supply power to state-owned power utility PT Perusahaan Listrik Negara. EWC also owns 95% of the Sengkang power plant, while Medco Sengkang holds a 5% interest.

Contact Eric Watkins at

Related Articles

Canada Briefs


Kinder Morgan to deliver natural gas to Corpus Christi Liquefaction

12/11/2014 Kinder Morgan Inc. (KMI) companies Kinder Morgan Texas Pipeline, Kinder Morgan Tejas Pipeline, and Tennessee Gas Pipeline Co. (TGP) have entered in...

Magnolia LNG lets EPC contract to SK E&C USA

12/03/2014 Magnolia LNG LLC parent-company Liquefied Natural Gas Ltd. agreed to an engineering, procurement, and construction contract with SK E&C USA cov...

Pipeline leak dampens Atlantic LNG production

12/01/2014 Atlantic LNG (ALNG) reported a 35% reduction in LNG production because of insufficient natural gas supply from Trinidad and Tobago’s National Gas C...

Real-time monitoring improves LNG inventory measurement

12/01/2014 Kogas has improved the calculation method for determining stocks at its LNG terminals, changing from a sampling method to a real-time monitoring sy...

Watching Government: Greece and energy in Europe

11/24/2014 Amid growing energy supply geopolitics, Greece is a stable anchor within a rapidly destabilizing region, Yannis Maniatis, its Environment, Energy, ...

Freeport LNG nears construction phase

11/19/2014 Freeport LNG Expansion LP expects later this month to close on financing and begin construction on the first two trains of its natural gas liquefac...

Woodside releases draft EIS for Browse LNG project

11/19/2014 Woodside Petroleum Ltd. has released its draft environmental impact statement (EIS) for the proposed Browse LNG project offshore Western Australia.

ANGA president calls for sharper focus on gas transportation issues

11/17/2014 America’s Natural Gas Alliance Pres. Martin J. Durbin called for a stronger focus on transportation as he outlined issues that the US gas industry ...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts

On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.



Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected