The Operation of the Sengkang LNG Plant Still Stays on Environmental Affairs

The LNG refinery facility managed by PT Energi Sengkang and affiliated with Energy Equity Epic has not been able to operate due to environmental problems.

David Eka Issetiabudi | March 31, 2019 17:59 WIB

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Bisnis.com, JAKARTA — The LNG refinery facility managed by PT Energi Sengkang and affiliated with Energy Equity Epic has not been able to operate due to environmental problems.

This was revealed by Deputy Minister of ESDM Arcandra Tahar. He said currently, the operator is coordinating with the Ministry of Environment and Forestry.

"They are still managing the KLHK," he said last week.

According to him, the LNG in the refinery will later be sold under the usual market scheme. However, all this time the Sengkang Block gas production of 60 MMscfd has been entirely channeled by the State Electricity Company (Persero).

Last December, the Ministry of Energy and Mineral Resources extended the Sengkang Block contract for 20 years to Energy Equity Epic, which is the operator of the existing block. However, the contract scheme was changed from a cost recovery operation to a gross split. The new contract will take effect on October 24, 2022.

The Sengkang Block has proven natural gas reserves of 800 billion cubic feet (bcf) and has a resource reserve of 2 trillion cubic feet (tcf).

Based on data compiled by Bisnis.com, the physical construction of the LNG refinery facility and supporting facilities began in 2011, but at this time it has been stopped by the relevant authorities due to crucial licensing problems, namely regarding the utilization of the Wajo coastal mangrove protected forest.

The construction site of the LNG plant turned out to be in a protected forest area with an area of 21.17 hectares, strengthened by the Minister of Forestry Decree No.434 / Menhut-II / 2009.

Referring to this fact, the South Sulawesi Environmental Management Agency (DPLH) finally sealed it on April 9, 2018 and determined the temporary suspension of all South Sulawesi LNG development activities.

The sealing will continue until South Sulawesi LNG pocketed a forest area loan permit (IPPKH) given the operational location in the mangrove protected forest area.

At least there are five sub-districts in Wajo that have protected forest areas for the coast, namely Sajoanging, Pitumpanua, Maniangpajo, Gilireng and Keera which are the development points of the South Sulawesi LNG project, specifically in Keera itself, covering 5,136 hectares including South Sulawesi LNG location .

Earlier, in the signing of the Sengkang Block gross split contract at the ESDM Ministry office on Tuesday (11/12/18), Energy Equity Epic President Andi Riyanto explained that the target of increasing production to 200 MMscfd would be carried out in stages over 5 years.

In 2020, it will start conducting three-dimensional seismic surveys and drilling around two exploration wells.

So far, Energy Equity has begun to explore potential buyers for the potential for additional gas production. One potential potential buyer who has been explored is a regional company owned by the Government of South Sulawesi Province.

"We are sort of the first MoU with prospective buyers. We are maturing with SKK Migas, how many volumes, how many years are there. We can only calculate the economy. However, gas prices will be determined on a business basis."