Summary
- Energy World has secured a green light to re-start construction work at its LNG facility in Indonesia.
- The Planology Department of Ministry of Forestry has confirmed the project location as industrial land after completing the historical land documentation review.
- The department also considered the remapping of the land area.
- First LNG sales are expected in the next two years.
The stock of Energy World Corporation Limited (ASX:EWC) soared more than 28% to AUD 0.135 on 9 February 2021, after a significant update concerning the resolution of a four-year-old land claim case in Indonesia.
Source: Copyright © 2021 Kalkine Media Pty Ltd.
As per the Australia-based independent energy company, the Planology Department of Ministry of Forestry has confirmed that its LNG project is located on an industrial land. The company was fighting against the earlier government claims that the project is situated on forest land.
A few years ago, the Company’s subsidiary PT South Sulawesi LNG (PT. SSLNG) commenced the construction of a mid-size LNG facility in Indonesia over the land purchased by EWC. However, construction work at the project site was halted followed by a government intervention, claiming that the plant was being built on forest land instead of industrial land.
Sengkang LNG Plant Project (Source: EWC ASX Update, dated 1 October 2019)
After a four-year period, relevant authorities have re-confirmed the location as industrial land encouraging the Company to resume the construction work.
About the LNG Facility
The LNG project is located in South Sulawesi, Indonesia. The Sengkang gas field is engaged in production since 1997. The other components of the LNG project include the Sengkang power plant.
The facility work is almost complete. The Company has already invested around US$343 million in the project. Additional US$35-50 million will be required to start the first production from the facility.
Initially, the facility is planned to deliver 500,000 tonnes of LNG per year. The Company plans to further finance the facility with project debt. It is targeting to increase the output to 2Mtpa using funds generated from LNG sales.
First LNG sales are expected in 18-24 months.
Other Significant Details
Sengkang Gas Field (Source: EWC ASX Update, dated 1 October 2019)
Additionally, the Company recently secured a 20-year extension to its gas operations in South Sulawesi. This will allow the Company to deliver a clean and economical energy source to the region for city gas transportation, power generation, and industrial development.
