Andalas, PPE sign consortium agreement for Jambi wellhead power plant project
Tuesday, August 8 2017 - 12:17 PM WIB
British energy firm Andalas Energy and Power plc announced on Tuesday that it has signed a legally binding Consortium Agreement with Indonesian energy company PT PP Energi (PPE) to develop the Jambi-1 independent gas-fired wellhead power plant, with minimum capacity of 30 MW, in Jambi Province.
Andalas said in a statement that Indonesia?s state-owned oil and gas firm PT Pertamina will supply the gas for the planned project, which is targeted to start operation end of 2019. Andalas will hold a 49 percent interest in the project, and PPE 51 percent.
PPE is a subsidiary of Indonesia?s state-controlled engineering and construction firm PT PP Tbk.
Andalas said that the agreement with PP Energi represents a major milestone for Andalas as it is a binding agreement to develop the first of the three projects that were planned in the Framework Agreement signed between the company and PPE on July 17, 2017.
David Whitby, CEO of Andalas Energy & Power, commented: ?This Agreement is a value trigger event for Andalas. With our internal forecasts indicating project revenue in excess of US$10 million per annum, the Jambi-1 project has the potential to transform the business and sets the platform to develop further power projects in tandem with PPE.?
?PPE is a strong and motivated partner to Andalas, being the power division of PTPP, the state owned entity. Since 2012 the PTPP group has constructed over 14 power plants for PLN, the state electricity company, and we therefore believe their participation strengthens the consortium's ability to deliver in the Jambi-1 project,? he added.
Whitby explained that to date the company has identified a significant number of potential projects for development, with PPE, Pertamina and also with others. ?We are therefore confident that Jambi-1 will be the first of a series of similar opportunities for Andalas, as we seek to roll out our standardized gas to power development model and rapidly scale up the business.?
Andalas said a preliminary assessment of the Jambi-1 project indicates a project with total installed capacity of 30MW base load with potential to offer state-owned electricity firm PLN the opportunity to purchase additional generating capacity subject to negotiation. The precise size and configuration of the facility will be determined as part of the PLN procurement process and front-end engineering and design ('FEED').
The power facility will be located adjacent to the proposed central processing facilities for the gas field supplying the project. The gas field is currently in production and a preliminary location has been proposed, which is located to the north-west of the two nearest substations. Previous studies have indicated that these substations have existing capacity to take power from this project.
Andalas and PPE propose to sell the power generated by the project to PLN.
The project is expected to qualify for direct appointment (i.e. without public tender) under Regulation No. 11/2017. The power price under direct appointment is agreed with PLN through an open book negotiation that determines the price based on the capital and operating costs of the project and an economic return for the owners. The forthcoming FEED study is designed to provide the various cost components for the open book negotiation.
Andalas said there are a number of key contractual, technical and financial project milestones to be achieved prior to the consortium making its final investment decision ('FID'). The consortium will commence execution of these milestones immediately, starting with a detailed project scoping study and the selection and appointment of the FEED engineer. ?Completion of FEED, which is the pre-curser to FID and construction, is being targeted for second half of 2018,? Andalas said.
Editing by Reiner Simanjuntak