Linc, Sugico in Indonesian UCG development deal
Thursday, February 18 2016 - 03:02 PM WIB
Sugico is in the early stages of developing two commercial UCG projects in Indonesia. The initial project, located in South Sumatra, will use UCG produced synthesis gas to generate electrical power. This project is in the concept phase of development. At this time, the first phase of the project is expected to be sanctioned and reach financial closure during 2016 and achieve designed specified performance during 2017.
The formal agreements consist of an Intellectual Property License Agreement supported by a Services Agreement. Key aspects of the agreements are:
- a license to use and exploit Linc Energy?s intellectual property (IP Licence), within Indonesia;
- Sugico to pay a Licence Fee of US$17.5 million in two tranches: (i) US$4.375 million on the latter of sanction of a Commercial UCG Project or the Licensee obtaining financial closure for a Commercial UCG Proje ct in the Region; and ii. US$13.125 million on certain performance criteria for the Commercial Project being achieved.
- Production Payment (Royalty) of US$0.3125 per MMBTU of Syngas;
- Sugico will pay Linc Energy for any services provided in relation to the development of any UCG projects at commercial rates.
The second project is located in South Kalimantan and will use UCG produced synthesis gas to produce chemicals. This project is currently in the concept phase of development, but is expected to be sanctioned in 2017, reach financial close during 2017 and achieve designed specified performance by 2020.
Linc?s proprietary UCG technology is a method of convert ing stranded coal resources into a valuable synthesis gas (Syngas) in situ. Linc Energy own s and operates the world?s longest running commercial UCG operation in Uzbekistan which supplies Syngas to a nearby power station.
Editing by Alexander Ginting