NuEnergy Gas signs MoU for sale of gas at $10/mmBtu
Monday, February 18 2013 - 02:14 AM WIB
ASX-listed NuEnergy Gas Limited said it has signed an MoU with PT Dharma Pratama Sejati (PT DPS) for the sale of gas from its Muara Enim Production Sharing Contract (PSC).
The company said in a statement received Monday that the main commercial terms of the MoU include a gas sales price of US$10/mmBtu; target gas quantity of between 1 and 5 million standard cubic feet per day (mmscfd); and gas delivery point at the Muara Enim PSC in South Sumatra at the plant gate of NuEnergy?s Coal Bed Methane (CBM) pilot plant.
The MoU is non-binding, non-exclusive and is subject to all necessary regulatory approvals. It contemplates a gas sales agreement being signed by 30 September 2013 with first gas sales before the end of this year.
?The MoU is a significant step forward for NuEnergy as the company moves towards commercialization. The $10 per mmBtu price establishes a new benchmark price for Coal Bed Methane in Indonesia,? said NuEnergy Chairman Graeme Robertson.
This pricing is reflective of the high demand for gas in the energy hungry domestic and export gas markets that are supplied in and from South Sumatra. South Sumatra gas is primarily utilized by Sumatra , Java and Singaporean gas buyers for power generation, industrial and commercial uses, oil refining and large scale steam flood generation for oil fields, the company explained.
?Pricing for the steam flood and export markets is expected to yield better results, however for our initial pilot project we are pleased with the outcome of US$ 10/mmBtu which will encourage further investment,? it added.
PT DPS is a Compressed Natural Gas (CNG) developer and marketer, which has already produced and marketed CNG in East Java and has an operating CNG to power project in Palembang South Sumatra.
The quantity of gas of between one and five mmscfd at a US$10/mmBtu price equates to potential gross revenue of between US$10,000 to $50,000 per day to the Joint Venture in which NuEnergy has a 40 percent interest.
Editing by Reiner Simanjuntak