Panax updates Indonesian geothermal project
Wednesday, January 30 2013 - 04:38 AM WIB
Indonesia provides increased financial certainty for geothermal investment
During 2012, Panax welcomed confirmation that the Indonesian Government is planning further increases to incentives for geothermal investment in Indonesia.
Indonesia?s Energy and Mineral Resources Ministry has increased the current US$97/MWh feed-in tariff by approximately 24 per cent, to an average of approximately US$125/MWh.
Indonesia?s increasing commitment to geothermal energy investment is a demonstration of growing endorsement of the position that Panax has taken in the Indonesian geothermal sector.
Indonesia is creating investment confidence and certainty for its renewable energy industry. This increase is the latest in a long list of recent investment incentives being offered by Indonesia for renewable energy projects, ensuring increased energy security for the country.
The new arrangements will benefit each of Panax?s current Indonesian projects ? Sokoria, Dairi Prima, and Ngebel, and will provide greater financial returns for additional projects that Panax is currently reviewing.
Panax has been reaping the benefits of Indonesia?s support, with this latest announcement closely following the successful negotiation of power purchase agreements between the company and Indonesian energy and government representatives.
SOKORIA Geothermal Project
The Sokoria Geothermal Project is distinguished by four factors:
? Ensuring the execution of the Power Purchase Agreement (?PPA?) for the project in as timely a manner as possible;
? Finalising the securing of required project finance for the project ? both equity and debt;
? Continuation towards finalisation of the required environmental studies for the project, following drill and plant site selections, and to assist with all matters required to finalise registration of the project for carbon credit / CDM purposes; and
? Securing a suitable drilling rig for the project.
The length of time being taken to complete the finalisation of the execution of the PPA is frustrating for all parties, and we appreciate the concerns of shareholders in relation to this. As we noted at the recent AGM of the Company and in conversations with
Shareholders since that time, all of our efforts are being applied to ensure the completion of the execution of the PPA in as timely amanner as possible. We have not been advised of and are not aware of any impediments to the PPA being executed.
DAIRI PRIMA Geothermal Project
Panax and its Indonesian joint venture partner, PT Bakrie Power, have signed a Binding Terms Sheet Agreement with PT Dairi Prima Minerals (DPM) for the supply of up to 25 megawatts of geothermal power for DPM?s proposed underground lead/zinc mine in northern Sumatra.
DPM is a subsidiary of Bumi Resources Group. First production from DPM?s mine is expected to occur in 2013/2014.
The region has one operating geothermal power plant at the Sibayak geothermal field and two neighbouring fields, operated by PT Pertamina Geothermal.
This is the most advanced geothermal field in the region with established geothermal reserves and 10 existing production wells.
The field is regarded as being under utilised and discussions are well advanced regarding the joint development of spare capacity of the Sibayak geothermal reserves to supply DPM?s mine.
Our activities and achievements during the 2012 financial year, and our targets for the coming 2013 year, include:
? Ensuring the execution of the Power Purchase Agreement (?PPA?) for the project in as timely a manner as possible;
? Finalising the securing of required project finance for the project ? both equity and debt;
? Continuation towards finalisation of the required environmental studies for the project;
? Advancing discussions with the current tenement holder for the Sibayak and neighboring geothermal licence areas, for rights of access to and usage by Panax and Bakrie of these geothermal fields ? active progress towards finalising these arrangements is well advanced ? with the active support of all parties involved;
? Detailed meetings in Jakarta between Panax and PT Dairi Prima Minerals, relating to development requirements, timings, schedules, and power plant design and associated requirements;
? Continuation of studies relating to the power transmission connection (of the order of about 30 kilometres) for the project, including transmission line route and environmental studies;
? Continuing process for registration for CDM?s for the project; and
? Pre-selection of potential EPC contractor for the project.
The first production from PTDPM?s underground mine is expected to occur during early 2014. Under the arrangements between Panax Geothermal and PT Bakrie Power, both parties will be entitled to receive 50% of all carbon credits generated from the project.
NGEBEL Geothermal Project
Panax has signed an agreement with Indonesian-owned power company PT Bakrie Power to develop the 165 megawatt geothermal project in East Java.
PT Bakrie Power won the tender for the Ngebel Geothermal Project in 2010, which involves the development of three, 55 megawatt geothermal power plants (for a total of 165MW) with the potential to expand to more than 200 megawatts.
Panax will earn a 35 per cent working interest in the project, through funding of required exploration works before commercial development commences. Both companies will contribute to development costs.
The Ngebel Geothermal Project is a near-term development, in a strategic location that is underpinned by a guaranteed, commercially attractive power tariff.
Exploration has already been undertaken in the project area, including detailed geological mapping, geochemistry works for water and gas, thermal manifestation chemistry, heat flow modelling, heat flow mapping and geothermometry work.
Panax will be project operator during the exploration and feasibility stages, and fund the acquisition of existing data and external reports about the project. This will include upper surface development planning, geological studies, geophysical studies, magnetotelluric data and a detailed feasibility study. This information will assist in the ongoing development of the project, and is anticipated to result in significant savings in both time and money.
The Ngebel Geothermal Project will supply geothermal energy to Indonesian state-owned power company PT PLN (Persero).
Our activities and achievements during the Q4:
? Substantial progress towards finalising the final Power Purchase Agreement (?PPA?) with PT PLN (Persero);
? Finalising the securing of required project finance for the project ? both equity and debt;
? Receipt of the formal forward planning schedules from PLN, including timetable for completion of the transmission connection to the main Indonesian National Transmission Grid, to ensure grid connection for our project);
? Continuation of studies relating to the power transmission connection (of the order of about 25 kilometres) for the project, including transmission line route and environmental studies; and
? Advancement of the acquisition of the considerable prior exploration and appraisal works that have already been undertaken on the project by other parties;
Focus for the coming months will continue to be on executing the formal PPA agreement with PLN, finalising exploration project plans, and finalising detailed field and plant design and preparation for drilling.
Required environmental assessments continue to progress and will continue during the coming months.
We will also complete the acquisition of the considerable prior exploration and appraisal works that have already been undertaken on the project, and seek to commence on the ground exploration and testing works.
It is both very pleasing and very significant that Panax has been able to secure our position in this large and very commercially attractive geothermal development project, under strong competition for participation from some other very large players in the geothermal sector.
JAMBI Geothermal Project
Panax has signed a Memorandum of Understanding with government-owned power company PT Petrogas Jambi Power to explore the east coast of Central Sumatra.
The companies are in the process of jointly applying for required licences and permits to explore and develop potential geothermal resources up to 80 megawatts.
The Jambi Geothermal Project is a strategic component of Panax?s Indonesian portfolio, increasing the company?s footprint in Indonesia and strengthening local partnerships.
Jambi Power has strong support from the Jambi Province?s local government for the development of geothermal energy in the region, and has an extensive database of information on the geothermal targets.
Jambi Power?s existing knowledge of the geothermal resource will significantly reduce risk on this project.
There is minimal diesel power generating capacity in the Jambi Province and it is insufficient to meet daily demand. Users have limited access to power and experience blackouts daily. This project would provide the community with reliable power 24 hours a day, seven days a week. There will also be opportunities for local participation in the project.
Energy generated from the proposed project would be connected into the local electricity transmission grid or used for local industry. Panax holds an initial 95 per cent interest in the project. (end of excerpt)