Sengkang LNG plant project faces fresh uncertainty

By Febry Silaban

The Sengkang mini LNG plant project in South Sulawesi Province has encountered new obstacle, creating fresh uncertainty for the completion of the long-stalled project, as the Investment Coordinating Board (BKPM) has turned down a request from PT South Sulawesi LNG Wajo (SSLNG), the project?s owner, for an extension of so-called temporary business license for natural gas processing.

A source told Petromindo.com on Thursday that BKPM in a letter dated October 17, 2017, a copy of which was obtained by this portal, said it ?could not process? the request made by SSLNG for an extension of the business license because around 20.85-ha of the land utilized by project is located in protected forest area. BKPM said that it could only start processing the SSLNG request once the company has obtained the so-called borrow and use permit from the Ministry of Forestry to the particular forest area.

?As a result, construction of the Sengkang LNG (plant) has been stunted,? the source said.

The Sengkang mini LNG plant was supposed to have been completed in 2015 to process gas into LNG from the Wasambo (Walanga, Sambisambi, Bone) gas field project in Sengkang PSC, South Sulawesi Province, operated by Energy Equity Epic Sengkang. Both SSLNG and Energy Equity Epic are controlled by ASX-listed Energy World Corporation.

But completion of the LNG plant project has suffered repeated delays due to a number of problems ranging from funding to agreement on the gas and LNG price with offtaker state-owned electricity firm PT PLN, previous reports said. Completion of this LNG facility is necessary to allow for the gas production in the Wasambo field.

SSLNG plans to build a combined 2 million tons per annum capacity of mini LNG plant in Sengkang, with capacity of 0.5 mtpa in the first phase, according to previous reports.

Editing by Reiner Simanjuntak