PT Perusahaan Gas Negara (PGN) signed an initial agreement to purchase up to 5 million metric tons of liquefied natural gas (LNG) per annum from Energy Equity Epic Sengkang Pty Ltd (EEES).
"PGN will receive between 1.5 and 5 million metric tons of LNG per annum *MTPA* from EEES. The LNG is expected to be delivered from 2012 as part of a five-year contract," PGN president director Hendi Prio Santoso said.
Hendi refused to divulge the contract's value, saying the pricing was one of the issues the two companies would finalize later.
Stewart Elliot, CEO of EEES's parent company Energy World Corporation Ltd, said EEES had produced a surplus of gas at its block in Sengkang, Central Sulawesi.The company was also planning to build an LNG plant, he added.
"We will build the LNG plant with a production capacity of 2 MTPA to begin with.
"We will then ramp up the capacity to 5 MTPA," he said.
Elliot added EEES would spend between US$400 million and $500 million to build the 2 MTPA plant.
EEES has been preparing for the plant's permit and putting together its component manufacturing.
"We expect the plant will start operating in 12 to 18 months from now," he added.
Hendi said the LNG would be supplied to PGN's LNG-receiving terminals it was planning to build in West Java and North Sumatra.
As has been reported earlier, PGN and state oil and gas company PT Pertamina have formed a consortium to build the two LNG-receiving terminals in those particular regions.
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