BPMigas rejects LNG project plan for Sengkang LNG project

Upstream oil and gas regulator BPMigas has rejected a plan of development (POD) for a liquefied natural gas (LNG) project proposed by Energy Equity Epic Sengkang, a subsidiary of Australia-based Energy World Corporation (EWC), on the grounds that the proposal is incomplete.

“The POD is not backed up with valid data. How can we approve the POD if we don’t even know

the reserve data?” BPMigas’s chairman, R. Priyono, told. Priyono said BPMigas rejected Energy Sengkang’s work program and budget (WPNB) for development of new gas reserves in the block.

“We cannot approve their WPNB for drilling activities, because they don’t follow the SOP [standard operating procedures]. It’s strange they want to drill without an initial seismic survey,” Priyono said.

EWC’s executive director Brian Allen said during a hearing with the House of Representatives Commission VII overseeing energy and mineral resources on Monday that the new reserves would be able to provide between 300 billion cubic feet (BCF) and 500 BCF of gas for the LNG plant

He said the proposed LNG development would cost EWC about US$500 million in investment.

To facilitate the financing and funding for the LNG project, part of the LNG would be exported.

Energy Sengkang is one of 232 oil and gas contractors operating in Indonesia. Based on their proposed work programs and budgets for 2010, the contractors plan to spend nearly US$16 billion in upstream activities in this coming year.

Origin seeks environmental nod for $31.3 Bn LNG project

Origin Energy said it had sought formal environmental clearance for its gas export project with U.S. ConocoPhillips.

Origin, the country's largest producer of coal seam gas, said the lodging of the draft environmental statement with the Queensland state government advances the $31.3 billion project towards a final investment decision by December this year and first LNG shipments by late 2014.

While the lodging of the environmental statement is a key project milestone, investors are still looking for firm gas sales before validating the project, analysts say. There are four other projects racing to start exporting Australian coal seam gas and the Origin/Conoco development is seen by some analysts as a falling behind the rivals as it was yet to lock in any gas sales.

Origin's project, also known as Australia Pacific LNG, will produce between 3.5-4 million tonnes per year (mtpy) of LNG in the first phase in 2014, before progressively expanding up to 14-16 mtpy.