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.

Indonesia Tangguh begins trial at train 2

Indonesia's Energy Minister said trial runs at the second LNG train at the Tangguh project began last week and the first train would resume operations by the second week of October at the latest.

The Tangguh LNG plant in Papua, led by BP's Indonesian unit, started up this year but was temporarily shut in August to resolve technical problems.

"Second train commissioning started. Trial runs are on," the minister, Purnomo Yusgiantoro, told Reuters in an interview.

Indonesia's oil watchdog BPMIGAS said last week the LNG plant, which has a capacity to produce 7.6 million tonnes per year (tpy) via two trains, will ship only 16 cargoes of liquefied natural gas in 2009, well short of its previous estimate of 56 cargoes.

BPMIGAS monitors oil and gas firms operating in Indonesia.

Indonesia, the world's third-largest LNG exporter after Qatar and Malaysia, plans to use more natural gas at home to avoid costly oil prices as its own oil reserves dwindle.

Yusgiantoro said fertiliser customers had placed a request for 0.5 million tonnes of LNG from Donggi-Senoro project and the remaining 1.5 million tonnes was yet to be sold.

He said the promoters were still negotiating price and financing of the project.

The Donggi-Senoro project, which will require $1.7 billion for upstream activities and $2 billion for downstream, has been under threat since Vice President Jusuf Kalla said in June gas from the project should be sold to the domestic market.

Yusgiantoro said Indonesia, the world's largest thermal coal exporter, would export 150 million tonnes of coal annually from 2015. It exported 140.35 million tonnes of coal in 2008.

"We will increase it by 20 million tonnes to 30 million tonnes per year up to the level that it can be massively exported," Yusgiantoro said. Currently, Indonesia uses 40 percent of its output locally and exports the rest.