Andalas Energy and Power has signed an agreement with PT Pertamina (Persero) (Pertamina) to establish a joint working and steering committee with the objective to fast-track commercialization of marginal gas fields within Pertamina’s acreage in Indonesia.

The execution of this Agreement represents substantial progress by Andalas in the implementation of its gas-to-power strategy with a world-class partner.  Pertamina, listed in the global Fortune 500, is Indonesia’s national energy company and holds an unrivalled position within the country’s energy industry.

This Agreement is in line with Andalas’ plan to utilise its team’s expertise and local knowledge to make a significant contribution at the local level towards fulfilling the Government of Indonesia’s goal of reducing the country’s power shortfall.  Indonesia is seeking to increase electricity capacity by 35,000 Megawatts (‘MW’) by 2019.

Agreement recognises that Pertamina and Andalas’ personnel have a proven track record in monetising gas fields in Indonesia;

Initial focus is to identify at least five stranded gas fields within Pertamina’s acreage in Riau, Jambi and South Sumatra provinces which are suitable for sub-100 MW gas-to-power development in the form of an independent power project (‘IPP’);

All target areas have an abundance of stranded gas fields that ADL has identified;

All field and IPP development plans will be based on modular/mobile power plants (‘MPPs’), a proven technology that is cost-effective, flexible, scalable and ideal for satisfying power demand at the local level in a wide range of operating environments;

Once the initial five fields have been identified both parties will sign an exclusive joint development agreement (‘JDA’) to design, construct, fund and operate the IPPs – suitable partners may be invited to join Pertamina and Andalas in the JDA for each development; and

Both parties will work together to generate IPP commercialisation plans for each of the identified marginal gas fields covering all key aspects of any future investment and approval; covering project design, project cost and economic analysis and all regulatory requirements.

Andalas CEO, David Whitby, said: “Working in partnership with Pertamina, the Indonesian national energy company, is in our view a testament to the strength of Andalas’ gas-to-power business concept and the calibre of both our Board and local management team, who have an intimate understanding of the country’s energy sector.  Andalas already has the team and network to make sure the partnership has at its disposal everything needed to deliver the targeted IPP commercialisation plans.

“Pertamina holds an unrivalled position and has in-depth knowledge of Indonesia’s oil and gas sector, as well as a substantial portfolio of stranded gas discoveries in South Sumatra where there is a major need for power. The Andalas team has a significant track record in monetising gas assets in Indonesia since 1990.  Together Pertamina and Andalas are uniquely positioned to make a significant contribution to Indonesia’s economic growth by helping to meet the country’s growing demand for electricity at both the industrial and household level.

“Together with our ongoing initiatives at TOE, this Agreement with Pertamina promises to fast track our strategy to build an integrated gas-to-power producer with a portfolio of interests which have the potential to generate significant value for shareholders.  As a result, we very much look forward to working closely with Pertamina to deliver projects that will not only help us achieve our objective, but importantly will benefit the people of Indonesia.”