ADV.L Regulatory News (ADV)

Andalas Energy and Power Plc - Operations Update

PR Newswire

London, February 24

27 February 2017

Andalas Energy and Power Plc

(‘Andalas’, or the ‘Company’)

Operations Update

Andalas Energy and Power Plc, the AIM traded Indonesian focused energy company (AIM: ADL), is pleased to provide an update on its activities in Indonesia including the completion of a feasibility study for its first 60 MW wellhead gas to power project in partnership with Pertamina, Indonesia’s national oil company (‘Project’) in the Jambi province of Sumatra. Andalas’ strategy is to develop a portfolio of at least five wellhead independent power producer projects (‘IPPs’) totalling 250-500MW of installed capacity fired with gas from proven fields.

Highlights

Andalas CEO, David Whitby, said “The results of the feasibility study by PLN Enjinering for our first gas to power project alongside Pertamina confirm what we have long known: not only is the Project viable but it can also play a vital role in satisfying local demand for power. Importantly, the Government recognises that Wellhead IPPs can play an important role in helping solve the country’s energy crisis. The recently announced new regulations have elevated Wellhead IPPs to a priority level within the Government’s 35,000MW programme. The Government’s new regulation governing Wellhead IPPs is exactly aligned with Andalas’ gas to power strategy and I look forward to informing shareholders as we progress our first project through to approval.

“Andalas was established to focus on a niche but nonetheless important and scalable gas monetisation strategy to contribute to solving Indonesia’s power crisis at the local level. In September 2016 we signed an agreement with Pertamina that gives us access to numerous potential gas fields, and the recent change in regulations from the Government, gives us confidence that we are working in a sector with enormous potential with a government that is continually renewing its support and emphasising the urgency with which it wishes to see projects on line.”

Feasibility Study

Andalas has now presented the feasibility study for the first Wellhead IPP project, which is to be located in the Jambi province of Sumatra. The report was prepared by PLN Enjinering (a division of PLN), the highlights and conclusions of the feasibility study are as follows:

New Regulations

The Ministry of Energy and Minerals published on 2 February 2017, three new regulations intended to foster the efficient and timely development of new electricity generating capacity in the Republic of Indonesia.

Regulation 11 2017 Utilisation of Natural Gas for Power Plants is intended to improve the utilisation of natural gas in the mix of energy for the generation of electricity and to guarantee the supply of natural gas at reasonable and competitive prices for the electricity sector. More particularly, the regulation provides that the procurement of wellhead power generation may be undertaken by direct appointment (i.e. without public tender). 

Project 2 and beyond

Pertamina have been quick to identify that the cooperation agreement with Andalas is a real opportunity to materially increase production of gas from its asset base. As a result, there continues to be genuine enthusiasm to work to expand the number of projects under the cooperation agreement, which in tandem with the recent regulations are expected to accelerate the expansion of Andalas’ strategy.

Andalas and Pertamina are now focused on identifying the location of gas supply for the next Wellhead IPP projects. Andalas is targeting the initiation of a further four new projects during the course of 2017 as it seeks to build towards its target of 500MW. Work to date highlights that the first target area should be the Jambi province area, within which Andalas and Pertamina have identified a significant inventory of gas fields with IPP potential. 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR). Upon the publication of this announcement via a Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.

**ENDS**

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