KUALA LUMPUR (June 20): Genting Bhd (KL:GENTING) on Thursday awarded a US$1 billion contract to Wison New Energies Co Ltd for the construction of a floating liquefied natural gas (FLNG) facility that will be deployed at Teluk Bintuni, West Papua.
The LNG facility is expected to have an annual capacity of up to 1.2 million tonnes. The tenure of the contract is estimated to last 27 months, Genting said in a statement.
The first drop of LNG is expected in the third quarter of 2026, which will also be the first FLNG facility in Indonesia and the 9th FLNG facility in the world, Genting said.
Feed gas for the facility will be supplied from the Asap, Merah and Kido structures within Genting’s concession area of the Kasuri Block in West Papua, it said.
To recap, the group’s 95%-owned indirect unit Genting Oil Kasuri Pte Ltd has a production sharing contract with BP MIGAS, the Indonesian oil and gas regulator. BP MIGAS had since been succeeded by SKK MIGAS. The contract was signed in May 2008.
The Indonesian government approved the Revised First Phase Plan of Development for the Asap, Merah and Kido structures on Feb 9, 2023, which allows the supply of 230 million standard cubic feet per day (“mmscfd”) of natural gas to the FLNG facility for 18 years, as well as another supply of 101 mmscfd of natural gas to an Ammonia and Urea plant to be built in West Papua, Indonesia for 17 years.
The nature of awarding the contract to Wison was entered between Genting's wholly-owned indirect unit Genting Oil & Gas Sdn Bhd and 95%-owned indirect subsidiary PT Layar Nusantara Gas through an engineering, procurement, construction and commissioning (EPCC) contract with Wison.
“Wison will construct the floating LNG facility in their shipyards located at Nantong and ZhouShan in China. After passing the yard performance test, the floating LNG facility will be towed to its final destination located at Teluk Bintuni, West Papua, Indonesia, where the final commissioning test will be carried out,” it said.
To ensure the project is completed within schedule, PT Layar Nusantara had on Sept 8, 2023, entered into a limited notice to proceed (LNTP) agreement for the purchase of long lead items worth US$43.04 million (RM202.73 million), noted Genting.
“The LNTP agreement has been extended further to cover the progress of the engineering work up to the date of signing of this EPCC contract including hull steel cutting on June 7, 2024 to enable first drop of LNG to be achieved in accordance with schedule in the third quarter of 2026."
To date, PT Layar Nusantara has committed to a total sum of US$188 million (RM885.54 million) for the LNTP agreement, which brought the total investment for the LNG project to over US$1 billion (RM4.71 billion) including the latest contract to Wison.
Genting said that the project will be funded by internally-generated funds and project financing. The company is also in the advanced stage of securing project financing from a group of Chinese and international lenders, it added.
Trading in Genting's shares has been suspended from 4.20pm on Thursday pending the announcement. Its trading will resume at 9am on Friday (June 21), its filing with Bursa Malaysia showed.
Genting was last traded at RM4.69, down one sen or 0.21%, giving the group a market capitalisation of RM18.18 billion.