[This story was first published on 6:38 p.m. It has been updated to recast with additional information.]

Banggai, Central Sulawesi. President Joko Widodo on Sunday inaugurated a slew of energy-related projects worth billions of dollars in Banggai, Central Sulawesi, as part of his administration’s commitment to ensure adequate energy supply in the country.

One of the major projects inaugurated by the president was a $1.2 billion Central Processing Plant operated by Joint Operating Body Pertamina Medco Tomori Sulawesi.

Joko inaugurated commencement of the facility that has a total capacity of 315 million standard cubic feet per day (mmscfd) and processes gas from the Senoro-Toili oil and gas block in the region.

As much as 250 mmscfd of gas from this facility will be supplied to a Donggi-Senoro liquefied natural gas plant and 55 mscfd will go to an ammonia factory developed by chemical manufacturer Panca Amara Utama.

Gas supply for Donggi-Senoro LNG plant will also come from Matindok block in Central Sulawesi which is operated by Pertamina EP, a unit of state energy company Pertamina.

“The government is committed to work towards energy sovereignty. In a bid to support tge industry, more energy supply [facilities] must be built. Among those are the ones inaugurated today,” Joko said in his keynote speech on Sunday.

Chief Economics Minister Sofyan Djalil, Coordinating Minister for Maritime Affairs Indroyono Soesilo, Energy and Mineral Resources Minister Sudirman Said, the head of the upstream oil and gas regulator SKK Migas, Amien Sunaryadi, as well as top executives from companies that have stakes in various projects in the region that were inaugurated were present at the event.

The president also witnessed the first cargo shipping of liquefied natural gas from a $2.8 billon Donggi-Senoro plant operated by Donggi-Senoro LNG (DSLNG). DSLNG is jointly owned by Pertamina Hulu Energi (29 percent), Medco LNG Indonesia (11.1 percent) and Sulawesi LNG Development (59.9 percent). Sulawesi LNG is in turn controlled by Japan’s Mitsubishi Corporation and Kogas (25 percent).

Ammonia plant

Joko also witnessed the groundbreaking ceremony for a new ammonia plant of chemical manufacturer Panca Amara Utama in Banggai, Central Sulawesi. The factory — worth $830 million — is one of the largest ammonia plant developments in the country over the last decade.

In a statement sent to GlobeAsia on Sunday, Panca Amara said the plant was built on 192 hectares of land and was set to have a production capacity of 700,000 tons of ammonia per year.

The plant will be fed a supply of natural gas from the Senoro-Toili oil and gas block with with a volume that can reach 55 mmscfd. Medco Energy, Pertamina Hulu Energi and Mitsubishi are managing the block.

Panca Amara is a unit of listed liquefied petroleum gas producer Surya Esa Perkasa. Ammonia produced from the plant is a key ingredient for fertilizer, explosives and other petrochemical products.

“The ammonia produced from Banggai district is a local initiative and is developed by local contractors,” said Garibaldi Thohir, president director of Panca Amara.

Panca Amara appointed Rekayasa Industri, a state-owned construction firm, as the main contractor to develop the plant.

Vinod Laroya, executive director of Panca Amara, said the company expected the project to help stimulate growth in Indonesia’s eastern regions.

IFC loans

In 2014, Panca Amara secured $509 million in syndicated loans led by the International Finance Corporation, a private-sector arm of the World Bank, along with seven other international banks.

“IFC’s investment in Panca Amara was the biggest in Asia in the last decade,” said Laroya, adding this reflects foreigners’ confidence for investment prospects in Indonesia.

An executive from Surya Esa, the parent company of Panca Amara, said the company would fully support the development of the plant.

“As a shareholder, Surya Esa’s fundamental will indeed become more solid. It will strengthen the value of the company in the long term,” said Isenta, a director at Surya Esa.

Last September, Kanishk Laroya, corporate secretary at Surya Eka, said the company expected to generate $270 million in revenue once the ammonia plant was fully operational and construction was expected to reach completion in 2016.

GlobeAsia & Investor Daily

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