Ann: Annual Report to shareholders, page-2

 

FromEWC’s 2018 AR I have cut and pasted  the following:

a.    ExecutiveSummary and

b.   Salientpoints

 

A.  Executive Summary

 

Sengkang LNGProject

In respect of our Sengkang LNGProject, we anticipate that we will complete the construction of the first 0.5MTPAtrain and associated works commissioning and commence operations in 2019/2020.We expect three additional modular trains to commence commercial production ofLNG at three or six-month intervals after the

first train begins production.

 

Eromanga andGilmore Gas Fields

We anticipate that we willrestart gas production from Eromanga in 2019, followed by gas production from Gilmore.

 

Philippines LNGHub

We envisage that we will completethe construction of the Philippines LNG Hub and associated works and commissioningand commencement of operations in 2019. We have also applied to the Departmentof Energy (DOE) for an extension of the existing development and operationpermit for the LNG Hub Terminal and expect

the extension to be providedimminently.

 

PhilippinesPower Project

We envisage that we will completethe commissioning of the first phase of the Philippines Power Project (being thecommissioning of the first 200MW gas turbine and associated works) in 2019. Thesecond phase of our Philippines Power Project (being the commissioning of thesecond 200MW gas turbine) and third phase (being the commissioning of the200/250MW steam turbine) will follow thereafter.

 

 Gilmore LNG Project

We envisage that we will completethe commissioning of the Gilmore LNG plant following the restart of gas productionfrom the Gilmore gas field.

 

 

B.  Salient statements (other than financial results)

 

SengkangPSC

During the year we made a formalapplication to extend the Sengkang PSC beyond 2022. We have been workingclosely with the appropriate authorities over the last few months and whilsttimetables are uncertain,

we are optimistic of a positiveoutcome in 2018.

 

SengkangLNG Plant

This project is now well advancedwith key equipment, including four cold-boxes, compressors and ancillary equipmentalready installed on site. The LNG storage tank has been fully slipformed andis now subject to fit out. Jetty works have been finalised and loading armshave been installed. The interconnecting pipework and the installation of thecontrol and instrumentation systems are being completed.

 

We have experienced delays in theproject development due to the conditions required to complete the project financingwhich amongst other conditions require an agreement to be concluded with PLNfor the initial offtake of LNG from the plant. Commercial discussions continuewith PLN in regard to the potential offtake of LNG. The

timetable for commercial operationof the first 500,000 TPA train is determined by the outcome of thesediscussions.

 

EWC has held extensive discussionwith SKKMigas and PLN and have identified a commercial solution potentially acceptableto all parties on the price of the feedstock gas and the free on board (FOB)price of the LNG. This data is now being processed for approval through theappropriate channels in Indonesia. Once approved it will enable PT

SSLNG to finalise matters withthe Indonesian Banks for funding to bring the first phase of the project into commercialoperation.

 

The debt finance being sought bythe Group in connection to the Sengkang LNG Project is US$120 million. The Companysigned a Mandate with a leading Indonesian domestic bank, Bank Mandiri toarrange and syndicate this project debt financing in FY15. We are now in theprocess of updating and discussing this mandate in view of recent

positive developments, and theseterms will need to be updated at the appropriate time.

 

PhilippinesLNG Hub

The Philippines LNG Hub andassociated works are well advanced. When completed in 2019, this LNG Hub willprovide regasified LNG to the power plant discussed below, in the interim theLNG will be provided from LNG Carrier “Ocean Quest”.

 

 

Philippines Power Plant

Our Philippines LNG Fired PowerProject in Pagbilao is well advanced. The 2 × 200MW gas turbines have beenplaced onto their permanent foundations and erection of auxiliary equipment isnow in place.

Works are ongoing to bring theseturbines into commercial operation as soon as possible after financial close ofthe project financing with the target date of the first unit being brought intocommercial operation

in 2019 and the second unitwithin 4 months thereafter subject to capacity availability on the transmissionsystems.

 

In February 2017, the NationalGrid Corporation of the Philippines (NGCP) has confirmed they have now receivedclearance from the Electricity Regulatory Commission (ERC) to develop asubstation in Pagbilao, Quezon Province. This additional substation will enableNGCP to address the capacity limitation of the existing Tayabas substation and accommodateadditional generation capacities from new power plants being built in QuezonProvince including the full

capacityof our 650MW combined cycle LNG fuelled power plant.

 

With the location of the substationidentified we were able to move quickly and on 27 November 2017 we announcedthat we had entered into an Agreement with a reputable Land Agent, who togetherwith the Quezon Province, had secured land agreements with individual landowners which would deliver us Right of Way access from our power plant to thenew sub station, a distance of approximately 12 kilometres. The Right of Waywill give us the right to construct, operate and maintain a transmission lineover this right of way. We have been

working with the land agent andQuezon Province to ensure that all agreements are capable of registration toallow annotation of the titles. We have commenced the acquisition process forthe rights of way already. ….. and then construct the transmission line.

 

We continue to work with Landbankand the Development Bank of the Philippines (“DBP”) to secure debt funding for thepower plant project. Both banks have repeatedly re-affirmed their support toour project while having recognized the delay caused by the transmissionarrangement. With the issue largely resolved, the banks recently have providedus with the updated financing terms and conditions for the Pagbilao powerplant. Upon our acceptance, these terms will be processed through theirrespective internal approvals, and after approval, will lead to a process tosecure draw down of debt facilities. We expect debt drawdown will take place bythe end of 2018, or early 2019.

 

On 28 November 2017 we announcedthat the NGCP had given us technical approval to connect to the adjacent 230 KVline for up to 200 MW on a temporary basis. We have also secured a temporaryconnection to the 230 kV line that is adjacent to our power plant.

 

 

 

Eromanga and Gilmore gas fields

During the year we made acommitment to re-start gas production from our Eromanga and Gilmore gas fields,given the high price of gas in Australia. We expect gas production willcommence from the Eromanga field in the second half of 2019, followedsubsequently by Gilmore in 2020.

 

Each of the Eromanga and Gilmorefields are connected to existing processing facilities that we own and have a throughputcapacity of 12 TJ of gas per day, allowing us to produce up to 24 TJ per daywhen fully utilised. Both facilities are connected to existing gas productionwells and the broader Queensland gas pipeline infrastructure. In addition, theEromanga facility has the potential to provide additional regional infrastructureto enable the unlocking of third party stranded gas resources.

 

PEL96 joing venture (33% EWC)

Our PEL 96 joint venturesuccessfully drilled the “Jaws-1” well, which is now undergoing a process of dewatering.The JV expects to be able to determine the commerciality of this programme overthe next few months.

 

As disclosed to the market byStrike Energy, during the year the JV completed the drilling of the JAWS-1 welland successfully completed the seven stage fracture stimulation for the well.The well is currently going through a dewatering process which is expected tolast several months, after which time a decision on commerciality can be taken.