ADV Advance Energy Plc

25 April 2017

Andalas Energy and Power Plc

(‘Andalas’ or the ‘Company’)

Update on Tuba Obi East

Andalas Energy and Power Plc, the AIM listed Indonesian focused energy Company (AIM: ADL), provides an update on the Tuba Obi East oil and gas concession (‘TOE’) in the South Sumatran Basin.  

Tuba Obi East (“TOE”) is one of a cluster of three gas fields identified by Andalas as suitable for development as an integrated wellhead independent power producer project (‘IPP’).  The other offsetting fields, which are operated by Pertamina, are known as Karang Makmur and Simpang Tuan.  Pertamina has indicated that following the expiry of the TOE technical assistance contract (“TAC”) that it will retain and develop TOE alongside the offset fields as a single integrated unit (the “MJ Cluster”).

This is in line with the Company’s cooperation agreement signed with Pertamina, Indonesia’s national oil company, in September 2016, to develop wellhead IPPs utilising Pertamina’s significant inventory of gas assets.  As part of this agreement, in December 2016, Andalas submitted its first 2 x 30 MW Wellhead IPP project development with Pertamina for government approval.  The Company can now advise that this first project envisages sourcing gas from fields included within the Pertamina owned MJ Cluster, which is now expanded to include the gas resources at TOE.  The advantages of Pertamina operating TOE are as follows:

• Pertamina will fund the upstream development at the MJ Cluster, which has the potential to exceed $50million.  Andalas believes it can create more value by concentrating its resources on progressing its Wellhead IPP project and pipeline;

• Pertamina, as owner of the enlarged MJ Cluster, has the technical and financial resources to fast track the development of this asset to match Andalas’ ambitions to use the gas to develop the MJ Cluster IPP project;
• The company’s timetable and ability to meet its target of 250-500MW of installed capacity is enhanced by this decision.

Andalas CEO, David Whitby, said: “As our recent project submission and project inventory updates attest, our cooperation with Pertamina continues to strengthen, therefore rather than focus our resources on developing a single smaller gas to power project at TOE, we are focussed on continuing the momentum we have in developing a portfolio of at least five projects with Pertamina that each have the ability to add significant value.

 “The inclusion of TOE in the MJ Cluster is a logical next step with the benefit of removing from Andalas the obligation to fund an upstream gas project that was not fundamental to our wellhead IPP strategy. At the same time with Pertamina now the operator, TOE is back in the hands of our partner who has the resources, technical capability and the desire to develop the broader MJ Cluster unit to supply Andalas’ first wellhead IPP project.”

**ENDS**

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