Linc Energy has entered into formal agreements with PT Sugico Graha to licence Linc’s proprietary Underground Coal Gasification (UCG) technology in Indonesia. Sugico plans to deploy UCG across its significant coal acreage, with initial projects planned for South Sumatra and South Kalimantan.

Sugico is in the early stages of developing the two commercial UCG projects. The initial project, in South Sumatra, will use UCG produced synthesis gas to generate electrical power. This project is in the concept phase of development.

At this time, the first phase of the project is expected to be sanctioned and reach financial closure during 2016 and achieve designed specified performance during 2017.

The formal agreements consist of an Intellectual Property Licence Agreement supported by a services agreement. Key aspects of the agreements are:

• A licence to use and exploit Linc Energy’s intellectual property (IP Licence), within Indonesia;
• Sugico to pay a licence fee of US$17.5 million in two tranches.
• Production payment (royalty) of US$0.3125 per MMBTU of Syngas; and
• Sugico will pay Linc Energy for any services provided in relation to the development of any UCG projects at commercial rates.

The second project in South Kalimantan will use UCG produced synthesis gas to produce chemicals. This project is in the concept phase of development, but is expected to be sanctioned in 2017, reach financial close during 2017 and achieve designed specified performance by 2020.

Linc Energy’s CEO and managing director Craig Ricato said, “Our agreement with Sugico to develop commercial UCG projects in Indonesia is an exciting development for the company.

This agreement has been achieved after a lengthy technical evaluation process by both parties and delivers a key strategic milestone in the commercialisation of our proprietary UCG technology in Asia. We are extremely pleased to have the opportunity to work closely with Sugico to deliver projects in Indonesia whilst we continue to develop further opportunities in the Asian market.”

Linc Energy is a global oil and gas company with a broad portfolio of oil, gas and coal assets. The company applies conventional production techniques and its proprietary advanced technologies to extract value from the development of these resources. Linc’s proprietary UCG technology is a method of converting stranded coal resources into a valuable synthesis gas (Syngas) in situ.

Sugico is a fast growing mining and energy company with its corporate headquarters in the heart of Jakarta. Formed in 1986, Sugico has rapidly expanded its coal, gas, and mineral resources across Indonesia. In addition, it has activities in oil & gas, gold, power plants and infrastructure.