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Malaysia’s Coastal Contracts proposes JV deal with JSK

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LNG Industry,

Coastal Contracts has announced that it has entered a joint venture (JV) agreement with Indonesia’s PT Jaya Samudra Karunia Internasional.

The company claims that it has entered a binding Memorandum of Understanding (MoU) with PT. Jaya Samudra Karunia Internasional (JSK), PT. Jaya Samudra Karunia Gas (JSK Gas) and Mr Yudha Kurniawan Tanos. Under the MoU, Coastal Contracts will obtain 215 ordinary shares in JSK Gas from both Yudha and JSK for US$6 552 428.

Upon the date of completion, JSK Gas will issue 1500 new ordinary shares at a price of US$9465 per share (US$14 197 52 overall) to the company or its subsidiary.

Upon completion, the purchase consideration and shares consideration will be subject to adjustment. Subsequently, a conditional share purchase agreement, shareholders agreement, deed of transfer, and all other required documents related to the proposed JV will be entered. Once complete, the company will hold 1715 ordinary shares of Rp. 1 million each in JSK Gas, representing 49% of JSK Gas’ eventual issued and paid-up share capital and JSK Gas will be recognised as a joint controlled entity of Coastal Contracts.

The proposed JV involves the acquisition of 49% of ordinary equity interest in JSK Gas. This is subject to the MoU’s terms and conditions.

JSK was established in October 2004, and is headquartered in Jakarta, Indonesia. Recently, it has become involved in the LNG supply chain. For instance, it was awarded the LNG regasification and storage contracts to support a 200 MWh gas-fired power plant in Bali, Indonesia, by a state-owned company.

JSK Gas – a 99% owned subsidiary of PT JSK Internasional – owns 99% of PT Benoa Gas Terminal (BGT), serving principally as the regasification provider. BGT owns a 50 million ft3/d floating regasification unit (FRU), which started operations in 2Q16. The unit helps to supply gas to the 200 MWh power plant operated by PT Indonesia Power in Bali.

PT Pelindo Energy has awarded BGT a five-year build, operate and transfer agreement (BOT), under which the FRU will regasify LNG for PEL, for the gas-fired plant.

In turn, BGT owns 99% of PT Jaya Transportasi LNG (JTL), where the main activity is to provide LNG storage services to the power plant via its floating storage unit (FSU). A 10-year firm charter contract (with an extension option of 13 years) was awarded to JTL by PT JSK Abadi Lines – the party that PEL awarded the charter contract. Under the contract, the FSU stores and receives LNG from a carrier on a scheduled basis, and then provides the LNG to the FSRU, which then regasifies it.

Coastal Contracts claims that the proposed JV aligns with the Board of Directors’ initiative to tap into the growing LNG supply chain, and to grow its business activities in the LNG downstream sector. With the acquisition, together with JSK, as the owners of both the FSRU and the FSU that form a crucial part of the infrastructure that supports the 200 MWh power plant, Coastal Contracts will be capable of building a new portfolio of LNG related business, which is core to the LNG downstream sector, particularly for the small scale FSRU, which is not only suitable for the archipelagic region, but also requires less capital and a shorter construction period.

The company claims that the need to diversify the energy mix and switch to cleaner fuels, such as gas, means that there is potential for development of the FSRU market.

Edited from various sources by David Rowlands

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