HAS anybody seen an LNG facility lying about? We seem to be missing a couple of liquefied natural gas plants. In this corner of the universe, the mighty Energy World Corporation has more LNG projects on the boil than BHP.
Rivalling the oil majors Chevron and Shell, it has three in Australia, and one project each in Indonesia, the Philippines and Papua New Guinea – according to its presentation materials to the stock exchange – but Energy World’s sharemarket value remains a paltry $737 million. Why is this so?
Either this stock is the greatest bargain since Woodside was a penny dreadful or somebody has been purloining its LNG plants. They are nowhere to be seen. Can there be any other explanation?
One vile and unseemly character has made the scurrilous allegation that Energy World keeps on raising money to build the same LNG plant.
It will never actually build an LNG plant, claims this dastardly off-the-record source. It just says it is building an LNG plant to raise money from unsuspecting sharemarket dabblers.
Surely it was time to rise and defend the honour of Energy World, impugned as it was by such pusillanimous and despicable innuendo.
Alas, our petitions for an audience with chief executive Stewart Elliott at the group’s global headquarters in Hong Kong were to fall on deaf ears. Neither Stewart, nor his crack Energy World team, was available to respond either by phone or email.
How was its ”successful Alice Springs LNG operation” with the Northern Territory Power and Water Corp getting along? We called the NTPWC. ”We no longer have an LNG contract with them.”
How about Energy World’s planned 2-5-million-tonne plant proposed for the Western Province of Papua New Guinea, along with a deep-water port and power station? This development appeared to have been accidentally located – at least in a company presentation – on acreage already pegged by US oil group Talisman.
We called Talisman. ”Regarding your inquiry, we would like to inform you that Talisman has no arrangements with Energy World.”
That was peculiar. The tie-up had been mentioned in the PNG press and an editor told us, ”EWC clearly put Talisman’s part-owned fields in its presentation.”
Energy World rather got ahead of itself in late 2007 when it told shareholders it was ”building” its first LNG plant in Indonesia. It had just raised $100 million with the aid of its trusty broker Tricom Securities.
The following year, it returned to raise another $156 million from the mums and dads. ”Our first 500,000 tonnes per annum LNG liquefaction facility remains on target for production in the last quarter 2009,” was the line.
It banked a further $86.5 million in a share sale to investment guru Richard Chandler last year.
The money did not go to waste. Some $200 million left the company in ”property, plant and equipment” payments in 2008 and 2009.
Roughly $40 million went to Slipform Engineering (H.K.) Ltd, a company incorporated in the British Virgin Islands and wholly owned by the Energy World chief himself, Stewart Elliott.
Energy World’s latest annual report makes for an interesting read, particularly the related party deals in the rear of the Ernst & Young-audited accounts.
There is a $2.34 million fee for ”executive management services” paid to Energy World’s major shareholder, Energy World International (EWI). EWI is also owned by Stewart. But that’s just for starters.
EWI must have a property division, too, as it leases a couple of properties to Energy World, one being an apartment in Sydney’s leafy Seaforth for $6000 a month.
In true Demtelian spirit there is also a raft of other payments to Slipform: all up $13.4 million departing Energy World in the direction of Stewart’s private companies for ”engineering services” and so forth.
And Stewart’s services must be indispensable, as it appears Energy World has since struck another $US618 million worth of contracts with a suite of Stewart’s companies. More related-party transactions than a Greek wedding, in short.
The good thing for Stewart is that if Energy World ever went bust paying lavish consultancy fees to his other companies, Stewart would still be standing front and centre in the creditors’ queue clutching a humungous proof of debt. Were this to transpire, he would be agreeably placed to claim ownership again of the very LNG equipment he had already sold, and perhaps then vend it into another exciting opportunity to list on the stockmarket.
Perhaps Energy World could try its luck with an LNG plant in the basement of 100 Market Street, Sydney, below the Australian Securities and Investments Commission. An ASIC liquefaction facility would complement its portfolio of projects nicely. Although we must confess the latter, projects that is, have been hard to find.
The South Australian Chamber of Mines and Energy didn’t know anything about the LNG plant proposed for Port Bonython. Nor was the relevant state agency or Quilpie Shire Council aware of Energy World’s impending LNG plant in Gilmore in Queensland.
Finally, though, there were traces of EWC LNG DNA. Upon inquiry into the touted Phase I, 2MTPA LNG plant and 500k pipe proposed development at Abbot Point we got this: ”Energy World Corporation (EWC) is known to the office of the Queensland Co-ordinator-General and EWC is discussing a proposal with officers that relates to Abbot Point. The next steps in progressing this proposal rest with EWC.”
Take that, vile sceptics!
EWC’s claims have been greatly exaggerated and, although the company has been unable to deliver on its promises and properly inform the market, it is fair to point out that its claims to build an LNG facility in Indonesia are fair dinkum. For the benefit of EWC shareholders, here is an email received overnight from the chief financial officer of Chart Industries in the US:
I can confirm that Chart received a purchase order in June 2007 covering the LNG liquefaction process design together with the supply of proprietary equipment including Cold Boxes, Brazed Aluminum Heat Exchangers, Air Cooled Heat Exchangers and ancillary equipment for four (4) 500,000 tons/year LNG Liquefaction Trains to be installed by EWC in Southeast Asia. The purchase order value was in excess of USD $100 million. The equipment was delivered to EWC on various dates commencing November 2008 with the final piece of equipment delivered in early 2012.
Subsequent to receipt of the above purchase order, Chart and EWC signed a Strategic Alliance Agreement in August 2007 to jointly pursue additional LNG liquefaction projects that EWC will build, own and operate. This Agreement remains in place at this time.
Chart has also provided a similar scope of equipment to EWC for a smaller 160 tons/dayLNG Liquefaction project to be installed by EWC in Australia. This equipment was delivered mid 2011.
Should Business Day receive responses to questions from EWC claims relating to the central Australian operation and PNG operations these will be published.