ESDM Auditing of Inpex Funds US $ 1.6 M

A letter from the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) was sent to the editor of KONTAN. The letter numbered SRT-0138/SKKMA0000/2017/SO is related to the development of Abadi Field, Masela Block.

Blogger Agus Purnomo In SKK Migas

 The SKK Migas letter was addressed to Inpex Masela Ltd. dated 22 May 2017. In the letter, the government agreed to all Inpex's wishes in developing the Masela Block. The Ministry of Energy and Mineral Resources (ESDM) confirmed the letter. ESDM admits that the government is encouraging Inpex to immediately conduct a preliminary design study of the Abadi Field, Masela.

Abadi Field, Masela Block.

There are five important points in the letter. First, the government is willing to replace US$ 1.6 billion in cost recovery. Second, SKK Migas approved a production capacity of 9.5 million tons of liquefied natural gas (LNG) per year and pipe gas of 150 mmscfd.

Blogger Agus Purnomo In SKK Migas

 Third, Inpex received a seven-year change of time, from the contract expiring in 2028 to 2035. This is because since 1998 the policies in the Masela project have often changed. Fourth, SKK Migas will discuss the addition of the Masela contract for a period of two to 10 years. Fifth, the location of the onshore LNG plant around Yamdena Island, West Saumlaki, East Saumlaki, and Kore on Selaru Island.

 Arcandra Tahar, Deputy Minister of Energy and Mineral Resources confirmed that SKK Migas' letter to lnpex is being audited, including approval of a refund of approximately US$1.6 billion to Inpex Masela Ltd.

"It doesn't necessarily mean that the letter given is approved, but it will be audited first," said Arcandra.

 The replacement of US$ 1.6 billion is not in the form of cash, but cost recovery when the Abadi Field is already in production. According to the contract, Masela Block will continue to use cost recovery profit-sharing instead of a gross split.

 Meanwhile, Fahmi Radhi, an Energy Observer from Gadjah Mada University, said that the state should not spend US$ 1.6 billion for Inpex Masela Ltd. as compensation for the presidential decision to move the refinery from onshore to offshore.

"Reimbursement of that amount does not guarantee that the Masela Block will start operating immediately. Inpex Masela Ltd. still needs to recalculate for offshore operations," he added.

Unfortunately, Amien Sunaryadi, the Head of SKK Migas, did not answer KONTAN's confirmation about the replacement of the funds.

 Deputy for Procurement Control of SKK Migas, Djoko Siswanto, only answered briefly. "Sorry I don't deal with that anymore," he said.

 Inpex Corporation Senior Communication Manager Usman Slamet also did not answer the question of the change in funds. The government targets that within three months there will be gas buyers for the Masela Block.

"We prioritize domestic first," said Arcandra, Sunday (30/7).

 Now, the government is waiting for lnpex and Shell to do a pre-Front End Engineering Design (feed).

"The SKK Migas letter is ready, they should start working," said Arcandra.

The Masela Block is managed by PT Inpex Masela Ltd.(65%) and Shell Upstream Overseas Services Ltd (35%).

Kontan, Page-14, Monday, July 31, 2017