Inpex Is Requested To Immediately Submit Masela Block Development Plan

The government asked Inpex Corporation to immediately submit a plan of development for the Abadi Field, Masela Block. Referring to the Indonesia Natural Gas Balance 2018-2027, the Masela Block is targeted to start operating in 2027.

the Masela Block

Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM) Djoko Siswanto said, his party wanted the Masela Block POD to be completed this year. Thus, the gas project in Eastern Indonesia can be started next year, such as procurement auctions.

"Quickly submit the POD. Inpex promised to quickly submit the POD for the Masela Block, "he said in Jakarta, recently.

It hopes that the POD can be submitted by Inpex at least next month. Currently, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) is still discussing the preparation of this Masela Block POD with Inpex. Furthermore, regarding the incentives needed or will be given for this project, it still has to wait for the preparation of the POD to be completed.

"The incentives will later be seen after the overall cost. What is Inpex needed, delivered, "said Djoko.

Even so, Djoko added, the discussion of the application for the extension of the Masela Block contract had been going on. The government has decided to provide a seven-year contract extension for Inpex at the Masela Block. However, the Japanese oil and gas company requested another 20-year contract extension.

"After that (lnpex) ask for another 20 years, the administration is November 28. Our principle is okay, "he said.

However, he admitted that the extension for 20 years had not been administratively possible. To guarantee the continuation of the project, the government will provide an extension of the production sharing contract (PSC) for Inpex Corporation in the Masela Block for 27 years. So the new Masela Block contract will expire in 2055, instead of 2028 like the initial contract.

The decision was one of the results of a discussion between the Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan and CEO of Inpex Corporation Toshiaki Kitamura in October last year.

Previously, Deputy Minister of ESDM Arcandra Tahar stated that Inpex had completed the Masela Block's concept of engineering and design feasibility (Pre-FEED). In the Pre-FEED he said there would be a new investment value from the Masela Block Project. 

   Unfortunately, Arcandra is reluctant to specify how much the project investment refers to Pre-FEED. In his official statement, Inpex once explained that the Pre-FEED was an important step to begin the development of the Abadi Field Project.

Furthermore, Inpex will prepare a revised POD referring to the Pre-FEED results and discussions with the Indonesian side so that the project becomes economically efficient and competitive.

"After the POD revision is approved by the government, various evaluations including detailed design (front end engineering design / FEED) will be carried out so that final investment decision can be achieved," said the official statement.

As is known, initially there were two options for the capacity of the Masela Block liquefied natural gas (LNG), depending on domestic gas requirements. However, PreFEED was finally carried out with one production capacity option and one island. This is in accordance with the decision after the visit of the Minister of Energy and Mineral Resources to Japan on May 16, 2017.

Meanwhile, the warrant stated that the capacity of the LNG plant was set at 9.5 million tons per year, and gas pipeline production was 150 mmscfd. The Pre-FEED includes offshore to land pipelines, offshore facilities, and LNG refineries, as well as refinery locations.

The Masela Block contract signed in 1998 was managed by Inpex as an operator with 65% share ownership and Shell Upstream Overseas Services by 35%.

Investor Daily, Page-9, Thursday, Nov 1, 2018