Shell is fleeing from the Masela Block

Head of SKK Migas Admits Poor Oil and Gas Condition.

Royal Dutch Shell Plc. (Shell) left the Masela Block Abadi Gas Project. Where currently Inpex Corporation (Inpex) as the largest Shell holder of the block is looking for a replacement for Shell.

"That's right (flee). Inpex is looking for a replacement," explained SKK Migas Deputy of Operations Julius Wiratno.

the Masela Block

Julius explained that the reason for Shell's flee from the Masela Block was because of the cash flow conditions affected by the co-19 pandemic situation. Shell decided to focus on other projects that were taking place in Indonesia. 

sHell

    Just so you know, Shell has a participation stake in the Masela Block of 35 percent and 65 percent by Inpex Corporation. Other than that. The Regional Government also confirmed that they would receive a 10 percent share of participating shares.

"In some other projects in other countries, it is not going well or not going well so that the company's cash flow is not good. They focus first on several projects that have already taken place," explained Julius.

He continued, currently, both Inpex Corporation and Shell are continuing discussions on options for taking full participation rights by Inpex. In addition, the option to search for new partners by Inpex also appears. Previous. 

      

Dwi Soetjipto

    The Head of SKK Migas, Dwi Soetjipto, mentioned that the condition of the LNG business that is currently in decline has indeed made some oil and gas companies worry about the project implementation. Including for the Masela Block.

"Currently the oil and gas industry is facing serious problems (including) LNG prices. "There is a fear of project owners like Masela project execution going forward," he said a few days ago.

Julius explained, it is not impossible that the project implementation time will increase. But he ensured, Inpex was committed to completing the project on time. The Masela Block is targeted to be streamlined in 2027.

The long road

The news about Shell's flee from the project, whose investment value reached 20 billion US dollars, is not new. Previously, in mid-May 2019 ago. Nevertheless, both parties continue to work together on the Masela Project. On the other hand, the Masela Project is also being faced with a number of works such as land acquisition and product buyer search.

The journey of the Masela Block liquefied natural gas (LNG) jumbo refinery project in the Tanimbar Islands in Maluku Province is still long. The Masela Block is targeted to produce 421 million cubic feet per day (mmscfd) of gas and 8,400 barrels of oil per day. 

    In addition to being constrained by land issues, Inpex Corporation and Shell Indonesia as the operator have not yet succeeded in finding potential buyers of the liquefied natural gas product. Just so you know, previously Inpex Masela Ltd had entered into an MoU of buying and selling gas from the Abadi LNG Project.

PT Perusahaan Listrik Negara (Persero)

The Masela gas production was purchased by PT Perusahaan Listrik Negara (Persero) and PT Pupuk Indonesia (Persero) in February. 

PT Pupuk Indonesia (Persero)

    The memorandum of understanding was intended to start discussions on sales and purchases to supply LNG gas to gas power plants operated by PLN and natural gas at 150 million standard cubic feet per day (mmscfd) for the co-production refinery to be built by PT Pupuk Indonesia. SKK Migas targets that the buyer search process is expected to be completed in 2021.

Surya, Page-7, Monday, July 6, 2020