Shell Corporation, which is a participating interest holder (PI) in the Masela Block, is reported to be planning to leave the oil and gas block. However, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) ensures that the Abadi LNG Project, the Masela Block will continue.
Dwi Soetjipto
SKK Migas Head Dwi Soetjipto admitted that his party had not yet received notification that Shell was releasing its 35% participating stake (farm out) in the Masela Block. The issue of Shell leaving the Masela Block will not stop the Abadi LNG Project. Inpex will continue the project.
the Masela Block
"KKKS (cooperation contract contractor) is committed to continuing the project," he said.
Meanwhile, SKK Migas Deputy for Operations Control Julius Wiratno added, so far, the farm out plan is still limited to discussions between Shell and Inpex as partners.
"There will be an approval from the Minister of Energy and Mineral Resources (ESDM) if it is certain [to release participating shares] right," he said.
The issue of Shell will sell its participation in the Masela Block is not the first time it appears. In May last year, this issue also surfaced following Shell's plan to release a number of assets that had generated the US $ 30 billion in funds.
From the sale of PIs in the Masela Block, at that time Shell was eyeing for funds in the amount of US $ 1 billion. However, the issue was denied by SKK Migas at that time.
Meanwhile related to the issue of Shell's withdrawal, Inpex Masela Ltd's Acting Corporate Communication Manager Moch N Kurniawan revealed, his party was not in a position to answer the commercial activities of the oil and gas company. He said he was still focused on developing the Abadi LNG Project, the Masela Block.
"As operators of the Abadi LNG Project and with the support of the Government of Indonesia, we are confident that this project will continue and we are actively working to implement a PoD (the plan of development) approved by the Government of Indonesia," said Kurniawan.
The Abadi Project is targeted to start operating in the second quarter of 2027. The project, valued at the US $ 19.8 billion, which is worked on by Inpex Masela Ltd, is projected to produce 150 MMSCFD of the pipeline through LNG and in the form of LNG 9.5 million tons per year.
Covid-19 affected
Meanwhile related to the progress of the Abadi LNG Project, Julius said, currently, the geological and geophysical survey activities were hampered due to the Covid-19 pandemic. At the end of March, Inpex was supposed to start mobilizing survey equipment but was eventually postponed due to Covid-19.
Until now, there is no certainty when the mobilization of tools and labor will continue. However, it is not certain that the delay in survey activities will make the target operation of the Abadi LNG Project backward. The reason is, this project has not been fully ongoing
"And [the process] is still long, because the target [operation] is 7-8 years. However, there will definitely be recovery efforts, "said Julius.
All parties are aware that the Covid-19 pandemic is hitting the oil and gas business, not only in Indonesia but also globally. Therefore, all companies also recalculated their business. The impact of the Covid-19 pandemic on the Abadi LNG Project was also disclosed by Dwi.
This impact is not only on project work, but also on gas marketing which is difficult because buyers still see the situation. However, he will try to prevent the project from backing down.
"We are still discussing with Inpex so that onstream does not retreat from 2027," he said.
In terms of gas marketing, so far, Inpex has only received a commitment to purchase gas by PT PLN (Persero) 2-3 million tons per year and PT Pupuk Indonesia (Persero) 150 million standard cubic feet per day / MMSCFD. At least, around 80% of the 9.5 million tons per year gas production must have a purchase commitment so that a final investment decision / FID can be achieved.
Based on SKK Migas data, as of last March, the work on the approval of the Abadi Project environmental impact analysis (Amdal) still reached 43.41% of the target of 47.27%. In addition, the auction process for front end engineering design / FEED of onshore liquefied natural gas / LNG refinery facilities, floating production, storage and offloading (FPSO) facilities, gas pipelines, and umbilical subsea facilities, risers, and flowline (SURF) is still ongoing.
Investor Daily, Page-10, Thursday, July 9, 2020
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