The Abadi Field development project, the Masela Block, located in the Arafuru Sea, Maluku is considered to be getting heavier. In addition to the uncertainty of buyers from the oil and gas block, liquid gas / LNG market conditions are also still difficult to predict.
the Masela Block
Currently, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) is reviewing the continuation of the Masela Block development project.
Dwi Soetjipto
SKK Migas Head Dwi Soetjipto said that the price of LNG which fell in the range of US $ 2 per MMBtu greatly affected the economics of the Masela Block project. According to him, the low price of LNG was influenced by the Covid-19 pandemic which hit almost all countries in the world, thus making demand is reduced.
"This is the fear of the project owner as in the Masela Block, project execution going forward," he said.
Dwi revealed, not a few Cooperation Contract contractors (KKKS) submitted a revised work plan this year, because they had to face a very difficult time.
SKK Migas Deputy for Operations Julius Wiratno added by looking at the current conditions, it was possible that the Masela project would be delayed. Julius had revealed that Shell Upstream Overseas Ltd. (Shell) decided to go out and the project, because of cash flow problems due to projects in other countries are stunted.
Inpex Corporation
"Inpex did not step down, which Shell resigned as a partner. All Inpex will be taken over or currently looking for potential partners, "he said.
However, later the statement was corrected.
"Until today Shell hasn't left yet, it's still a B to B discussion, negotiation. The project must continue even if it is limping, "he said.
When it was confirmed by Bisnis Indonesia, both Shell and Inpex management was reluctant to comment on the news of Shell's withdrawal in the project. Meanwhile, Shell originally held 35% of the share of participation in the project. The rest is held by Inpex and regionally-owned enterprises (BUMD) by 10%.
The Trisakti University Teaching Staff Pri Agung Rakhmanto assessed that if it was true that Shell resigned as a strategic partner in the project, the development of the Masela Block project would certainly not be easy. According to him, partner factors in the development of the Masela Block project added complexity to existing problems, such as certainty of gas buyers and Masela's production output.
On the other hand, he said, the condition of the global LNG market in the next 5 years is projected to also be in an oversupply condition with low prices. So the cost and economic development of the Masela Block will not necessarily be competitive to develop existing fields, "he said.
Inpex Corporation and Shell Upstream Overseas Ltd.
Based on the records, Inpex Corporation and Shell Upstream Overseas Ltd. (Shell) previously signed a cost recovery profit-sharing amendment contract, including an additional 7 years of allocation and extension of the Abadi LNG project with SKK Migas on October 11, 2019.
Bisnis Indonesia, Page-4, Monday, July 6, 2020
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