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Jakarta Post

INPEX hands over revised proposal for Masela development

  • Raras Cahyafitri

    The Jakarta Post

  /   Fri, September 4, 2015   /  01:10 pm

INPEX Masela Ltd, the subsidiary of Tokyo-based oil and gas firm INPEX Corp., has submitted a revision to its plan of development (POD) for the Abadi gas field in the Masela block to the Upstream Oil and Gas Regulatory Task Force (SKKMigas).

According to an announcement on the company'€™s website, the revision involves a new plan to develop a floating liquefied natural gas (LNG) plant with 7.5 million tons in processing capacity, higher than the initial plan of 2.5 million tons.

The higher capacity is partly in response to higher gas reserves the company found in the field following the evaluations of three appraisal wells drilled between June 2013 and April 2014.

'€œThe company concluded that development by a 7.5 million ton-class floating LNG is the optimal solution to replace the initially planned development in stages and has submitted the Revised POD to the Indonesian government authorities accordingly,'€ the company said.

The company has yet to reveal the investment needed to develop the project, but it is expected to be higher than the previous plan of US$5 billion. Also under assessment, the reserves at Abadi gas field can support production of 7.5 million tons of LNG for a period of more than 20 years along with 24,000 barrels of condensate per day.

INPEX is currently the operator of and holds 65 percent stake in Masela block. The other shareholder is Shell with 35 percent ownership.

The government awarded the contract for Masela block in 1998 for a 30-year period until 2028. Inpex is seeking an extension by 20 years until 2048 to make the project more economical and so the contractor can get a return on its investment.

Late last year following a visit of INPEX representatives, Vice President Jusuf Kalla said that an extension would be awarded if the firm performed well and accelerated the completion of the project by 2022.

SKKMigas spokesman Elan Biantoro confirmed that the regulator had received INPEX'€™s POD revision. He said that SKKMigas would process the proposal and make a decision on whether to approve it within a month.

'€œVarious subjects will be discussed following the revised POD submission, including the timeline of onstream, the lifetime of production and calculation of contribution to the state. However, the contract is the government'€™s domain,'€ Elan said.

The Abadi field project in Masela block, which is located in the Arafura Sea, is one of the country'€™s biggest deepwater gas projects that is expected to support rising energy demand in the future. Apart from Masela, there are several other deepwater gas projects, namely the Indonesia Deepwater Development by Chevron and the Muara Bakau by Italian ENI.

The country remains a significant liquefied natural gas (LNG) exporter in the world and is estimated to have a significant amount of gas reserves. However, the potentials are mostly located in remote frontier areas where infrastructure is poor, technically challenging and high risk.

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