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Jakarta Post

Govt approves revised development plan for gas-rich Masela block

  • Stefanno Reinard Sulaiman

    The Jakarta Post

Jakarta   /   Fri, July 12, 2019   /   03:13 pm
Govt approves revised development plan for gas-rich Masela block Energy and Mineral Resources Minister Ignasius Jonan (right) shakes hands with Inpex Corp CEO Takayuki Ueda (left) in Tokyo in May after they signed a heads of agreement on the further development of the gas-rich Masela block in the Arafura Sea. (Courtesy of/ESDM Ministry)

The development of the Masela block in the Arafura Sea has entered the final investment decision (FID) stage after the government approved the latest revision of the development plan for the gas-rich block.

Upstream Oil and Gas Regulatory Task Force (SKK Migas) chairman Dwi Soetjipto said Friday that Energy and Mineral Resources Minister Ignasius Jonan had recently signed the final revision.

“The minister [Jonan] inked the final plan of development [PoD] this week, and now he’s going to bring the news to the President, as it’s a project that involves a big investment sum,” he said in Jakarta.

A heads of agreement on the development of the gas block was signed by Minister Jonan and Inpex Corp CEO Takayuki Ueda in Tokyo in May.

The FID stage will lead to the final decision on the block’s development, with Inpex Corp, a Japanese oil company, as the operator.

Dwi said the now-signed revision settled, among other things, terms of the production-sharing contract (PSC) period, financial conditions and cost estimations.

Dwi, the former boss of state-owned energy giant Pertamina, further said that the revision was approved after the task force had consulted with the Corruption Eradication Commission (KPK).

“We have clarified several issues with the KPK that had been concerns of theirs. After the signing, several processes still need to be overseen, such as the procurement part,” he said.

The FID process, according to Dwi, was to be completed within a year after the revised PoD was signed, meaning early in the second half of next year.

He was upbeat that the signing would move forward the project, which also involves building an onshore liquefied natural gas (LNG) plant, to complete in a timely manner by 2027.

Previously, Inpex as the block’s operator and the government agreed on an estimated investment cost of US$18-20 billion for the Masela block’s development.

A series of changes to the plan in the past years, such as whether the LNG plant should be built onshore or offshore, has delayed the project.

The initial plan was to finish development of the project in 2018, a target that has since moved back to 2027, just one year before the Masela block’s PSC ends.

Once the development is completed, which is estimated to be in the second quarter of 2027, the block could produce 9.5 million tons of LNG per annum and 150 standard cubic feet per day (mmscfd) of gas.

The project is crucial for national energy security, with the government recently estimating that the country might be in short supply of gas by 2025.

The Masela block holds 10.7 trillion cubic feet of proven gas reserves.