Indonesian oil and gas field Masela Block in Arafura Sea, Maluku.

JAKARTA (TheInsiderStories) – Indonesian government renegotiated the Masela block‘ plan of development (PoD) with Japan’ Inpex Corporation, said the minister on Thursday (05/16). With this effort, its expected the giant gas block can operate soon.

Minister o Energy and Mineral Resources Ignasius Jonan explained the meeting was focused on to get the best option to finalize the Masela block’ PoD with an efficient costs.The block itself is one of the oil and gas fields with quite large gas reserves.

This field, which is often called the perpetual gas field, has been managed by Inpex and British oil producer’ Shell 30 years ago. During the negotiation, the government asked the contractor to change the development scheme which was originally offshore to land.

Both parties haven’t agreed on the amount of the block development costs located in the Arafura Sea, in the area of ​​Papua and Maluku provinces.

Inpex has taken several steps to determine accurate costs through the pre-front-end engineering design (Pre-FEED) mechanism. the Pre-FEED Work includes making initial designs of the Darat Abadi LNG plant and other Eternal LNG project facilities such as Floating Production Storage and Offloading, pipelines, also estimating project costs and schedule in the future.

In 2014, Inpex and Shell revised PoD after the discovery of new gas reserves in the Masela Abadi Field, from 6.97 trillion cubic feet (TCF) to the level of 10.73 TCF. In the revision, the two investors agreed to increase the capacity of the LNG facility from 2.5 MTPA to 7.5 MTPA with the offshore scheme.

As a consequence, Inpex must repeat the study process of LNG development with a new scheme. The plan is for refinery production capacity to reach 150 million cubic feet per day (mmscfd) of pipeline gas and 9.5 million tons per year (MTPA) of liquefied natural gas (LNG).

The government acknowledged, the problem of the two sides was also related to land and incentives, in which the contractor requested the acquisition of 1,400 hectares of land and is now being processed in the Ministry of Environment and Forestry.

While regarding incentives, the discussion was mainly related to split divisions in the gross split profit sharing scheme.

If both problems are resolved, then PoD will be agreed upon and will be developed with a capacity of 9.5 million tons of LNG per year and 150 MMSCF per day.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

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