Indonesian, Japan Inpex Co. agreed on Masela block' plan of development with an investment value of US$20 billion - Photo: Privacy.

JAKARTA (TheInsiderStories) – Indonesian government and Japan Inpex Corp., agreed on Masela block‘ plan of development (PoD) with an investment value of US$20 billion, said Energy and Mineral Resources (EMR) ministry. Both parties managed to achieve a win-win solution with a 50-50 percent profit sharing scheme.

Minister of EMR Ignasius Jonan said on Monday (05/28), an agreement with Inpex was made after 18 years of discussion.

“For a minimum yield of 50:50 and if the real cost falls, it can reach more than 58 percent for the country,” he said by adding that the investment would improve the domestic economy and employment opportunities for eastern Indonesia.

It said the development of the enduring field of Masela Block use an onshore refinery scheme. The proven reserves in the field located in the Arafuru Sea, North Maluku amounted to 10.7 trillion cubic feet (Tcf). The development costs are around $6-7 per barrel oil equivalent (boe) or 20 percent cheaper than the cost for the $8-9 per boe offshore scheme.

“The government continues to work hard so that Masela can immediately operate and provide the best benefits for the country and people of Indonesia,” said Dwi Soetjipto, Chairman of Upstream Oil and Gas Regulatory Task Force, in a written statement.

The final agreement was marked by the signing of the Minute of Meeting by Soetjipto and Takayuki Ueda, witnessed by Jonan. While the signing of the agreement between the Government of Indonesia and Inpex Corporation is planned to be held at the G20 countries meeting in Japan in the near future.

In addition to the amount of investment and profit sharing scheme, the government and Inpex should also have agreed on five requests submitted by the Japanese company for the development of the Masela Block.

Previously, Inpex reportedly submitted five requests. First, increasing refinery production capacity to 9.5 MTPA and 150 MMSCFD. The government has approved this request.

Second, a moratorium on contracts for 10 years. Regarding this request, the government has stated that it will only provide a moratorium in the form of adding a seven-year contract for Inpex and Shell as the Masela Block cooperation contract contractor.

Third, Inpex requested an internal rate of return of 15 percent. Fourth, requested that the costs incurred by Inpex and Shell related to the development of the Masela Block from the start of exploration to the manufacture of PoD Floating LNG were returned. The amount of this fee reaches around $1.6 billion.

Finally, the request for an acceleration of the licensing process to develop the Masela Block project. The PoD of the block is targeted to be approved by the government in the middle of this year. That way, the gas field project is expected to be able to produce in 2027.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com