Japan’s Chiyoda Wins Pre-FEED Contract of INPEX’s Masela Block

Masela Block - Photo by INPEX

JAKARTA (TheInsiderStories) – Consortium Japan’s Chiyoda Corp., and local firm PT Synergy Engineering announced has been won a front-end engineering design (Pre-FEED) contract by INPEX Corp., for the Subsea Umbilicals Risers and Flowlines and Gas Export Pipeline facilities of the Abadi LNG Project in Indonesia.

Pre-FEED will be an important step to formulate revision of a field development plan (PoD). As previously known, the PoD revision was made to increase LNG production capacity while still using the floating refinery scheme.

INPEX through is unit INPEX Masela Ltd., is currently conducting two options of onshore pre-FEED locations, namely in Aru and Jandena islands. The company is undertaking Pre-FEED studies for the Abadi field development in the Masela Block, located in the Arafura Sea with an onshore concept, under the supervision of the Indonesia Government Special Task Force for Upstream Oil and Gas Business Activities.

Last year, Indonesian Energy and Mineral Resources Minister (MEMR) Ignasius Jonan is urged INPEX, a giant oil and gas company of Japan, to accelerate the pre-FEED for the development of Masela Block. The minister has also asked INPEX to prepare two pre-FEED with two capacities, namely 9.5 million tons per annum plus 150 million standard cubic feet (MMSCFD) and 7.5 MTPA plus 474 MMSCFD.

Masela Block is believed to have gas reserves of 10.73 trillion cubic feet. Currently, INPEX holds 65 percent interest in Masela Block and the remaining 35 percent is owned by Royal Dutch’s Shell. State-owned oil& gas producer PT Pertamina has expressed its interest to acquire stakes in the Masela Block.

Inpex has earlier decided to develop offshore LNG processing facilities, but President Joko Widodo government decided to build onshore processing facilities, forcing INPEX to restart the plan of development  as well as FEED of the project. In addition to developing LNG plant, the government is planning to develop petrochemical complex nearby the LNG plant.

The Indonesian government has agreed to extend INPEX’s operational permits for developing Masela natural gas project in the country’s east by up to 27 years, once it expires in 2028. The agreement was made after minister Jonan met with Toshiaki Kitamura, CEO of Japan-based  Inpex Corp, the block’s operator, in Tokyo last year.

The Ministry extended the contract for 20 years and then added seven more to compensate for an earlier government mandate for the project to be built on land rather than as a floating facility as had been proposed earlier.

The Masela Block agreement, signed in 1998. The Indonesian government hopes that Inpex can immediately start the gas field project.

Inpex entered into a production sharing contract with the Indonesian Government in October 1966, at that time acquiring a 100 percent interest in the Offshore Mahakam Block. The Attaka Unit was established in April 1970 through the unitization of part of the adjacent blocks owned by INPEX and Unocal (now Chevron), with each company taking a 50 percent interest.

Production of crude oil and natural gas has continued since 1972. INPEX farmed out 50 percent of its interest in the Offshore Mahakam Block to CFP (now TOTAL) in July 1970.

This venture subsequently made a series of discoveries in the Bekapai (oil), Handil (oil), Tambora (oil and gas), Tunu (gas), Peciko (gas), Sisi and Nubi (gas) fields, as well as the South Mahakam Gas Fields (gas), each of which has continued to produce crude oil and natural gas.

The crude oil and condensate produced from these fields are shipped mainly to oil refineries and power companies in Japan by tanker from the Santan and Senipah terminals. Most of the natural gas is supplied to the Bontang LNG Plant, and then shipped as LNG to customers in Japan and elsewhere.

The Offshore Mahakam Block has begun to see output decline after more than 40 years of production. In 2012, impediments at production wells led to a large drop in output, in addition to natural attrition.

Thereafter, successful steps were taken to control the decline in production by advancing efforts to counter sand problems and accelerate the pace at which the Company undertakes development well drilling. Despite these endeavors, production is still expected to decrease gradually in the future.

INPEX has been in discussions with Pertamina and TOTAL concerning participation in the block after 2018.

Email: theinsiderstories@gmail.com