Inpex: Good News Imminent on the Masela Block Project

Oleh Arnold Sirait 11 February 2016

The government"s decision would be the best for everyone.


KATADATA - After nearly six months of controversy, Inpex Corporation can see the light at the end of the tunnel for the development of the Masela Block. The government is set to announce its preferred scheme for the natural gas field in the Arafuru Sea. Many believe that the government's decision will be good news for Inpex as the operator of the block.

Inpex Senior Communications Manager Usman Slamet said that the company’s management had met with the senior officials. However, Inpex did not have the chance to meet President Joko Widodo, even though he had expressed a desire to meet the block’s investors Inpex and Shell at a closed meeting on Monday last week.

After a meeting at SCBD, Jakarta, on Tuesday evening (2/9), Usman explained that Inpex had been invited to the Palace by a presidential institution other than President. During the meeting, they discussed a number of issues and the government hinted that it would make a decision in the near future. "Good news will be coming soon," he said. 

Refusing to explain what he meant by ‘good news’, Usman also declined to say whether the government was set to approve Inpex’s proposal for an offshore development of the block where the natural gas will be processed using a floating vessel (FLNG). He would only say that the government’s decision would be the best for everyone. (Read: Stealing Clarity in Masela)  

Committed to making the best decision, the government has partnered with the University of Pattimura, University of Indonesia, and Bandung Institute of Technology to make a detailed evaluation of this mega project. This move was applauded by Inpex, said Usman, adding that Inpex would need investment of US$14.8 billion to develop the block under the FLNG scheme.

The FLNG scheme proposed in the revised plan of development (PoD) was approved by the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) on 10 September 2015. Inpex also proposed a number of revisions to the previous proposal for development of the block.

Inpex upped the figure for gas reserves from 6.05 trillion cubic feet (tcf) to 10.73 million cubic feet (tcf). FLNG capacity was revised from 2.5 million tons per year for 30 years to 7.5 million tons per year for 24 years. Natural gas production was also raised from 400 mmscfd to 1,200 mmscfd, and condensate production from 8,100 barrels per day (bpd) to 24,460 bpd. The block will begin production in 2023. (Read: Conflict behind Controversy over Masela Block Development )

Coordinating Minister for Maritime Affairs and Resources Rizal Ramli previously rejected the proposal, arguing that an onshore development would be preferable. He claimed that building onshore gas refineries would create a multiplier effect for the people of Maluku, such as the development of a petrochemical industry.

To resolve these differences, the Ministry of Energy hired British independent consultant Poten and Partners, which supported the FLNG option. Despite this, the Ministry of Energy remained undecided. Energy Minister Sudirman Said said that the decision on the Masela Block development would be taken by the President. (Read: Inpex: Masela Project On Schedule Despite Conflicting Ministers)

While waiting for the decision of the President, Sudirman hopes all parties will take a step back. He is worried that conflict will scare off investors, leaving the state with nothing.

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