Rizal Ramli wants Inpex to consider developing onshore LNG plant instead of floating LNG

JAKARTA (rambuenergy.com) – Coordinating Minister for Maritime Affairs and Resources Rizal Ramli called on the Energy and Mineral Resources Ministry and the Special Task Force for Upstream Oil and Gas (SKK Migas) to push Inpex Corporation to develop onshore LNG plant, instead of developing floating LNG facility (FLNG) as currently being proposed by Inpex.

Early this month, SKK Migas said that it has received final draft revision of the Plan of Development (PoD) of Abadi Field within Masela Block from Inpex Corporation.

Inpex requested earlier to revise the PoD of the block as it aims to double the capacity of its floating LNG vessel (FLNG) from 2.5 million metric tons to 7.5 million metric tons. The decision was made following the discovery of additional gas reserves in the area. Inpex plans to add one more train to three units with an estimated mamoth investment of US$14 billion.

He argues that the development of onshore LNG pant will stimulate the development of Aru Island, just like Balikpapan town in East Kalimantan, which benefited from the development of Mahakam block and other oil and gas blocks in East Kalimantan.

“Balikpapan developed into a large town, thanks to Block Mahakam development by Total. If we build gas pipeline to Aru Island, principally, we are building a new city in the next ten years, as big as Balikpapan,” he said.

SKK Migas and the Energy Ministry have yet to make official statement over the the Rizal Ramli’s call. Under the existing regulation, the one who makes the decision is the Energy and Mineral Resources Ministry and SKK Migas.

Inpex has also yet to respond to the minister’s statement. Nevertheless, oil and gas international experts have said building an FLNG is more efficient, partly they do not need to clear the land which often a headache for oil and gas business players in Indonesia. It is also faster and efficent to establish an FLNG than onshore facilities. However, with regard to the Masela block, political decision could play a part before the government approved and disapproved Inpex PoD.

Apart from submitting revision of its PoD,  Inpex is also looking to extend its production sharing contract to 2048, beyond existing contract of up to 2028. The problem is that under the current regulation, a PSC holder can only seek contract extension from 10 years before the contract ends. This means Inpex would only be allowed to seek contract extension after 2019.

The government is currently seeking ways out to respond to the Inpex request. Inpex has argued that given the huge investment, the development of the block would not be efficient and the time is short for the operator to recover its investment.

Initially, Inpex will develop Abadi Field within Masela Block with estimated production of 421 million standard cubic feet per day (MMSCFD) and oil of 8,400 bpd.

Inpex currently holds working interest of 65 percent in the Masela Block, while Shell holds the remaining 35 percent. (*) (editorial@rambuenergy.com)

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