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Pertamina may buy half of Masela block gas production

JAKARTA ( – Indonesia’s state owned energy company PT Pertamina may buy nearly half of the natural gas production produced by the Masela Block, according to a senior minister.

Masela Block, located in Arafura Sea, in eastern Indonesia is being developed by Inpex Corp and its partner Shell.

“Pertamina plans to buy 200 MMSCFD out of 474 MMSCFD total production. It (PoD) should be out soon,” Coordinating Minister for the Maritime Affairs Luhut Binsar Panjaitan, said at his office Tuesday (Feb. 7).

At present, the government and Inpex are involved in intense discussion to finalize the PoD of the block.”We want to make sure this project will benefit all (government and developers),” he said.

The internal rate of return (IRR) of Masela Block, he said, could be in a range of 14.10-14.20%.

The Indonesian government is currently in talks to resolve pending issues, one of which is about the capacity of the LNG plant.

Inpex prefers the LNG plant capacity to be at 9.5 million tons per annum (MTPA) of LNG, plus 150 MMSCFD to be allocated for petrochemical industry. Inpex wants the 9.5 MTPA of LNG is dedicated for exports.

The government wants the capacity of the LNG plant to be at 7.5 MTPA in the form of LNG and 474 MMSCFD will be allocated for petrochemical industry that will be built nearby the LNG plant.

This issue should be resolved before entering the pre-FEED (Front End Engineering Design), which encompass the location, capacity and petrochemical plants.

Currently, Inpex holds 65 percent working interest in Masela Block and the remaining 35 percent is held by Shell.

The block contains huge gas reserves of around 10.7 trillion cubic feet (tcf). Block Masela covers 4,291.35 square kilometers area, about 800 km to the east of Kupang town, the capital of NTT and over 400 km from Darwin, Australia at water depth of 300-1,000 meters. (*)

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