BPMIGAS turns down Inpex's proposal to send gas to Australia

The upstream oil and gas regulating body, BPMIGAS, has turned down Japanese firm Inpex's proposal to send gas from its Masela block in Timor Sea to Australia to be processed into LNG, insisting that the firm should build a floating LNG production plant in the block.

"Inpex has proposed two options. First, building a floating LNG terminal in Masela. Second, sending the gas to Australia using pipelines. We are opposed to the idea of sending the gas to Australia," BPMIGAS' chairman Kardaya Warnika said Monday.

The offshore Masela Block is located about 800 kilometers east of East Nusa Tenggara province's capital of Kupang and approximately 400 kilometers north of Darwin, the capital of Australia's Northen Territory.

He admitted that it was very difficult and costly for the firm to build a pipeline to deliver the blocks' gas to an onshore LNG terminal in Indonesia given the existence of a deep sea separating the block from the Indonesian nearby land areas.

"We still subscribe to the idea of building a floating LNG terminal in the block," Kardaya said.

Kardaya said BPMIGAS had given the Japanese firm until April this year to finish its plan of development (PoD) for the block.

In 2002, Inpex, which has a 100 percent working interest in the block, confirmed a large natural gas accumulation in the block after two appraisal wells, Abadi-2 and Abadi-3, tested a total 32.4 MMCFD of gas.

Gas reserves at Masela are estimated to be around 4-7 TCF, which could warrant for development of an LNG plant. Report from Japanese newspaper Nihon Keizai said in October 2006 that Inpex will invest US$4 billion to develop an LNG plant in Masela, capable of producing 3 MTPA of LNG, with production to seen to begin in 2015. (godang)