Government to extend Masela block contract

The government has agreed to extend the current Masela block contract for another 20 years, plus another seven years as compensation for the time spent by block operator Inpex Corp in developing a floating LNG plant, but which has been cancelled by the government.

The Ministry of Energy and Mineral Resources said in a statement on Thursday that the Masela block contract extension forms part of agreements made by Minister of Energy and Mineral Resources Ignasius Jonan during discussions with CEO of Inpex Toshiaki Kitamura in Tokyo on Tuesday. Jonan was on a three-day visit to Japan ending Wednesday.

?The government will provide a 20-year extension for Inpex plus another seven years as compensation for the change in the development of the LNG plant from floating to onshore (scheme),? the statement said. The current contract is set to expire in 2028.

The statement added that the government will give Inpex the freedom to select the location for the onshore LNG facility.

Inpex is the operator of the Masela block in Maluku Province with a 65 percent interest, while partner Shell holds the remaining 35 percent. Inpex initially proposed a floating LNG plant to process gas from the Abadi field in the block, but the government decided to opt for the onshore plant.

Inpex is currently carrying out pre front end engineering design (pre-FEED) for an onshore LNG plant with capacity of 9.5 million tons per annum plus pipeline gas production of 150 mmscfd. The ministry said in the statement that the Pre-FEED is an important stage toward the formulation of a revised plan of development (POD) of the Abadi gas field development project following a change in the production facility from offshore to onshore.

Editing by Reiner Simanjuntak