Inpex sees Masela LNG production to commence in 2010

Japan's INPEX Corp., said on Friday it would start commercial production of liquefied natural gas (LNG) from the Masela block in Indonesia in the first half of 2010.

Production at the offshore block in the Timor Sea is expected to start at between 3 million and 5 million tonnes a year, and INPEX will start drilling for commercial production in the middle of 2006, a company spokesman said as quoted by agency.

The Masela block is 100 percent owned by INPEX, but the company said it might sell some of the shares to one or more operation partners.

"It is a common industry practice to set up a joint venture to run a project, and we have been contacted by many companies," the INPEX spokesman said.

He declined to name the companies.

INPEX confirmed gas reserves in Masela in 2000, but this was the first time it said when commercial production would start.

The spokesman declined to confirm a report by the Nihon Keizai business daily on Thursday that investments to build facilities in Masela, including a liquefication plant and pipelines, might total US$4.3 billion.

He also declined to confirm the Nikkei's report that INPEX would start marketing LNG produced in Masela to Japanese utilities in 2007 on a long-term contract basis as well as to users on the U.S. West Coast and in India and China, and that it would start building production facilities at the block after 2008.

Japan is the world's largest LNG importer, absorbing almost half the fuel exported globally every year. In the year to March 2005 it imported about 58 million tonnes of LNG.(*)