Inpex, Shell seek government incentives for Masela block project

Inpex Corp, the operator of the Masela block, and its partner Royal Dutch Shell, demanded incentives from the government to make the Abadi LNG project within the block feasible, reports said on Monday.

The request for incentives comes after the government decided the contractors to use an onshore LNG plant for the project instead of the proposed floating LNG scheme.

Inpex Senior Manager for Communication and Relation Usman Slamet was quoted by Kontan and Bisnis Indonesia as saying Monday that the incentives are needed because based on a previous study, the OLNG scheme is not commercially feasible.

He, however, could not yet disclose what forms of incentives will be needed. Some experts have said that the incentives could be in the form of extension of the contractors? current contract over the Masela block, which expires in 2028, into 2048, or in the form of tax breaks.

After months of lengthy debate, President Joko Widodo finally decided in March that the contractors of the Masela block should build an onshore LNG plant instead of the FLNG facility.

Upstream oil and gas authority SKK Migas has sent notification letter to Inpex and Shell on the government?s decision and requested the contractors submit a new plan of development (POD) based on an OLNG scheme.

Inpex owns 65 percent interest in the Masela block, while Shell holds the remaining 35 percent. (*)