Inpex to seek contractor to carry out Masela LNG plant development

Japanese firm Inpex Corporation said on Thursday it will open tender of Front End Engineering Design (FEED) for its Masela LNG plant in Timor Sea, to make way for Final Investment Decision in the third quarter of 2011.

Director, Managing Executive Officer and Senior GM for Masela Shunichiro Sugaya told reporters that the FEED contract would be awarded autumn of 2009 with completion seen 20 months after.

Sugaya estimates that the company would spend US$10 billion to develop the project, including to develop floating LNG plant, subsea platform and 18 production wells. The 4.5MTPA project is expected to come onstream in 2016, he said.

He said Inpex may also appoint FEED contractor to act as EPC contractor for the project as such decision might be able to move development works faster. ?There are not many contractors in the world that have capability to undertake such complex project. This is going to be the world?s largest floating LNG project,? he said.

Contractor JGC had earlier been selected to carry out pre-FEED for Masela.

Sugaya said currently Inpex is in the process of certifying its reserves by employing DeGolyer and MacNaughton and Indonesian government agency to separately carry out certification works at Masela block. The certification, he said, would be completed this year.

Based on existing P1P2 reserves, Inpex may be able to double capacity in the future by adding one more LNG production unit in Masela complex .?Current reserves would justify for development of another unit with similar capacity to what we are planning to build,? he said.

Sugaya said Inpex would target Japanese and South Korean market, and-despite having no obligation in the PSC contract- would also consider to supply some of its future production to domestic market. ?However, at this stage, Inpex is not yet engaged in active marketing effort,? he said.

Despite the global financial meltdown, Sugaya is optimistic that the project would not be delayed. ?I believe the project?s economic is still sound despite the weak oil price environment as the price of material to build the project such as steel have also significantly decline over the past year.

?Inpex will try to secure financing for the project once the FEED is completed, to give us clearer picture on investment requirement,? he said.

He also said that thus far Inpex has yet formulated policy on plan to sell part of stake in the project to other oil, gas companies. ?So far, our commitment, as stated in the contract is to farm-out 10 percent stake to national oil company,? he said, adding that even if the company eventually decided to seek other partner, it would retain operatorship of the block. (alex)