Luhut proposes new scheme for Masela block project
Friday, September 16 2016 - 08:02 AM WIB
Interim Minister of Energy and Mineral Resources Luhut Panjaitan said he will propose a new scheme for the development of the gas-rich Abadi field in Masela block, Maluku Province.
He said on Thursday that under the proposed new scheme, the Masela block investors Inpex Corp (operator) and Shell will only be in charge of drilling and production, the gas output of which to be sold to an Indonesian entity for further processing into LNG.
Luhut said that this new scheme will drastically reduce the investment required by the investors to US$7 billion. He said that he will present the new scheme to President Joko Widodo.
Luhut earlier said that the government will provide incentives to the Masela block investors including renewing the current contract, which is set to expire in 2028, for another 30 years, exceeding the 20-year limit set under the existing regulation. Another planned incentive for the investors is a greater revenue split.
He said that the incentive particularly extending the contract for a longer period is necessary as a compensation for the government?s decision to force Inpex, the operator of the block, to switch to onshore LNG production scheme in developing the Abadi field, instead of the initially proposed offshore plant.
He added that Inpex had spent about 10 years to study the offshore development scheme for the Abadi field project.
Following months of noisy debates, President Joko Widodo decided in March of this year to change the production scheme for the Abadi gas field to onshore production facility, instead of the offshore scheme as proposed by Inpex in a plan of development (PoD), which had been approved by the Ministry of Energy and Mineral Resources. Under the initial PoD, Inpex, which owns 65 percent interest in Masela block (the remainder is held by Shell), is projected to start production at the block in 2024.
Luhut has asked Inpex to complete the revision of the PoD within eight months to help accelerate the development of the Abadi field.
Editing by Reiner Simanjuntak