Minister expects Masela block POD in January 2017

By Godang Sitompul

Minister of Energy and Mineral Resources Ignasius Jonan said that a revised plan of development (POD) of the Masela block can be signed in January of next year.

?Signing (of the Masela block POD) probably in early January 2017,? Jonan told reporters on Saturday on the sidelines of a visit at the Lahendong geothermal power plant project in North Sulawesi.

He added that a number of incentives requested by Inpex Corp, the operator of the block, are still being negotiated.

Inpex, which holds 65 percent interest in the Masela block, while the remainder 35 percent held by Shell, is required to submit a new POD after President Joko Widodo in March instructed the company to change the production scheme for the gas-rich Abadi field project in the Masela block to onshore LNG scheme from a floating LNG production facility as initially planned under a POD submitted in 2015. The government argued at the time that an onshore production facility would provide greater benefits to the country. The government since then called on Inpex to accelerate the development of the project.

Following the change in the production scheme to an onshore LNG facility, Inpex requested a number of incentives to make the project commercially feasible. The Inpex demands include expanding the capacity of the Abadi LNG project to 9.5 million tons per annum from 7.5 mtpa, a 10-year moratorium of its current contract over the block, reimbursement of expenses it spent in developing the floating LNG scheme, and a minimum internal rate of return of 15 percent.

Then acting minister of energy and mineral resources Luhut Panjaitan said in October of this year, that construction of the Masela block project was expected to start in 2019. Based on the 2015 POD, the Masela bock was projected to start production in 2024.

Editing by Reiner Simanjuntak