Ministry has yet to decide on Inpex?s requests
Tuesday, October 25 2016 - 02:42 AM WIB
The Ministry of Energy and Mineral Resources has yet to decide on a number of requests made by Inpex Corp as part of conditions for the company to be able to quickly start the development of the gas-rich Abadi field in the Masela block, in Maluku Province.
Then acting minister Luhut Panjaitan on October 13 sent a letter to Inpex, the operator of the block, in response to an August 23 letter sent by the Japanese firm requesting various incentives to help make the project commercially feasible.
?The minister (recently installed Minister of Energy and Mineral Resources Ignasius Jonan) will later explain it,? said Director General of Oil and Gas IGN Wiratmaja Puja on Monday.
In the October 13 letter, a copy of which was obtained by Petromindo.com, the ministry said that together with upstream oil and gas authority SKK Migas, the government will make further assessment on the request of Inpex to expand the capacity of the Abadi gas field project to 9.5 million tons per year from 7.5 million tons per year.
The letter also said that the ministry will make a further study on Inpex?s request for a 10-year moratorium of its current production sharing contract over the block as existing regulations do not acknowledge such contract moratorium.
Regarding the request for a reimbursement of the investment spent on developing offshore LNG production facility, was has been rejected by the government, through the cost recovery mechanism, the letter said it would be further discussed with SKK Migas.
The letter finally said that the government can provide incentives to help ensure reasonable internal rate of return (IRR) in the project, and promises to speed up permitting process.
Inpex, the operator of the Masela block with a 65 percent interest (the other 35 percent is held by Shell) has made the request to help ensure commercial feasibility of the project after President Joko Widodo in March of this year decided to alter the LNG production scheme to onshore production facility from the offshore LNG facility as initially proposed by the investors.
The government has been struggling to push Inpex to quickly start developing the project, but the Japanese firm is still waiting for the requested incentives.
Editing by Reiner Simanjuntak