President to lead cabinet meeting over Masela block project
Tuesday, November 22 2016 - 01:02 AM WIB
President Joko Widodo is scheduled to hold a limited cabinet meeting today (Tuesday) to discuss a number incentives requested by Inpex Corp, the operator of the Masela block, to help accelerate the development of the gas-rich Abadi field in the block, according to a government source.
The source, however, told Petromindo.com that the meeting is likely to fail to reach an agreement amid lingering differences between upstream oil and gas authority SKK Migas and Directorate General of Oil and Gas at the Ministry of Energy and Mineral Resources over the Inpex requests.
?The problems relating to Masela block development will be discussed at a limited cabinet meeting, but it looks like it?s going to be a deadlock amid differences between SKK Migas and the Directorate General of Oil and Gas over the Inpex requests,? the source said.
Inpex has requested for a number of incentives to help make the Masela block project commercially feasible after the president in March decided to alter the production scheme from an earlier planned floating LNG facility (FLNG) to an onshore LNG facility.
Among of the Inpex requests include expanding the production capacity to 9.5 million tons per annum of LNG from an earlier plan of 7.5 mtpa; a 10-year moratorium of its current contract over the Masela block for the time it spent in producing studies and making preparations for the earlier approved FLNG scheme; recovery of the cost it spent for studying the FLNG scheme; and an internal rate of return of 15 percent.
Vice Minister of Energy and Mineral Resources Arcandra Tahar declined to provide much comments. ?Just wait, it?s still being discussed,? he told Petromindo.com
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