SKK Migas rejects coordinating minister?s proposal on Masela

By Godang Sitompul

Upstream authority SKK Migas rejects Coordinating Minister of the Maritime Affairs Rizal Ramli?s proposal to build a conventional, landed LNG plant for the Abadi gas field within the Masela block, saying the proposal is too costly.

SKK Migas? Chairman Amien Sunaryadi said on Tuesday that the agency still supports the Plan of Development (PoD) submitted by the owners of the block ? Japanese firm INPEX Corp and European firm Royal Dutch Shell ? to build a floating LNG plant (FLNG) for the huge field.

?From the economic point of view, FLNG is cheaper,? Amien said during a press conference specially arranged to respond Rizal?s proposal.

On Monday, Rizal said the Abadi gas field project will bring more benefits to the country, if the LNG plant to process the gas from the field is built on Aru Island, located some 600 km away from the field, rather than on the seawater of the field. Under Rizal?s proposal, the gas will be delivered through underwater pipeline to the Aru LNG plant.

This, he said, will give a significant boost to the growth of pipeline industry of the country. Besides, with the LNG plant situated on Aru Island, it will create a lot of jobs for people on the island and surrounding areas and will turn Aru into a big city, an economic center in eastern Indonesia within 10 years. With gas delivered on the island, downstream industries, such as petrochemical plant, can also be built on the island.

Rizal said a 600-km pipeline is cheaper to build compared to an FLNG, which he said needs an investment of US$19.3 billion.

Amien however said the cost of FLNG project proposed by INPEX-Shell is lower compared to the total cost of the project proposed by Rizal.

Based on study by SKK Migas, he said, the total cost of the FLNG is $14.8 billion with breakdown as follows: $1.5 billon for well development, $1.4 billion for the construction of SURF (Subsea, Umbilical, Riser and Flowline), $11.5 billion for the construction of FLNG vessel and facilities, $0.4 billion in general cost.

Meanwhile, if the LNG plant is built onshore as proposed by Rizal, the total cost will rise to $19.3 billion with breakdown as follows: $1.5 billion for well development, $1.4 billion for SURF, $4.8 billion for FPSO, $1.2 billion for pipelines, $9.9 billion for LNG plant and $0.5 billion in general cost.

With regards the size of Abadi?s reserve, Amien said SKK Migas has accepted the certified gas reserve issued by LEMIGAS, the research and development center of the Ministry of Energy and Mineral Resources, which estimates the reserve at 10.73 tcf, enough for 24 years of production for a 7.5 mtpa LNG plant.

The reserve was initially estimated at 6.05 tcf. In its First Plan of Development (PoD), INPEX-Shell proposed to build a one-train FLNG plant with a capacity of 2.5 mtpa. Following the increase in the reserve, both firms are now proposing as the Second PoD, under which they plan to build a three-train FLNG with a total capacity of 7.5 mtpa.

Abadi?s gas potential that that have yet to be proved is still huge. Sources said the gas reserve may reach 40 tcf.

According to Amien, aside from gas, the field has 209 million barrels of certified condensate reserve. Once it has come onstream, it will produces 1.200 mmscfd of gas, 24,460 bpd of condensate.

Editing by Johannes Simbolon