SKK Migas withholds recommendation for Masela PSC extension

By Bernard Loebs

Upstream authority SKK Migas still withholds a recommendation for the government to extend the production sharing contract (PSC) on the Masela block in Maluku.

Japanese firm Inpex Corp, the operator of the block, has proposed an extension of its contract on the block for another 20 years to ensure that it will get enough return for the huge investment it is going to spend for the Abadi field in the block. The current contract is effective from Nov. 1998 through Nov. 2028.

In its confidential report to the House of Representatives? Commission VII for among others energy affairs, which was leaked to Petromindo.com, SKK Migas said it had met with Inpex several times to discuss the Inpex proposal.

However, SKK Migas said thus far it hasn?t yet recommend the government to accept the proposal on the grounds that the proposal is not in line with the existing the regulation on contract extension and the Inpex has yet to sign Heads of Agreement (HoA) with any potential buyers of the Abadi gas.

Under the existing regulation, a PSC holder has the right to ask for contract extension within seven years before the end of its contact.

Inpex and its partner Shell (with 65-35 percent share composition) plan to develop a floating LNG production facility at Abadi field.

Editing by Johannes Simbolon