ASIATODAY.ID, JAKARTA – Head of the Special Task Force for Implementing Upstream Oil and Gas Business Activities (SKK Migas) Indonesia, Dwi Soetjipto, revealed that the plan of development (PoD) I of the Masela Block Abadi liquefied natural gas (LNG) project is ready to run after the Minister of Energy and Mineral Resources, Arifin Tasrif approved the revision of the two PoD plans.
PoD approval submitted by Inpex Masela Ltd together with the Consortium of PT Pertamina Hulu Energi Masela & Petronas Masela Sdn. Bhd is expected to pursue a final investment decision (FID) for the project with a current estimated value of around US$19.8 billion.
“The 2nd revision of PoD I was approved by Minister Arifin Tasrif on November 28 2023,” explained Dwi Soetjipto during a hearing with Commission VII DPR RI, Jakarta, Thursday, November 30 2023.
Several crucial points are stated in the PoD, including a commitment to commercial operations by the end of 2029 and plans to install carbon capture and storage (CCS) facilities.
In the new development proposal, SKK Migas reported that the additional investment for CCS is estimated to be around US$ 1 billion. Meanwhile, other investments in upstream oil and gas activities have not shifted much.
“Yesterday the onstream target was the end of 2029, hopefully we can fulfill our long term planning,” said Dwi.
Meanwhile, the Masela Block development project will use a combined land and sea system to ensure that the investment value of the existing field development plan does not shift much.
Through this combination system, seabed drilling will be carried out at a depth of 600 meters, and the well depth will be 4,000 meters. The gas obtained will be processed in a floating building called floating production, storage and offloading (FPSO) to be purified from other substances. After being purified at the FPSO, the gas will be channeled to the LNG plant on land via a pipe called the Gass Export Pipeline (GEP) which is 175 kilometers away and through sea trenches.
Previously, the operator of the Masela Block, Inpex Masela Ltd, had negotiated with the Indonesian government regarding the need to re-amend the production sharing contract (PSC) for the Masela Block Abadi LNG project. The contract amendment is expected to make the economics of this national strategic project more attractive amidst Inpex’s commitment to include CCS facilities in the development plan that was sent in April 2023.
Inpex targets development costs to be optimally reduced with an internal rate of return (IRR) in the range of 10%.
“We not only hope that the IRR will be in the 10% range, but we have started negotiations with the government, we cannot tell you what the contents are now,” said Managing Executive Officer Senior Vice President Asia Projects Inpex Akihiro Watanabe at Inpex Investor Day 2023.
Akhiro said that the Indonesian government has the same understanding regarding the negotiations currently underway with Inpex regarding efforts to reduce production costs from Abadi Masela gas.
Inpex proposed that CCS installation and operation costs could be charged to the production sharing contract or PSC which is currently being pushed for amendment. The plan is that CCS operating costs will be paid directly through the sale of gas and condensate from future field projects.
“To secure this plan, the PSC needs to be amended which we are currently considering, once that is realized we plan to start implementing the project later this year or next year,” he said.
The Masela Block is one of the largest oil and gas field prospects in Indonesia. Production is estimated to reach 1,600 million cubic feet per day (MMscfd) of gas or the equivalent of 9.5 million mtpa and 150 MMscfd of piped gas, as well as 35,000 barrels of condensate per day (bcpd).
The project, which was originally estimated to require an investment of up to US$19.8 billion, is Inpex’s second largest gas management asset, after the Ichthys LNG Project in Australia. The Abadi Masela Block project will cover more than 10% of Japan’s annual LNG import needs.
On the other hand, the project is also expected to maintain the resilience of energy supplies in Indonesia, Japan and several other Asian countries. (AT Network)
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