Indonesia Considers Inpex Request To Boost Masela LNG Output Again

Indonesia Considers Inpex Request To Boost Masela LNG Output Again

Indonesia expects to decide within "one or two weeks" on a plan by Inpex
Corp. to increase proposed output from the Masela natural gas field to
nearly four times the level originally slated, a senior energy official said
on Friday.

"We are still discussing the capacity of Masela - between 7.5 mtpa (million
tonnes per annum) and 9.5 mtpa," said Coordinating Maritime Minister Luhut
Pandjaitan, referring to discussions between the government and Inpex along
with its partner Royal Dutch Shell PLC.

The minister, who oversees resources, said that a decision would likely come
in the next couple of weeks.

A spokesman for Inpex in Jakarta confirmed the discussions. "There are
several conditions we need for this project to be investable," he said,
though he did not confirm the proposed output increase.

This would be the second time Inpex, Japan's biggest energy developer and
Shell, the world's top LNG trader, have proposed an increase in output from
the deep sea field in eastern Indonesia that was initially expected to
produce 2.5 million tonnes per year (mtpa) of LNG.

President Joko Widodo in March rejected a $15-billion plan by Inpex and
Shell to develop the world's largest floating LNG facility to process gas
from Masela, saying an onshore plant would benefit the local economy more.

The move was a blow to both companies and pushed the anticipated start of
production from the field into the late 2020s.

An onshore LNG plant will now be developed on either the islands of Aru or
Saumlaki, Pandjaitan said, which is hoped will spur construction of
petrochemical and fertilizer plants in the eastern province of Maluku, an
impoverished area with little development.

"One of these two locations will be chosen," he said. "We don't just want to
develop petrochemicals there. We also want to develop the fishing industry
and tourism."

Indonesia gets priority on a large portion of domestically produced LNG, but
development of infrastructure to absorb the fuel has been slower than hoped
both locally and abroad, putting pressure on gas prices.

Inpex is also working with BP, Mitsubishi Corp., China Natinoal Offshore Oil
Co. and other companies on an $8-billion expansion of the Tangguh project in
West Papua province that will boost the project's annual LNG production
capacity by 50%.

Questions remain on how quickly Indonesia can develop infrastructure to
absorb gas from these projects, with at least 60 uncommitted cargoes this
year and next.

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Ref:
http://www.downstreambusiness.com/indonesia-considers-inpex-request-boost-ma
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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com