Indonesia threatens to cancel Masela contracts

Indonesia threatens to cancel Masela contracts

Energy and Mineral Resources Minister Ignasius Jonan has threatened to
cancel production-sharing contracts (PSCs) on the gas-rich Masela block if
the contractors do not get the ball rolling on the field's development.

The government has asked Japan-based Inpex and Dutch Shell, which hold 65
and 35 percent stakes in the block, respectively, to conduct a preliminary
front-end engineering design (pre-FEED) in order to determine the production
capacity of the onshore liquefied natural gas (LNG) plant and the buyers of
piped gas.

"If Inpex takes too long to conduct the pre-FEED then I will cancel the
contract. My patience is wearing thin," he said on the sidelines of a
national gas forum in Central Jakarta on Wednesday.

"I have been [the energy and mineral resources minister] for six months and
they still haven't started."

The government has given the companies two options on the LNG plant
capacity: 7.5 mtpa with 474 million standard cubic feet of gas per day
(mmscfd) or 9.5 mtpa and 160 mmscfd. The piped gas will be sold to local
petrochemical companies.

The gas-rich Masela block is estimated to be able to produce 1,200 mmscfd
and 24,000 barrels of condensate per day for 24 years.

While the government is optimistic that the block can start operating by
2023, the previous plan on development (POD) estimated that the gas field
could start production by 2024, and start piping gas in 2026, just two years
before Inpex's and Shell's contracts expire.

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Link to Original Article:
http://www.thejakartapost.com/news/2017/05/03/indonesia-threatens-to-cancel-
masela-contracts.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com