PGN mulls buying gas from Masela Block

OIL AND GAS - JAKARTA. State-owned subholding gas company PT Perusahaan Gas Negara (PGN) has expressed its interest to absorb the gas output from a multibillion dollar gas project in the Masela Block in the Arafura Sea.

PGN commercial director Danny Praditya said on Monday the company had discussed its interest with the block's operator, Japanese energy firm Inpex Corp, but that a deal was yet to be reached.

"We have discussed where we will distribute the gas, how much we will invest and how much we want to buy [from the Masela Block]," he said. He added that production from the Masela Block was sufficient to fulfill the country's gas demand but that the company would still carry out a profitability study before making a decision.

"If we talk about the continuity of the domestic gas supply, it [the Masela Block] is significant. Now it's a matter of financial considerations."

The development of the Masela Block has yet to begin, as the government and Inpex are still finalizing the plan of development (PoD), including plans to construct an onshore liquefied natural gas (LNG) plant.

The project will cost US$18 billion to $20 billion.

Once the plant is in operation, which is expected to be in 2027, it will produce 9.5 million tons of LNG per annum and 150 million standard cubic feet per day (mmscfd) of gas.