SKK Migas asked Inpex to find additional reserves

JAKARTA. Minister of Energy and Mineral Resources (ESDM) and Special Task Force for Upstream Oil and Gas Business (SKK Migas) have not yet met agreement on the acceleration of the gas project in Lapangan Abadi, South Maluku Bloc (Blok Masela) in Arafuru Sea.

However, SKK Migas recently has requested Inpex Corporation to conduct additional drilling to find additional gas reserves, while government has not made decision over the request for incentive from Inpex.

To date, government has not yet responded to Inpex request for extend the contract duration for 10 years from 2028 to 2038. Aside of the contract extension, government has not responded to Inpex request to increase internal rate of return (IRR) by 15% by raising the amount of liquefied natural gas (LNG) production capacity from 7.5 ton to 9.5 ton per year. Inpex also requested government to include US$1.2 billion of cost spent by Inpex to cost recovery.

According to Inpex, the company has conducted review on the economic value of the projects, after government shifted the offshore production scheme to onshore scheme.

However, SKK Migas requested Inpex to find new reserves in order to meet the target of 9.5 ton of LNG production per year. Head of Public Relations Affairs at SKK Migas Taslim Z Yunus said that the existing gas reserves are unlikely to meet the target production of LNG, on the grounds that the reserves will also be allocated to the needs for petro chemical industry and other purposes.  Taslim mentioned that Inpex is suggested to conduct additional drilling to accelerate Lapangan Abadi project.

Senior Manager for Communication and Relation Affairs at Inpex Corp Usman Slamet refused to give comments about the request for conducting additional drilling. However, he claimed that Inpex continues to hold intensive communication with ESDM and SKK Migas about the plan for accelerating Lapangan Abadi gas project. “We expect to meet an agreement (on the project) so that the project may start immediately in accordance with government direction about onshore scheme”, Usman said.

During 1999-2014, Inpex has spent US$11 million-US$12 million  of funds to drill Abadi 1 to Abadi 10 deliniated wells, as well as Berkat 1 additional exploration well.

Previously, in 2010 Inpex has requested for additional production capacity under the scheme of plan of development (PoD)  to 2.5 million ton per year. Subsequently, in 2014 Inpex requested for the revision of production capacity in PoD I to 7.5 million ton per year, after Inpex claimed to find additional gas reserves from 6.05 trillion cubic feet to 10.7 trillion cubic feet.

Previously, care taker of Minister of Energy and Mineral Resources Luhut B. Panjaitan said that government is considering to approve Inpex request, including request on profit sharing scheme between government and Inpex. Under the scheme, Inpex suggest the profit sharing ratio of 60% and 40% for government and Inpex, respectively.

(Muhammad Farid/Translator)