The government says it has approved Japan-based Inpex Corporation’s plan of development (POD) for the massive Masela gas field in the Arafura Sea, including the company’s plan to build a floating liquefied natural gas (LNG) plant.
“I have signed the POD as recommended by the oil and gas regulator BPMigas,” Energy and Mineral Resources Minister Purnomo Yusgiantoro said Wednesday.
He added that, with the approval of the POD, Inpex could begin the development of the block, including the construction of a proposed floating LNG plant with a processing capacity of about 4.5 million metric tones of LNG per year.
“We approve the POD immediately so that they can carry out the FEED (Front End Engineering Design) and build the plant soon so that the country can get cash by 2016.
“Actually the *estimated* field reserves will facilitate to produce up to 9 million metric tons of LNG per year, but we approve the POD for a capacity of 4.5 million metric tones first to catch up with the 2016 production target,” Purnomo said.
Masela is estimated to hold more than 10 trillion cubic feet of gas reserves. Inpex owns a 100 percent stake in the area.
The block development, including the floating LNG plant, re-portedly will require around a staggering total of US$19 billion in investment.
Earlier, the government considered studying another option to build a land-based LNG plant on a nearby island. But, later the government agreed that Inpex should build the floating LNG plant.
BPMigas’s chairman R. Priyono said that the existing study showed that the floating LNG was more feasible for the project economically and could be completed earlier.
“Now, we are fixed with the floating LNG option, because the block must start delivering the gas by 2016,” he added.
The country expects to lift 7.50 billion cubic feet per day of gas this year, only slightly higher than the 7.46 billion cubic feet of gas per day produced in 2008.
Nico Muhyiddin, Inpex’s new ventures and assets manager, said the company had not yet received the official letter to proceed, but said it would immediately begin work as soon as the company received an approval.
“One of the first things we’ll do is to open a tender for the FEED. This FEED project will be completed in between two and three years. So, we expect the construction to begin in 2012 or 2013,” Nico said.
Responding to the massive cost of developing the block, Nico said that it may turn out to be less than the much-touted $19 billion, as current lower oil prices are also pushing down the costs of materials.
Source: The Jakarta Post
