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Pertamina eyes interest in Masela block after Energi Persada pulls out

JAKARTA (rambuenergy.com) – State owned oil and gas company PT Pertamina has expressed its interest to purchase working interest in the Masela Block, which is operated by Inpex Masela Ltd. Inpex, however, is unaware of Pertamina’s interest.

An oil and gas subsidiary of the financial trouble Bakrie Group PT Energi Mega Persada opted to sell its 10 percent ownership of the Masela PSC in June 2013 to Inpex Masela Ltd.

Energi Mega through its subsidiary PT EMP Energi Indonesia raised Rp 3.1 trillion (US$313 million) from the working interest sale.

Director for Upstream at the Director General for Oil and Gas at the Energy and Mineral Resources (ESDM) Djoko Siswanto said that Pertamina has conveyed its interest to enter Masela Block, although the express of interest has so far been made through informal means.

“Pertamina wants interest in Masela, it is an attractive opportunity. However, it (Pertamina) only made informal request. There is no formal letter as yet,” he was quoted by Bisnis Indonesia as saying.

Inpex however said that there are talks with Pertamina over Masela interest. “Inpex is aware of media reports that Pertamina is interested in participating in the Masela block … (however) Inpex is not in discussion with Pertamina about its participation in the block,” an Inpex executive told Rigzone.

Masela Block is a mega LNG project that requires huge investment. Therefore, Inpex has submitted its request to the government to extend its contract to operate the block beyond 2028, in which time its current contract expires. However, under the current regulation, an oil and gas contractor are only allowed to seek extension 10 years before the contract expires. The government is currently trying to find ways to resolve the issue.

Under the current regulation, the operator is obligated to transfer 10 percent of working interest to local governments. However, the government and the operator have yet to finalize the transfer issue.

Inpex, the operator, holds 65 percent working interest in Masela Block, while Shell, through and Shell Upstream Overseas Services (I) Ltd, owns 35 percent.

Inpex acquired a 100 percent interest in the Masela Block in November 1998 through an open bid conducted by the Indonesian Government. Inpex proceeded with exploratory activity as the operator. The first exploratory well drilled in 2000 discovered the Abadi Gas Field. Subsequently, six appraisal wells were drilled (two in 2002 and four in 2007–2008), all of which confirmed the presence of gas and condensate reservoirs.

The Indonesian Government granted its approval of the Stage-1(POD-1) development plan involving a floating LNG (FLNG) with a capacity of 2.5 tons per year of LNG in December 2010. Thereafter, Inpex undertook FEED work for subsea production facilities from November 2012 to January 2014. In addition, Inpex continues to engage in FLNG FEED work, which began in January 2013.

For Inpex, Masela block is important it is the first major LNG project that the Japanese oil and gas giant company becomes an operator. In Mahakam block, it becomes a non-operator partner. (*)

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