TEMPO.CO, Jakarta - Deputy Energy and Mineral Resources Minister Arcandra Tahar said that he has met with Japan-based oil and gas company Inpex Corporation to discuss the Masela block.
“We discussed the Masela,” Arcandra told reporters at the ministry’s premise in Jakarta on Wednesday, as quoted by Antara.
When asked about the conclusion and agreement between the two parties, Arcandra said that he is trying to understand the situation. Earlier, Arcandra had pushed down capital expenditure in the project, thereby lowering cost recovery to be paid by the government annually through the state budget (APBN).
Arcandra added that Indonesia can profit from improved production capacity of Masela block. He, however, did not reveal Inpex’ capital expenditure in the Masela block development.
Based on the initial scheme, the Masela block costs USD 22 billion using an onshore scheme. Meanwhile, the Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said Inpex Corporation as the Masela block operator will get 7 years contract extension.
Inpex had asked for compensation for a 10-year contract moratorium from 2006 to 2016 due to change in Masela block development scheme from offshore to onshore.
“They wanted 10 years. But we see that 7 years is the most realistic,” Luhut said.
Inpex also expects to get some incentives, such as USD1.2 billion cost recovery and improved production capacity of LNG regasification.
Luhut noted that the government has agreed that the capacity of LNG facility will remain at 7.5 mtpa with an additional 4.7 mmbtu. The decision is made upon Inpex’s request to improve the capacity of the LNG facility to 9.5 mtpa to achieve refinery economics.
On cost recovery, Luhut said that the government will meet it after an audit by relevant agencies.