Indonesia Agrees to Extend Inpex's Masela Contract

Indonesia has agreed to extend Japanese producer Inpex’s Masela block contract, which includes the Abadi gas field, by up to 27 years once the present contract comes to an end in 2028, the ministry of energy and mineral resources in Jakarta said October 19.

The Indonesia government has granted a 20-year extension to Inpex and then another seven years as compensation for its decision to change the LNG plant development from a floating scheme to a higher-cost land-based one -- so potentially out to 2055.

Inpex will also get to choose the location of the land based terminal.

In March 2016, the country's president Joko Widodo said production facilities of Masela LNG project will be built onshore, instead of offshore as Inpex had proposed. As a result the Japanese company had to review its plans. 

Currently, Inpex is conducting a pre-project engineering or pre-Feed study after receiving a work order from Indonesia oil and gas regulator SKK Migas; the proposed LNG terminal will have a capacity of 9.5mn mt/yr. 

The Masela block contract was signed in 1998, and Inpex as operator owns 65% share in the block while Shell owns the rest 35%. The block is located in the Arafura Sea. 

Location of the Masela block, which includes the Abadi gas field (Map credit: Inpex) 

Shardul Sharma