Timor Sea gas block a ‘huge’ find

Ika Krismantari, The Jakarta Post, Jakarta

The Masela Timor Sea gas block in East Nusa Tenggara has potential reserves of 10 trillion cubic feet (tcf), the country’s second’s biggest after the Tangguh block in Papua, an official says.

Upstream Oil and Gas Regulator (BPMigas) chairman Priyono said Monday that based on a first drilling trial by block operator Inpex, Japan’s largest oil company, data on available reserves showed a potential “almost as big as the Tangguh gas block”.

Tangguh block in Papua holds a proven gas reserve of 14.4 trillion cubic feet. This block, operated by British oil giant BP, is scheduled for production start-up by the end of 2008.

BPMigas planning deputy Achmad Luthfi said, however, that Inpex had yet to submit its proposal on project development, estimated to cost US$7 billion.

“Inpex’s representative from Japan will come to town tomorrow, to present detailed findings,” Luthfi said.

The Masela project is expected to involve the construction of a floating liquefied natural gas (LNG) processing terminal with a total capacity expected to reach 4 million tons per annum.

This will be the first floating LNG terminal in the country.

The decision to build a floating terminal is viewed more favorably by the government than the alternative option, which is to construct a pipeline to Australia, the closest possibility to the site, BPMigas said recently.

Due to the high cost of the proposed project, Inpex plans to seek partners to build the floating LNG terminal.

When asked about the plan, Luthfi said that a partnership permit would be given to Inpex and that it could decide on the matter under a business-to-business negotiation.

Should the project be approved this year, he said, the block is expected to start production by 2013.

Data from the Directorate General of Oil and Gas shows that so far Inpex has spent US$101.1 million on seismic surveys and drilling tests in the Masela block.

In this light, Priyono was upbeat that Indonesia could get back to its 1970s heyday in terms of gas production capacity.

During the past six years, the country’s gas production has been through a stagnant period with an average production of 8.15 billion cubic feet per day.

Priyono added that there were additional hopes for national gas production based on the Semai block, which is estimated to have probable gas reserves of 1 billion barrels of oil equivalent. The Semai block was offered in the government’s tender of oil and gas blocks last year.

It is reported that a number of oil and gas giants including U.S. Chevron, Exxon and ConocoPhillips, French Total and British Shell and BP are eyeing the Semai block.

The Timor Sea is part of the Indian Ocean situated between the islands of Rote and Timor, with underwater rights now split between Indonesia, Timor Leste and Australia.


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