The Indonesian upstream oil and gas regulator SKK Migas has reached an agreement with the Japanese energy group Inpex on the framework for a revised development plan for the Masela gas block. Around US$20bn would be invested in the development of the block and the Indonesian government would have a share of at least 50% in the production from the block.
The Masela block is located in the Timor Sea near Indonesia’s border with northern Australia and is owned by Inpex (65%) and Shell (35%). Inpex acquired a 100% interest in the Masela Block in November 1998 through an open bid conducted by the Indonesian government. In October 2017, the initial Masela Block Production Sharing Contract (PSC) - due to expire in 2028 - was extended for another 27 years, i.e. until 2055.
The block's gas resources will be processed in a liquefaction plant and exported. In 2010, Indonesia approved an initial floating LNG (FLNG) plan with an annual capacity of 2.5 Mt/year, which was later raised to 7.5 Mt/year in September 2015. However, in April 2016, the Indonesian government rejected the initial US$15bn FLNG plan, saying an onshore plant would be US$6bn cheaper and more beneficial for the local economy. The authorities instructed Inpex to re-propose a plan of development based on onshore LNG instead, delaying the anticipated start of production from the field until the late 2020s.