North Belut gas field starts production

INPEX CORPORATION announced this week that its wholly owned subsidiary INPEX Natuna, Ltd. together with its co-venturers ConocoPhillips (the operator) and Chevron, has started natural gas production from the newly developed North Belut gas field, in the South Natuna Sea Block B Production Sharing Contract on 16 November 2009.

It is planned to ramp up to sustained gas production rates in excess of 200MMscfd and condensate and LPG of over 20,000 barrels per day in 2010. An active and continuing development drilling program will add this production capacity from start up throughout 2010.

The North Belut field is located offshore in the South Natuna Sea, Indonesia, and is about 1,180 km north of capital city of Jakarta. ConocoPhillips operates the field with a 40% participating interest while Chevron holds a 25% and INPEX holds a 35%. 

The North Belut field is part of the ongoing development of gas and associated liquids within Block B to meet existing long-term gas sales obligations to Malaysia. The project includes drilling and completing numerous wells; engineering, procurement, construction and installation of two wellhead platforms, an intrafield pipeline, one central processing platform capable of processing condensate-rich gas, and export pipelines to the Kerisi pipeline end manifold where it will connect with the existing Block B pipeline infrastructure. The Liquefied Petroleum Gas (LPG) produced will supply the Indonesian domestic market in support of the Government’s kerosene to LPG conversion program.

INPEX has been expanding its exploration and development activities in Indonesia as one of its international business core areas. INPEX is conducting production activity in the Offshore Mahakam Block with the largest gas production in Indonesia. INPEX is also in the process of developing large scale Abadi LNG project in the Masela Block, the Arafura Sea, which INPEX is now preparing for the Front End Engineering and Design (FEED) as the Operator.

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Bakrie unit pays US$77M for 10% in Masela

PT Energi Mega Persada (ENRG) Tbk informed stock market authorities today that its wholly owned subsidiary PT EMP Energi Indonesia will pay US$77.25 million for the acquisition of 10% shares in Masela Block PSC.

ENRG, a company controlled by Bakrie & Brothers (BNBR), will also pay certain pre-completion adjustment pursuant to farm-out agreement between EMP Energi and Inpex Masela Ltd. The company has yet to disclose financing of the acquisition.

The acquisition is pending approval from public shareholders, Upstream Oil and Gas Regulatory Body (BPMigas), shareholders of Inpex Masela Ltd, and the signing of joint operating agreement.

Masela PSC is expected to commence LNG production of 4.5 million tons per annum and 13,000 barrels of condensate per day by 2016.

ENRG closed lower by 1.64% at Rp300 today. The stock has lost 30% its value in recent weeks. Still, it gained over 200% YTD.

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PQ for Senipah gas-fired power plant

State-owned electricity provider PT Perusahaan Listrik Negara (PLN) kicks off pre-qualification for Senipah gas-fired power plant project in East Kalimantan.

The gas-fired power plant will have 2x40 MW capacity as an independent power producer (IPP) project where investor will develop, finance, construct, and operate it on a build-own-operate (BOO) basis pursuant to a long-term power purchase agreement (PPA) up to 30 years.

Investors is also required to finance and construct the associated 150 kV transmission line, which will be transferred to PLN as a special facility.

Late last month, PT Total E&P Indonesia and Inpex Corporation signed gas sales agreement (GSA) with Perusahaan Kelistrikan dan Sumber Daya Energi (PKSDE), a company owned by Kutai Kartanegara administration to supply 20 MMSCFD of gas for 20 years. PKSDE and PT Toba Sejahtera are partners in the plan to build Senipah gas-fired power plant.

According to the GSA, buyer will pay US$3.5/MMBTU plus 3% raise every year for the period of 2011-2017, while for the period of 2018-2031, gas price will be US$4.5/MMBTU plus 3% raise per year and 30% of any electricity price hike to charged to PLN.

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Govt asks Inpex to build onshore LNG plant

Indonesian government asks Inpex Corporation to build onshore LNG plant for Masela block in Timor Island instead to accelerate the long-delayed project.

Energy Minister Purnomo Yusgiantoro admitted government allows Inpex to build floating LNG plant when the provisional plan of development (PoD) was awarded. "But there are new developments, where the oceanic trenches were initially considered as deep as 2,500 meter, but turned out to be shallow enough to lay down the pipeline," Purnomo said.

He was optimistic an onshore LNG plant would save billions of USD of investment. Other than that, according to Purnomo, construction of the LNG plant could be accelerated to 2013-2014, two years ahead of the schedule for floating facility (2015-2016).

Evita Legowo, director general for oil and gas at the ministry said a feasibility study for the pipeline is expected to accomplish in the coming months.

Inpex Masela Ltd won an open bid for and acquired a 100% working interest in Masela Block in November 1998. The Japanese company then discovered the Abadi gas field in 2000, the first hydrocarbon discovery in Indonesian Arafura Sea. The company submitted POD to Indonesian government last September for a floating LNG concept to produce 4.5 million tons of LNG per year for more than 30 years. FEED was expected to start by the end of this year, to be followed by FID in 2011.

Inpex is one of the largest players in Indonesia's oil and gas business. The company owns 50% working interest in Offshore Mahakam block which supplies Bontang LNG plant in cooperation with Total, and the Attaka Unit (50%), in cooperation with Chevron (50%). 

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