Inpex set to invest $88m in oil exploration

Ika Krismantari, The Jakarta Post

Japan's largest oil and gas firm, Inpex Holding Inc., is setting aside US$88 million for the drilling this year of four appraisal wells in its Masela block, located in the Timor Sea.

Hirohisa Ota, Inpex general manager for the Jakarta office, said Monday the move was needed so as to verify the gas reserve, which may lead to further investment ahead as the drilling would also determine whether the firm would need to build an LNG terminal or an LNG floating terminal in the area.

Ota was speaking at the sidelines of the 31st annual Indonesian Petroleum Association (IPA) that runs until May 16.

The Masela block, which was awarded to Inpex in 1998, is located in the Timor Sea at more than 2,000 meters deep. The preliminary reserve is reported to be big enough to provide 3.5 to 5 metric tons per year of liquefied natural gas (LNG) for 20 years.

The drilling at the Abadi field in the Timor Sea started last week and it is expected to finish within eight months as one well requires around two months of drilling, Ota said.

In addition to the $88 million, from 1998 to 2008, the company has allocated another $91 million for its 10-year exploration activities.

Beyond 2008, Nico Muhyiddin, Inpex administration manager, said the company had set aside a budget of up to $800 million for the 2008-2010 period.

Nico also added that the gas from the Abadi field, which is wholly owned by Inpex, may likely be compressed into LNG at a floating terminal, construction of which may start in 2011 and be completed in 2014.