Additional Profit Sharing Clause for Inpex: Is It Necessary?

By Editorial Team 10/08/2020
Summary

The Indonesian government is trying its best to keep the Masela Block project on track since the departure of Shell Upstream Overseas Ltd, by providing additional incentives for Inpex Corporation as the sole block’s operator. The Upstream Oil and Gas Regulatory Task Force (SKK Migas) is currently reviewing an extra profit-sharing clause for the Japanese company as the government’s attempt to support the development of the Masela Block amid the Covid-19 pandemic and gas price slumps.

However, the SKK Migas’s head, Dwi Soetjipto, said that his side had to monitor the natural gas price fluctuation before granting the incentive to Inpex, considering the economic value of the project would rely on the gas selling price. “This project will start (the production) in 2027. The currently low gas price will not necessarily stay the same tomorrow. We will assess the project’s economic value once it comes on stream,” Dwi revealed on Friday (8/7).

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