Major gas reserves discovered in Indonesia

The Masela Timor Sea gas block in Indonesia's East Nusa Tenggara has potential reserves of 10 trillion cubic feet (tcf) of gas, the second biggest after the Tangguh block in Papua, local press said Wednesday.

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.

However, Inpex had yet to submit its proposal on project development, estimated to cost 7 billion US dollars, reported major newspaper The Jakarta Post, citing officials with the Upstream Oil and Gas Regulator (BPMigas).

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.

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