SKK Migas Approves ConocoPhillips Plan to Close Operations in Belanak

KATADATA - The government’s Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) has approved ConocoPhillips’ plan to stop producing liquefied petroleum gas (LPG) at Belanak Refinery, South Natuna B Block. The US multinational energy company claims that continuing production is not financially viable.

The Head of Public Relations of SKK Migas, Elan Biantoro, said it would be better to export the gas from the block to Malaysia, instead of taking the trouble to refine it into LPG in Indonesia. This would be more economically workable and efficient because the gas could be sent to Malaysia through the gas pipeline between the two countries, resulting in a significant transport cost saving.

SKK Migas said that ConocoPhillips’ plan was approved at the end of last year, but ConocoPhillips is still auctioning the floating production storage and offloading (FPSO) facility. (Read:  Pertamina to Take Over Belanak LPG Refinery from ConocoPhillips)

When the winner of the auction is announced, ConocoPhillips will be able to stop operations and return the facility’s ships to their owner. 

On Pertamina’s interest in taking over the refinery’s production activity, Elan said that this would not be profitable because of the high operating cost and risk involved managing the South Natuna B Block. (Read: Pertamina: LPG Imports to Rise as ConocoPhillips Stops LPG Production)