President Jokowi urged to immediately decide on Masela gas project

President Jokowi urged to immediately decide on Masela gas project

Map of Masela Block. (www.energy-pedia.com)

Development of Masela will become a benchmark for global investors in oil and gas sector."
Jakarta (ANTARA News) - The Indonesian Chamber of Commerce and Industry urged President Joko Widodo (Jokowi) to immediately decide on the Masela gas block project.

The president has yet to decide on either the liquefied natural gas (LNG) gas plant of the project is to be built onshore or offshore.

A Kadin chairman Firlie Ganinduto said immediate decision by the president is necessary that the investment climate would remain conducive.

Oil and gas industrialists in the world follow progress in the negotiations on Masela,Firlie said here on Sunday.

"Development of Masela will become a benchmark for global investors in oil and gas sector. The impact would bad on investment and industry if the negotiations ended in failure," he said.

He said delay in making a decision would result in Indonesia lagging behind Vietnam and Myanmar in competition.

Investment climate would be jeopardized by uncertainty in government policy, he added.

"The countrys oil and gas industry is undergoing a gloomy period. The industry is being hit by low oil price and poor legal certainty," he said, pointing to failure in revising the Law No 22 of 2001 on oil and gas.

Firlie said Kadin Indonesia would back up any decision made by the government on the Masela project.

"The two option (offshore and onshore) both have negative and positive aspects. What is certain is that implementation of either one of the options would contribute to economic development," he said.

Masela block in southern Maluku, is believed to hold one of the largest gas reserves in the world.

The project is 65 percent owned by Japans Inpex Masela Ltd with Shell Corporation holding the remaining 35 percent.

Inpex, the operator of the block has proposed to build floating LNG plant on cost being cheaper.

Based on the feasibility study by Inpex, building the LNG plant offshore, would cost only about $14.8 billion, as against $22.3 billion if it is to be built onshore.

Additional cost would be needed to build around 60 kilometers of gas pipes under the sea if the plant is to be built on the nearby island of Aru.

Apart from additional cost, the pipes would be vulnerable to destruction by earthquakes that frequently hit that area.

Independent consultants, citing risk of earthquake, have also recommended development of the LNG plant offshore as proposed by the operators/investors.

Energy and Mineral Resources Minister Sudirman S. said both options in locations have their advantages and disadvantages.

The Masela gas block has not only commercial value but it is important in social political aspect.

The security aspect of the location even needs serious addressing as it is close to Australia and Papua New Guinea, he said.

Officials, experts and observer have been split in their choice for the location of the plant, which will have an annual capacity of 7.5 million tons.

The Upstrem Oil and Gas Regulator (SKK Migas) already approved the operators proposal to build the LNG plant offshore.

However, Coordinating Minister for Maritime Rizal Ramli strongly recommended that the facility be built onshore.

Rizal spoke of the possibility of integration of the plant with petrochemical industry if the plant could be built on the Aru island.

The people of Maluku also want the plant to be built onshore hoping to gain more from trickle down effect on the regional economy.

Charles Anidla from the Southwest Maluku association of intellectuals (ICMBD) said the operation of the plant on Aru is expected to serve as a milestone bringing modernity to the region and reducing the poverty.
(Uu.H-ASG/H-YH)

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