Government demonstrates firm stance on Masela refinery: SKK Migas

Jakarta (ANTARA News) - The governments decision on building an onshore refinery of the Abadi gas field in the Masela Block in Arafura Sea, Maluku, shows its firm stance, according to the Upstream oil and gas regulator SKK Migas.
"I do not think it is disturbing. This is a firm stance of the government," SKK Migas Head of Public Relations Elan Biantoro stated here on Thursday.
The government has finally decided that the refinery plant of Masela Blocks Abadi gas field should be located onshore. The governments decision came as a surprise for the Masela contractors: Japans Inpex Corporation and Shell Upstream Overseas Services Ltd.
The government took the decision after the project triggered polemics on whether it should be developed onshore or offshore.
Based on the feasibility study conducted by Inpex, it will cost only some US$14.8 billion to build the gas refinery plant offshore as against US$22.3 billion for an onshore refinery on the Aru Island or US$19.3 billion if built on Tanimbar Island.
Coordinating Minister for Maritime Affairs Rizal Ramli had stated that according to his study, the cost of developing an onshore refinery would be some US$16 billion, while it would take US$22 billion to develop the refinery offshore.
Ramli added that the calculation was far different from the cost estimates provided by Inpex Corp. and Shell, which were set at US$14.8 billion for the offshore and US$19.3 billion for the onshore refinery.
President Joko Widodo finally decided that the refinery plant will be built onshore.
"But, we have urged the contractors to think about the decision, and of course, they will discuss it internally and conduct a review of the earlier recommendation. It will take time before they submit it to us," Biantoro noted.
Biantoro said the decision on building the plant onshore is favorable for the investors as they already have certainties to formulate the projects design and cost.
"The government has been in one position regarding the location of the refinery, and it has provided certainty to the investors. So, what is left to be done by the investors is to focus on one option of building it onshore," he explained.
Regarding the deadline for the revision, Elan said his side had not given any. However, he made assurance that after his side received the proposal from them, SKK Migas will finish processing it in 30 days at the latest.
"So, it will depend on Inpex as the sooner, the better. We will complete its process in 30 days at the latest. Moreover, it will be different from the earlier proposal which they had submitted when the oil price was still high. The cost now could be adjusted in line with the current condition," he noted.
Elan noted that his side will study the incentive request of the investors who had spent a significant amount of funds before the Masela Blocks development scheme was changed.
"It was referred to during the press conference. Inpex wants an incentive. We will evaluate it in the first place what type of incentive are they asking for," he added.(*)