Masela block to improve Maluku people`s welfare

Masela block to improve Maluku people`s welfare

Masela Block. (

"Masela Block by Inpex Corporation should be sped up for the 2017 exploitation."
Jakarta (ANTARA News) - Known as "the province of a thousand islands", Maluku province has abundant natural resources of strategic value.

But poverty remains widespread among rural households in remote islands, with countless number of people living in impoverished conditions.

An integrated rural development programme is considered a promising path for improving the livelihoods of the communities of Southeast and Southwest Maluku districts, where the Masela gas block is situated.

Therefore, President Susilo Bambang Yudhoyono`s decision to let Maluku have a 10 percent participating interest in the Masela Block management is good news for the people in the province.

During his working visit to the provincial capital of Ambon over the weekend, President Yudhoyono responded positively to the Maluku provincial government`s request for a 10 percent participating interest in Masela Block management.

"Maluku will get 10 percent participating interest of Rp400 trillion worth of gas exploitation in Masela block in 2017, or about Rp40 trillion, for the improvement of local people`s welfare," the head of state said.

President Yudhoyono then urged Inpex Corporation, the main shareholder of Masela Block management, to speed up the exploration process.

"The exploration of Masela Block by Inpex Corporation should be sped up for the 2017 exploitation," he stated.

Inpex acquired a 100 percent participating interest in the Masela Block in November 1998, through a public tender conducted by the Indonesian government.

The Abadi-1 (Masela block) exploratory well was drilled in the year 2000 and the presence of gas and condensate was confirmed, which marked the first discovery of crude oil and natural gas in the Arafura Sea.

Subsequently, by 2008, six appraisal wells were drilled, and gas and condensate were confirmed in all the wells.

In September 2008, based on the results of Pre-Front-End Engineering and Design (FEED) for a floating LNG, a development plan was submitted to the Indonesian government and an approval in principle was granted.

After a third-party evaluation, the approval for the plan of development (POD-1) was granted in December 2010 for the commencement of LNG production of 2.5 million metric tons per year.

Therefore, Maluku Governor Karel Albert Ralahalu requested President Yudhoyono to remind the energy and mineral resources minister to immediately sign the agreement regarding the 10 percent participating interest for Maluku.

According to the governor, the production-sharing contract with Inpex Corporation was signed on November 16, 1998, which granted Inpex 30 years of exploration and exploitation rights.

Results of Inpex Corporation exploration show Masel Block has gas reserves of 14 trillion cubic feet, and its development is expected to be completed between 2018 and 2019.

So, Governor Ralahalu sent a letter to President Yudhoyono in February 2012, expressing hope that Energy Minister Jero Wacik would soon sign the agreement regarding Maluku`s 10 percent interest in Masela Block.

After receiving Shell representatives in Jakarta on Thursday, Economic Minister Hatta Rajasa said the Royal Dutch Shell was prepared to develop the Masela Block to boost the production of liquefied natural gas (LNG).

Shell is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.

It is also engaged in major renewable energy activities, including in biofuels, hydrogen, solar and wind power.

Shell has operations in more than 90 countries, produces around 3.1 million barrels of oil equivalent per day, and has 44,000 service stations worldwide.

"The development of Masela Block, with the addition of a floating LNG facility of 2.5 million metric tons per year capacity, would run parallel with the development of phase one. With this, the overall capacity will be increased," Hatta noted.

He expressed hope that with the development of the Masela Block, LNG production would be enough to meet national gas needs until 2018.

"We have to produce large amount of LNG to meet domestic needs," he said.

Hatta stated Shell was likely to invest around US$10 billion in the project.

He added the energy company from the Netherlands would also continue to develop infrastructure facilities in the country, such as filling stations.

In July 2011, the Japanese oil and gas company, Inpex, signed an agreement with Shell for transfer of a 30 percent participating interest in the Masela Block.

The majority state is still held by Inpex, at 60 percent, while the publicly listed PT Energy Mega Persada controls 10 percent.

Maluku has natural resources in abundance, especially in the districts of West Southeast Maluku (MTB), Southwest Maluku (MBD), and Aru Islands, which can be exploited properly and fairly to improve the local people`s welfare.

"The districts of MTB, MBD, and Aru Islands are rich in marine, mining, oil and gas resources for domestic and foreign investors to develop," Ralahalu said.

He added the development of the Maseala oil and gas block on the border between MTB and MBD was expected to boost the economic growth of the districts as well as the province.

No wonder, during a working visit to the MTB district town of Saumlaki in November 2010, Vice President Boediono called on the local community to play an active role in supervising and overseeing various development programmes in the districts, which border Australia and Timor Leste.

"The people here should actively take part in the development programmes of both the central government and regional government in order to improve their welfare here in the future," Boediono said.

He expressed hope that various development programmes in Maluku and the management of Masela Block could be run properly and fairly to meet the local people`s needs.