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Energy minister passes Masela megaproject buck to President
Energy and Mineral Resources Minister Sudirman Said has handed the final say on the fate of the gas-rich Masela block development to President Joko âJokowiâ Widodo, following Japanese oil and gas contractor Inpexâs recent call for the government to make a quick decision to end prolonged controversy over the megaproject
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Energy and Mineral Resources Minister Sudirman Said has handed the final say on the fate of the gas-rich Masela block development to President Joko 'Jokowi' Widodo, following Japanese oil and gas contractor Inpex's recent call for the government to make a quick decision to end prolonged controversy over the megaproject.
'For now, I'm indifferent because we have presented all technical and economical aspects [to the President]. One thing that is yet to be clear is the wisdom of the President, so we are waiting for his wisdom,' Sudirman said on Wednesday.
Currently, the approval of such plans of development (POD) for oil and gas block development is under the Energy and Mineral Resources Ministry's authority. However, the huge potential of Masela and divisive arguments on its development have drawn widespread attention.
Inpex and its Dutch partner Shell proposed last year to develop a floating liquefied natural gas (LNG) plant in the Arafura Sea. The controversy began late last year after Coordinating Maritime Affairs Minister Rizal Ramli criticized the offshore plan. Rizal claimed that the plant, touted to become one of the world's biggest LNG facilities, would leave the community's economy behind and instead proposed a new idea for an onshore plant.
The debate put the development of the project in limbo as any change could result in the contractors dropping their initial plans and returning to square one.
Inpex has called on the government to make a quick and clear decision regarding the project.
On Wednesday, representatives from Inpex reportedly visited the presidential office. However, no details were immediately available regarding the meeting.
Inpex, the operator of the block, has continued to assert that an offshore plant would be the most appropriate.
'We investors believe that our revised plan of development proposed to the government is the best option for Masela based on years of studies and various economic, technological, environmental and sociocultural aspects and an opportunity to be the catalyst of development in the eastern part of Indonesia,' said Usman Slamet, Inpex's senior manager of communication and relations.
Both the offshore and onshore schemes have pluses and minuses. The offshore plan, according to figures from the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas), would result in greater revenue, which could be used to develop other potential projects in the eastern regions. However, it would absorb less employment.
On the other hand, an onshore scheme is expected to absorb more workers, particularly local engineers, as the country has the experience required for onshore LNG plant development. However, the scheme would provide less income for the country and the production period would be two years shorter. The acquisition of land on either Aru or Tanimbar island, which are easily accessible from Masela, is also expected to challenge the project.
Despite the high-level controversy, Sudirman said that for the Maluku community, the debate was not an issue.
'I'm grateful to hear from the Maluku governor that Maluku people do not consider the onshore or offshore debate to be important as the most significant thing is the best benefit for the local community,' Sudirman added.
Separately, the Energy and Mineral Resources Ministry's oil and gas director general IGN Wiratmaja Puja said the offshore scheme could also boost the shipyard industry with the need for a complete vessel.
'Although the main buoy of the floating vessel can only be made in China or South Korea, all of the country's shipyard capacity, such as PAL in Surabaya and McDermott in Batam, will be absorbed to support the vessel,' he said.
'The national pipe manufacturer could support the onshore scheme. The steel industry will also be benefited,' Wiratmaja added.
Inpex and Shell submitted the Masela POD in 2010 under a scheme for an offshore LNG plant. However, the discovery of larger resources led contractors to adjust up the capacity of the floating LNG plant to 7.5 million tons per year from 2.5 million tons. The company submitted last year a revision of the plan of development under the new capacity.
Under the onshore scheme, up to 600 kilometers of pipes must be installed to connect the gas block to Aru Island.
