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Cabinet rift widens over gas block
Sudirman Said (left) - Rizal Ramli (right) - (JP)The rift within the Cabinet over the future of the Japan-led Masela gas block has amplified to a new level of animosity after the nationâs energy minister said on Monday that a fellow minister had been trying, for considerable time, to stymie reform in the energy sector
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Sudirman Said (left) - Rizal Ramli (right) - (JP) (left) - Rizal Ramli (right) - (JP)
Sudirman Said (left) - Rizal Ramli (right) - (JP)
The rift within the Cabinet over the future of the Japan-led Masela gas block has amplified to a new level of animosity after the nation's energy minister said on Monday that a fellow minister had been trying, for considerable time, to stymie reform in the energy sector.
Energy and Mineral Resources Minister Sudirman Said did not openly name the minister, but Coordinating Maritime Affairs Minister Rizal Ramli is thought by many to be the minister in question because of Rizal's tendency to frequently engage in heated arguments over several issues.
'It's not only hampering the Masela project. There were also negative comments on electricity, the Energy Security Fund, infrastructure development and on Freeport [Freeport Indonesia],' Said said.
In an emotional tone, Sudirman, who was once an accountant and the co-founder of the Indonesian Tranparency Society (MTI), said it was easier to deal with the so-called 'mafia' in the Indonesian oil-and-gas business.
'Being disturbed by a colleague is tougher than being troubled by the mafia. With mafia or criminals, we can confront them. With a colleague, will we exchange rhymes?' Sudirman said.
The conflict between the two ministers started as soon as Rizal was appointed a minister in August last year following a Cabinet reshuffle. On day one as minister, Rizal, who was an outspoken critic of the government, and finance minister in 2001, said the government's program to develop 35,000 megawatts of power in five years was too ambitious and should be scaled down.
Soon afterwards, Rizal voiced criticism targeting various sectors, but most of his barbs were directed to policies in the energy and mining sector.
Regarding the Masela block development, Rizal insisted that the project should be developed under an onshore scheme instead of an offshore scheme, which will involve a floating liquefied natural gas (LNG) plant on the gas block located on the Arafura Sea.
He said the onshore scheme would deliver more benefits to regional development. He made the comment after Japan's Inpex and the Anglo-Dutch oil firm Shell, the contractors of the block, submitted last year a revised plan of development (POD) to the Upstream Oil and Gas Regulatory Task Force (SKKMigas).
Rizal's view was diametrically opposed to the views expressed by the contractors, SKKMigas and the Energy and Mineral Resources Ministry, all of whom preferred on offshore development plan.
President Joko 'Jokowi' Widodo tried to resolve the dispute, but he has not made a firm decision despite a new study by an international expert and a series of meetings involving the contractors and the office of the Presidential chief of staff.
'Ministers are the ones who execute the President's policies. Before any decision is made, it is inappropriate to build up a polemical atmosphere outside the Cabinet. Polemics are only permitted during limited meetings or Cabinet meetings,' presidential spokesperson Johan Budi said.
He said that Jokowi would call for another limited Cabinet meeting before coming up with a firm decision.
The Masela POD under an offshore scheme was approved in 2010 by the previous administration of Susilo Bambang Yudhoyono.
Inpex and Shell submitted a revision after they discovered larger reserves, bringing the capacity of LNG production from the block to 7.5 million tons per year from a previous estimate of 2.5 million tons.
Approval was expected last year so that the contractors could meet the scheduled final investment decision (FID) in 2018 and fully complete development in 2024. The timeline is now unclear.
Inpex, which holds a 65 percent interest in Masela, has expressed its disappointment in the prolonged decision-making process.
'It is unfortunate that the decision-making process is so lengthy. However, we appreciate the President's attention and his interest in this project. Inpex, which has long been a partner of the Indonesian government and always complies with regulations, will appreciate certainty,' Inpex spokesperson Usman Slamet said. 'It would be fair if all government institutions had corresponding views and performed prudent practices, such as we have experienced with SKKMigas and the oil-and-gas directorate general.'
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