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Jakarta Post

Another delay for the Masela gas block development

  • Ina Parlina and Raras Cahyafitri

    The Jakarta Post

Jakarta   /   Wed, December 30, 2015   /  05:21 pm

The final say on the eagerly anticipated Masela gas-block development will have to wait a bit longer as President Joko '€œJokowi'€ Widodo, yet to be convinced by existing reports, has requested further input from related contractors.

Following a limited Cabinet meeting on Tuesday to discuss the planned development of the country'€™s largest deepwater gas project, Jokowi said that the Masela development should reflect significant efforts made to ensure that the optimum had been sought for the welfare of the people.

'€œTo be used for the welfare of the people [as mandated by the Constitution] means that the benefits coming from the use of the natural resources must cover all Indonesian people, not only a small group,'€ Jokowi said. '€œI want this large, long-term project to provide direct benefits to [our] economy while, at the same time, I would also like it to create a multiplier effect on the economy.'€

Reports from various parties were heard during the meeting, including those of Energy and Mineral Resources Minister Sudirman Said and Coordinating Maritime Affairs Minister Rizal Ramli, whom are said to have had differences in opinion over the Masela project.

A study conducted by an independent consultant, hired by Sudirman'€™s office to provide a professional recommendation in hopes of resolving the intensifying differences, is also believed to have been presented during the meeting.

'€œAll feedback has been received but the President wants to hear directly from contractors. Therefore, they will be invited to present their aspirations [at a meeting] in the near future,'€ Sudirman told reporters.

The Masela block is currently operated by Inpex and Shell, whom hold stakes of 65 and 35 percent, respectively.

There has not been an exact date set for Inpex and Shell to present before the President.

The Masela plan of development (POD) was initially submitted in 2010. However, larger resource findings have prompted contractors to revise the plan, adjusting for an increase in the capacity of the floating LNG plant to 7.5 million tons per year from 2.5 million tons. As much as 10.7 trillion cubic feet in gas reserves is estimated to exist in the block. The revised POD was submitted to the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) in September.

Differing calculations with regard to the expected investment required to develop Masela have been presented, ranging from between US$14 billion to $19 billion. Given the amounts, the Masela gas block development is set to become the biggest deepwater gas project in the country.

According to Sudirman, state oil and gas firm Pertamina might also participate in the project in the future.

Pertamina president director Dwi Soetjipto confirmed that his company had voiced a strong interest in the Masela project.

'€œWe have expressed several times our interest to participate in Masela. We are ready to take an ownership stake of up to 25 percent,'€ Dwi said.

The Masela development is seen as important as it will become the new future energy source. Failure to monetize the assets will force the country into becoming a net importer of gas sooner than is expected. The development of Masela had initially be due for completion by 2018, but under the revised plan, completion is now scheduled for 2024.

Separately, Inpex'€™s senior manager of communications and relations said, '€œWe understand that development of the block is currently under review by the government. We have delivered our POD [plan of development].'€

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