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Inpex downsizes personnel amid Masela uncertainty
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Downsizing: President Joko "Jokowi" Widodo discusses the development of the Masela gas block at a press conference last year. The uncertainty surrounding the development of the Masela gas-block project has led Japanese oil and gas giant Inpex to downsize their personnel in Indonesia.
(Kompas.com/Indra Akuntono)
T
he uncertainty surrounding the development of the Masela gas-block project has led Japanese oil and gas giant Inpex to resort to downsizing their personnel in Indonesia.
Head of the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) Amien Sunaryadi said on Wednesday evening that he received news from Inpex that its plan to downsize its workforce was because as of March 10, an agreement on the revised Masela plan of development (POD) had not yet been reached.
He said Inpex told SKK Migas that it would reduce around 60 percent of its personnel in Indonesia.
“SKKMigas is worried that it [the downsizing] will lead to layoffs […] There are around 350 to 400 Inpex personnel in Indonesia, so there will be only around 90 to 100 personnel,” said Amien.
He further said SKK Migas also received news from Shell that its CEO had asked its engineers in Kuala Lumpur, Jakarta and the Netherlands attached to the Masela project to pursue other jobs at Shell Global.
Inpex and Shell are waiting for a decision on the POD. Inpex submitted the revised POD in September last year.
Due to its massive estimated reserves of 10.73 trillion cubic feet (tcf), Masela is expected to be a major new source of energy in Indonesia. However, its development has been slow as the government has yet to decide whether the block will be developed as a floating offshore liquefied natural gas (LNG) plant or onshore scheme.
The Masela block, located in the Arafura Sea, is currently operated by Inpex, which holds a 65 percent stake. The remaining 35 percent is held by Shell. The Masela POD was initially submitted in 2010, however, the discovery of larger resources led contractors to revise the plan, adjusting the capacity of the floating LNG plant to 7.5 million tons per year from 2.5 million tons. The revised POD is scheduled to be approved by the end of the year. Conflicting opinions within the government have hampered its progress, however.
Amien said that Inpex hoped the revised POD was approved soon. However, it has been alleged that Inpex stated that even if a decision was made right now to move forward with the floating LNG, the final investment decision (FID) can only be made at the end of 2020.
“Those international investors have also included parameters and country risks, among other risks, within their calculations. [Having the FID] at the end of 2018 is still acceptable. However, if you enter the election season in 2019, it will be a difficult time for any large investment decisions to be made,” he said.
Amien said the SKKMigas was worried that further delays would result in another layoff in the future. The Maluku people would also need to wait longer to receive benefits from the Masela project. (ebf)
