Thursday, 11 April 2019 08:49

Govt accelerates Masela block development

The government is putting pedal to the metal to accelerate the development of the gas-rich Masela block in the Arafura Sea off Maluku. Coordinating Maritime Affairs Minister Luhut Binsar Pandjaitan will meet with the chairman of Royal Dutch Shell on April 21 to discuss the continuation of the block’s development. The government would stick to its decision to build on-shore gas processing facilities for the gas block, Luhut said as quoted by
There are a number of obstacles hampering the development of the Masela block. Besides the difficulties of finding a location for the on-shore gas facilities, a revision of the Plan of Development (PoD) for the block has also not been approved. According to Luhut, the development of the gas facilities would need at least 1,000 hectares of land and the local government would have to find a location and complete the land acquisition process within a year.
Meanwhile, the undersecretary in charge of infrastructure in the Office of the Coordinating Maritime Affairs Minister, Ridwan Djamaluddin, said he hoped that the Environment and Forestry Ministry would accelerate the process to provide land within six months. In addition, the meeting with Shell will also discuss the production sharing split. “Once it is approved, the company’s PoD will be approved,” Ridwan added
According to Shell’s website, the chief executive of the company is Ben van Beurden, while Charles O. Holliday is the non-executive chairman of the oil giant, which partly owns the Masela block. But, there is no confirmation yet, who will meet Minister Luhut. The head of the Upstream Oil and Gas Regulatory Task Force (SKK Migas), Dwi Soetjipto, said negotiations related to the approval of the revised  PoD would be completed in the first half of this year.
Previously, Dwi told the press that the review of the revised PoD also included the technology to be used in the project, the investment commitments and the local content requirement. Besides completing the revision of the PoD, Inpex -- as the operator of the gas block -- also has to tackle three main tasks this year, namely, public consultation for the Environmental Impact Analysis (Amdal), submitting the Amdal to the Environment and Forestry Ministry and to start the baseline survey. The Masela block is operated by Inpex of Japan, which has a 65 percent stake, while Royal Dutch Shell owns the remaining 35 percent.
Meanwhile, Inpex’s senior specialist media relations officer, Moch. Nunung Kurniawan, told The Jakarta Post recently that the company was still in discussions with SKK Migas over its PoD revision, especially on cost and technical matters.
“We [Inpex], are still holding discussions about PoD-related matters with the Indonesian government surrounding a cost efficient and economically competitive project,” he said.
When asked about the cost of the project, which SKK Migas has estimated to be US$16 billion, Nunung added that Inpex could not confirm this number for now, saying that it “was taking into consideration the complexity of the Abadi project”. He said Inpex was also in discussion with the government over the contract extension of the Masela block, which Energy and Mineral Resources Minister Ignasius Jonan had previously said would be extended by up to 27 years. The extension was initially set at 20 years as per regulation. The additional seven years is compensation for changing the project development scheme from off-shore to on-shore. The  Masela block is expected to begin production in the second quarter of 2027.


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