What Next For Masela?

The heated debate pitting two powerful ministries on whether the LNG (liquified natural gas) plant of the US$15 billion Masela offshore gas project should be built offshore as a floating LNG facility or built onshore several hundred kilometers away on either Aru or Tanimbar island has finally subsided. Recently, President Jokowi finally decided to side with Coordinating Maritime Minister Rizal Ramli, who argued for an onshore LNG plant as it would have a broader 'multiplier' impact on the region's local economy.

In contrast, the mines and energy ministry agreed with the two project sponsors, INPEX from Japan (with 65 percent interest) and Shell from the Netherlands (with 35 percent), an offshore, floating LNG plant built right next to the gas field would be more cost- and time-efficient. They argued that an offshore option would not require building either a 600- or a 200-kilometer-long pipeline across Indonesia's eastern Arafura sea, depending on which island is chosen. Also, it does not require costly and time consuming land clearings and permits to build an onshore facility.

April 5, 2016