showdown in masela
Both Maluku and East Nusa Tenggara feel they have a claim to a 10-percent share in the Masela Block. The two regions are hoping for increased revenue and multiple benefits from the Abadi Field megaproject.
ONE topic always seems to make its way into discussions on the Masela Block project: participation rights. Most recently, on Monday, November 4, the issue was again discussed during a private meeting between Maluku Governor Murad Ismail and Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) Chairman, Dwi Soetjipto.
Dwi refused to explain the topics discussed in the closed meeting in Murad’s office that morning. Meanwhile, the host said he conveyed all of his hopes for Masela to Dwi. “If possible, stay away from other provinces that claim they also have the right to a five-percent participating interest. This is very sensitive,” said Murad.
Murad was referring to East Nusa Tenggara (NTT). Regional government officials and public figures in Maluku and NTT recently launched into another debate over who had the right to the 10-percent share that must be released by Masela Block’s contractors, namely, Inpex Masela Limited and Shell Upstream Overseas Ltd.
NTT Governor Viktor Bungtilo Laiskodat’s statement on Friday, October 25, triggered new reports about the participation rights dispute that first emerged three years ago. The former chairman of National Democrat (NasDem) Party central board’s agricultural and maritime affairs division said President Joko Widodo and then-Energy and Mineral Resources Minister Ignasius Jonan had already approved of the 10-percent’s two-way split between Maluku and NTT. “Starting 2025,” said Viktor, as quoted by the Antara news agency.
Viktor even mentioned that his region is estimated to profit as much as Rp30 trillion from the Masela project. He believes that this massive amount can be used to resolve various infrastructure problems in NTT. “Roads, water and others will certainly be resolved because we have over Rp30 trillion outside of other revenue sources,” he said at the time.
The dispute peaked over the past month. During a workshop held by the Papua and Maluku SKK Migas at the Santika Hotel in Ambon, October 31, there was little time to discuss the several scheduled topics. The event was attended by Maluku Deputy Governor Barnabas N. Orno and a number of Maluku regents. During the occasion, regional government officials showered demands to give the 10-percent share to Maluku and regencies around the Masela project. “We have to stress that the participating interest cannot be split with other regions. We will communicate with the central government,” said Barnabas after opening the event. “They can request five percent, but don’t take Maluku’s share.”
Tanimbar Islands Regent Petrus Fatlolon, who also attended the workshop, says Governor Murad has scheduled a meeting with Energy and Mineral Resources Minister Arifin Tasrif in mid-November. He hopes that Tanimbar Islands will be determined as a Masela gas producing region. “When completed, there are two benefits: shared profit and participating interest,” Petrus told Tempo.
Meanwhile, Viktor refused to explain his claim to NTT’s right to a five-percent participating interest when Tempo attempted to speak with him in Kupang on Thursday, November 4. “That’s the central government’s business,” he said.
The Tanimbar Islands Regency in Maluku is the host for the Masela gas project. A refinery for the liquefied natural gas (LNG) produced by the Abadi gas field will be built in Saumlaki, the regency’s capital, located on the Yamdena Island. The facility will be connected with the Abadi field—around 147 kilometers to the island’s southwest—by a submarine pipeline. At least 1,500 hectares of land is needed for the project.
The project has grown increasingly popular in Saumlaki. “Masela Block, Inpex!” shouted Ben, a Latdalam village resident, when he stumbled upon an SKK Migas group. The middle-aged man was walking with other residents on their way home from the field. “We will definitely give our support.”
Latdalam is among villages predicted to be the location of Masela’s onshore refinery. Petrus Fatlolon, who accompanied the SKK Migas team when reviewing the location, claims that his people’s understanding of how the project would benefit the region—including in regard to the participating right—is improving.
Governor Viktor Laiskodat, who was elected in the 2018 regional heads election, was not the person responsible for bringing up NTT’s participating right in the Masela project. Frans Lebu Raya, NTT governor in 2008-2018, had already advocated for the region’s right to a 5-percent share since the tenure of Energy and Mineral Resources Minister Purnomo Yusgiantoro. At the time, Frans also sent a letter to the State Palace. “But no result,” said Frans in Kupang on Saturday, November 16.
“If possible, stay away from other provinces that claim they also have the right to a five-percent participating interest. This is very sensitive,” said Murad.
He explained that the distance between the Masela Block and Maluku’s provincial government in Ambon is around 600 kilometers, closer than Kupang, which is 800 kilometers away from the block. But he stressed that the Abadi gas field in the Arafura Sea still lies outside both provinces’ 12-mile territorial sea. “So it should be split between the two regions,” he said. “This is the central government’s authority.”
Article 2 in the Energy and Mineral Resources Ministerial Regulation No. 37/2016 on participating rights for oil and gas producing regions regulates the contractor’s obligation to offer a 10-percent share to region-owned businesses. Specifically for work areas that are producing for the first time and are located off-shore, up to 12 miles from the shore, the energy ministry has the authority to award the participation right to state or region-owned businesses.
The 10-percent share is, in fact, not free. The regional government, through a region-owned enterprise (BUMD), must invest according to the region’s share. The amount is first paid by the project’s contractor, and must be paid off in stages using the region’s share of profit.
With this scheme, Petrus is still certain that the participating region would enjoy great profit. According to his calculations, a region with a 10-percent share in the Masela Block would receive an extra revenue of US$3.7 billion, or Rp52 trillion, during 2027-2955 production period. Furthermore, Petrus hopes that his region’s involvement in the Masela project would also be able to improve the quality of Tanimbar’s human resources, who would have to meet the project’s needs. “Don’t let them be unemployed,” he said.
Putri Adityowati, Retno Sulistyowati, Johanes Seo (Kupang)