Masela Block Polemics: Conflict between Rizal and Sudirman continues

Oleh Arnold Sirait 26 January 2016

The President of Indonesia, Joko (Jokowi) Widodo, will soon decide the development scheme for Masela Block. But, the conflict of Rizal Ramli and Sudirman Said still continues until now.

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KATADATA - The polemics of Masela Block’s development scheme continues as the conflict between Coordinating Maritime and Mineral Resources Minister, Rizal Ramli, and the Energy and Mineral Resources Minister, Sudirman Said, rages on; even though President Joko (Jokowi) Widodo will soon decide whether to use the offshore FLNG scheme or onshore pipeline scheme for Masela Block.

Rizal Ramli said that there are certain sides that try to build up a concept that the FLNG is better than the onshore. He still believes that the onshore scheme is the best development that Masela Block can get. It is also more economically efficient compared to FLNG.

To prove his statement, Rizal has made a comparison between Masela Project and Prelude Project in Australia. Prelude Project used FLNG scheme, with the capacity of 36 million tons per year (mtpa) and spent US$ 3.5 billion per mtpa. Referring to this, FLNG refinery of Masela Block, with the capacity of 7.5 mtpa, will require investment up to US$ 22 billion. 

It is different with the onshore scheme, which can be done in Selaru Island that is much closer with Masela Block. The investment needed is only at US$ 16 billion, and it already includes the cost to build 90 kilometers of pipes from the block to the land.

Besides cheaper, the onshore scheme will also give a greater multiplier effect for the economic growth of the surrounding areas. Gas refining units in Selaru Island will open up vacancies for the local people. This condition can grow downstream industry like fertilizers, petrochemicals, and gas usage for fuel. Meanwhile, FLNG will only benefit the locals at the amount of 10 percent from the total investments.

However, Sudirman Said still stated that the most suitable scheme for the block is FLNG. This is belief is based on the reviews from Poten and Partner, and the government’s Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas). 

But when this matter was brought into a talk on December 29th 2015, the President of Indonesia asked Sudirman to study about the block again to make sure that the scheme really works out for the people’s best interest. 

So, Sudirman formed a team that consists of the Energy Ministry, SKK Migas, and several universities to study about the development scheme for Masela Block again. Sudirman has even asked SKK Migas and his ministry to open up a temporary office in Ambon, which is near the block. This was done in order to directly hear the opinions of the people, institutions, scholars, and oil and gas experts in Moluccas. 

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