President Jokowi: Masela Block Investment Important for Indonesia

By Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation
Date 18 Juli 2019
Category: News
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President Jokowi accompanied by Cabinet Secretary, Minister of Energy and Mineral Resources, and Head of the Indonesian Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) receives Inpex’s delegates at the Merdeka Palace, Tuesday (16/7). (Photo: Presidential Secretariat)

President Jokowi accompanied by Cabinet Secretary, Minister of Energy and Mineral Resources, and Head of the Indonesian Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) receives Inpex’s delegates at the Merdeka Palace, Tuesday (16/7). (Photo: Presidential Secretariat)

Investment in Masela Block is very valuable and will bring benefits to Indonesia, President Joko “Jokowi” Widodo said following the completion of negotiations between the Indonesian Government and Japanese oil and gas giant Inpex Corporation to develop gas-rich Masela block in the Arafura Sea in Maluku.

“The giant investments are highly valuable to Indonesia,” President Jokowi wrote on his social media accounts—Instagram, Facebook and Twitter.

According to him, the Masela’s Plan of Development (PoD) also includes commitment to maximize the local content and empower local workforce in running the gas block.
Based on report from the Upstream Oil and Gas Regulatory Special Task Force (SKK Migas), the production of the Masela Block will begin in 2027.

“Indonesia will receive large portion of this project, as well as the multiplier effect, including petrochemical industry that will also be built following the Masela project,” President Jokowi continued.

Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan earlier stated that the total cost to develop the Abadi Field LNG project in the Masela Block reached US$18.5 billion – US$19.8 billion.

“This is the largest foreign investment since 1968 and a symbol of global-level development in Eastern Indonesia after Freeport Indonesia,” Jonan said after reporting the development of agreement of the Masela Block to President Jokowi, at the Merdeka Palace, Jakarta, Tuesday (16/7).

During construction, Jonan continued, the Masela Block project can absorb 30,000 workers and once it starts operation, the project is predicted to absorb between 4,000 – 7,000 workers including those working for the petrochemical industry.

In the meantime, CEO of Inpex Takayuki Ueda said that the concept of project development has changed from a floating refinery scheme to a land LNG scheme.

“The Abadi Gas Field which has very good reservoir productivity will be developed efficiently and will operate for a long period of time,” Takayuki said.

In addition to the approval of the revised PoD, the Government also approved applications for an additional 7-year time allocation and extension of the Work Area Production Sharing Contract (PSC) or Masela Block for 20 years until 2055.

Furthermore, Inpex will continue to work with Shell as a working partner to begin the preparatory activities needed to carry out Front End Engineering Design (FEED) activities.

With this project, the Indonesian Government will receive an investment of around US$39 billion, while Inpex will receive around US$37 billion. That figure includes 10% for the regional government, so Inpex and Shell approximately will receive US$33.3 billion. However, the amount can still be increased from multiplier effects such as the petrochemical industry and the potential investment of US$5 billion in the area. (*/ICE)

Translated by: Estu Widyamurti
Edited by: Mia Medyana

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