Coordinating minister proposes conventional LNG plant for Masela

Godang Sitompul

Coordinating Minister of Maritime Affairs Rizal Ramli called on Monday for a change in the plan of the development for the giant Abadi gas field within Masela block in Maluku, saying a floating LNG plant (FLNG) is too expensive to build.

The owners of the project ? Japanese firm INPEX Corp and European firm Royal Dutch Shell -- have planned to build a FLNG plant for the development of the gas field.

Rizal however proposed a conventional LNG plant be built on Aru island to process the gas into LNG and an underwater 600-km pipeline should be built to deliver the gas from the field to the Aru LNG plant.

Rizal noted that the FLNG plant planned for the Abadi field is a relatively new technology, the second to be built by Shell across the world. The FLNG plant is very expensive to build, costing an estimated US$19.3 billion.

If the gas is delivered via pipeline to Aru and an LNG plant is built on the island, the impact on the Indonesian economy will be greater, he said.

?Pipeline is cheaper to develop. We shall build a 600-km pipeline from the gas location to bring the gas to Aru. The immediate benefit is there will be an economic development in Aru,? Rizal said after a meeting with top officials from the Ministry of Energy and Mineral Resources and upstream authority SKK Migas.

?We shall build a city in Aru. In ten years, there will be a city on the island, which could be bigger than Balikpapan. Balikpapan has developed into a big city simply because Total found gas in Mahakam,? he said.

The presence of an LNG plant on the island will also provide a lot of jobs for people living in surrounding areas. The development of a 600-km pipeline will boost the growth of pipe industry in the country. And there will be more benefits created if downstream industry, such as petrochemical plant, is later developed on the island.

He noted that Abadi has a huge gas reserve and more reserves are likely to be discovered there. ?The project will be a prime mover of development in Eastern Indonesia,? he said.

Proven reserve (P1) of Abadi field was initially estimated at 6.05 tcf, but the reserve has been raised to 12 tcf, certified by DeGolyer & MacNaughton and LEMIGAS, according to SKK Migas. Sources said the field?s gas reserve is potentially much higher, up to 40 tcf.

?The field?s potential is very huge. That?s why it is called ?Abadi?,? Rizal said. ?Abadi? means ?eternal?.

Editing by Johannes Simbolon