OLNG supporters launch black campaign

The protracted debate on Masela block gas project has taken an ugly turn as supporters of onshore LNG scheme launched black campaign using questionable information to attack Minister of Energy and Mineral Resources and investors of the project.

Ridwan Darmawan, Executive Director of little known Indonesia Human Rights Committee for Social Justice, was quoted by news portal rimanews.com as saying over the weekend that he had obtained information that Japanese oil and gas firm Inpex, the operator of the Masela block with 65 percent interest (partner Shell holds the remaining 35% interest), had transferred a total of US$1 million to Kuntoro Mangkusubroto, a former energy minister and a long-time friend of Sudirman, to help ensure the government selects the floating LNG scheme (FLNG) in the development of the gas-rich Abadi field in the block as proposed by the company.

Ridwan said that the money was not directly received by Kuntoro as it was transferred to consultancy firm Tridaya Advisory, owned by Erry Riana Hardjapamekas, also a close friend of Kuntoro, for consultancy services.

He urged the Corruption Eradication Commission (KPK) to launch investigation into the matter.

The accusation came following an earlier controversial statement by Coordinating Minister for Maritime Affairs Rizal Ramli that the government has selected the onshore LNG (OLNG) scheme for the development of the Masela block. This was immediately denied by Presidential Spokesman Johan Budi, who said that President Joko Widodo (Jokowi) has yet to make decision as various aspects from social to security are still being considered.

The approval of the Masela block project has become a protracted process with political nuance following unauthorized intervention by Rizal, who insisted on the use of the OLNG scheme despite a two-year study by Inpex concluding that FLNG is the most commercially feasible.

Minister Sudirman, who according to regulations has the authority over the project (not Rizal), was supposed to approve in October of last year the revise plan of development (POD) of the Masela block project with an FLNG scheme as recommended by upstream oil and gas authority SKK Migas.

But intervention and political maneuvering by Rizal has prompted the president to delay the approval. Although International consultancy firm Poten & Partners, which was later assigned by the government to give independent assessment, confirmed the proposed FLNG scheme, the government has yet to approve the project.

Reports said that Jokowi is expected to soon hold a limited cabinet meeting, where an FLNG scheme is expected to be finally approve, thus ending months of uncertainty suffered by Inpex, which is rushing against time to complete what is seen as one of the country?s largest gas projects. (*)