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Friday, February 21, 2020

Masela's New Round

Finally, there began to shed some light on the future of gas from the Abadi Field, Blok Asela, in Maluku. PT Perusahaan Listrik Negara (PT PLN Persero) and PT Pupuk Indonesia (Persero) signed a memorandum of understanding on gas purchases with Inpex Corporation on Wednesday (2/19/2020) night in Jakarta. This is the first step in a long journey on how natural resources in Indonesia should be managed.

The Abadi Field on the Masela Block

The Abadi Field on the Masela Block is another blessing from God for this country. Discovered in 1998, proven reserves of Masela gas 18.5 trillion cubic feet. Planned for production in 2027, the Masela Block will produce 9.5 million tons of liquefied natural gas (LNG) per year and 150 million standard cubic feet per day (MMS CFD) of natural gas.

Even more detailed, the natural wealth is managed with a capital of 19.8 billion US dollars or equivalent to Rp. 267 trillion. The government calculation shows that the total gross revenue from the Masela Block will reach 118.41 billion US dollars or nearly Rp 1,600 trillion during operation. The share of the country will reach 38.9 billion US dollars or Rp 525 trillion. The remainder is the contractor's portion and the recovered operating costs (cost recovery).

the Arun gas field in Lhokseumawe, Aceh

How can you make Masela's fate unlike other natural resource-producing regions in Indonesia? As a comparison, the Arun gas field in Lhokseumawe, Aceh. Starting in production in 1979, Arun gas was exported to Japan and South Korea. Arun was recorded as the largest natural gas producer in the world in 1990 with a production capacity of 1.5 million tons per year.

As it was written in this column on December 7, 2019, the Arun gas well is now dry and has stopped operating since October 2014. So, what is the Arun gas yield? Based on statistical data, the poverty rate in Aceh as of March 2019 was 15.32 percent, far above the national average in the same period of 9.41 percent.

The Human Development Index (HDI) in Aceh in 2018 is 71.19 or slightly below the national HDI of 71.39 Arun should be a lesson for Masela. How abundant natural wealth turned out not to be able to fully improve the lives of its people. That is because natural wealth is seen as a commodity-producing foreign exchange, not the capital for driving domestic development.

The matter of managing natural resources is not a trivial matter. Moreover, Masela is much bigger than Arun. The management is definitely more complicated. The signs have been seen when the polemic decided whether the Masela Block gas should be managed offshore or processed at an onshore refinery several years ago. Finally, the Masela gas was decided to be processed at the mainland refinery.

PT Perusahaan Listrik Negara (PT PLN Persero)

The memorandum of understanding is already in the right direction. Its natural gas is the source of energy for PLN's power plants. While the rest is used to support the fertilizer industry. Indeed, the memorandum of understanding is not final and binding like a gas sale and purchase agreement. At least this is the first step of a long journey ahead.

For PLN, the use of gas from Masela can replace fuel oil for electricity generation. While for the fertilizer industry, gas becomes a vital raw material. Gas from Abadi Field is piped directly to the fertilizer plant. This means that fertilizer plants must be built on land or on the island around sources of gas capable of providing new jobs.

Once again, Arun must be a lesson for Masela. Gas must be a source of energy to empower the economy in the country, not sold to generate foreign exchange. Both the regional and central government must have a long-term vision so that the Masela Block does not suffer the same fate as the Arun Block. 

Kompas, Page-13, Friday, Feb 21, 2020

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