Gov't opts for onshore construction of LNG project in eastern Indonesia

Indonesian President Joko Widodo on Wednesday decided the construction of the country's biggest Masela gas block in Maluku will be undertaken onshore to help expand economy in the area.

The decision in turn rejected the proposal of Japanese firm, INPEX Corp, the operator of the field, for setting up a floating LNG facility to develop the block.

"Based on a calculation we have made, I choose onshore construction," President Widodo said in a statement obtained by Xinhua.

"We want the economy in the area to be positively affected," he said at the main airport in West Kalimantan.

Previously, the INPEX corp., has said on its plan of development(POD) that the floating LNG(FLNG) facility requires fewer investment than the onshore construction, and shorter period of construction.

According to the firm's calculation, an FLNG facility will require total investment of 14.8 billion U.S. dollars, fewer than the projected 19.3 billion U.S. dollars for onshore facility. The upstream oil and gas authority SKK Migas has also recommended the use of FLNG technology.

According to the POD, final investment for the Masela block development is expected to be realized in 2018, in the hope that production can start in 2024.

The decision to select between FLNG and onshore construction should have been made last October. It has been delayed due to the difference of opinion between Indonesian Minister of Energy and Mineral Resources Sudirman Said and Coordinating Minister for the Economy Rizal Ramli. Endit