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March 16th, 2016 
Awake Goy 
Fahwad Al-Khadoumi (nsnbc) : The executive director of Indonesia’s Institute for Defense and Security Studies, Connie Rahakundini Bakrie, noted that the development of the Masela gas block located at the maritime border to Australia increased the risk of a proxy war, but that the development would increase Indonesia’s regional influence. Late February Indonesia’s Chamber of Commerce stressed that it was time for President Jokowi to decide whether to build an on-shore or an off-shore liquefied gas facility.
Masela Gas Block, Indonesia. Courtesy energy-pedia.com
The Indonesian State news agency Antara quoted Connie Rahakundini Bakrie as saying that the off-shore scheme design for the Masela gas block would underpin Indonesia’s presence at its maritime border with Australia and affirm the existence of Indonesia’s exclusive economic zone. Bakrie also stressed that the development of the Masela gas block and the off-shore option would increase maritime traffic in the region.
The executive director of Indonesia’s Institute for Defense and Security Studies also stressed that Indonesia should act quickly, especially because Australia will strengthen its border region by building several floating liquefied natural gas (LNG) plants. Bakrie noted that the development of the Masela gas block should be based on a holistic approach that includes humans, living space, welfare, sustainability, prosperity, and the environment. She stressed that the off-shore option was preferable to the on-shore option, also because President Joko Widodo (Jokowi) has committed to transforming Indonesia into a maritime axis. The defense expert stressed also, that the development of the Masela gas block would increase the risk of a proxy war against Indonesia via “one of Australia allies”, and that Indonesia should take this risk into account in its defense planning.
In late February Indonesia’s Chamber of Commerce urged Jokowi to make an immediate decision about the Masela Gas Project. Kadin Chairman Firlie Gandinuto commented to the press, saying that an immediate decision was needed to maintain an environment conducive of investments. Firlie added that oil and gas industrials worldwide are following the progress in the negotiations.
Firlie also stressed that treading waters and about the on-shore vs. off-shore decision would lead to Indonesia lagging behind Vietnam and Myanmar in competition. Firlie noted that there had been a failure in revising the Law No. 22 of 2001 on oil and gas, adding that “The country’s oil and gas industry is undergoing a gloomy period. The industry is being hit by low oil price and poor legal certainty.”
The Kadin Chairan said that Kadin Indonesia would back up any decision made by the government on the Masela Project. Firlie noted that both the on-shore and the off-shore option for the Liquefied Natural Gas (LNG) plant have positive and negative aspects. What is certain, however, is that “either one of the options would contribute to economic development”, he added.
The Masela block is southern Maluku is estimated to hold one of the world’s largest known natural gas reserves. The project is 65% owned by Japan’s Inpex Masela Ltd while Shell Corporation is holding 35%. Japanese import of LNG would largely be guaranteed as over 80% of the Japanese population are against the restart of the country’s nuclear power plants due to the 2011 disaster at the Fukushima Daiichi Nuclear Power Plant.
Inpex has proposed to build a floating LNG plant. Inpex conducted a feasibility study according to which building the plant off-shore would cost about $14.8 billion, as against $22.3 billion if it is to be built on-shore. Additional cost would be needed to build around 60 kilometers of gas pipes under the sea if the plant is to be built on the nearby island of Aru. Consultants have also pointed out that the pipes, apart from the extra cost, would be vulnerable to earthquakes. Earthquakes are a frequent occurrence in the area.
Indonesian Energy and Mineral Resources Minister Sudirman S., for his part, noted that both the off-shore and the on-shore projects had their advantages and drawbacks. However, Sudirman stressed that the Masela gas black had not only commercial value but that it involves important social aspects too. Another aspect that needs to be considered is the security aspect of the location that needs serious addressing as it is close to Australia and Papua New Guinea, he said.
The LNG plant is expected to be built at an annual capacity of 7.5 million tons. Upstrem Oil and Gas Regulator (SKK Migas) already approved the operators proposal to build the LNG plant offshore. Coordinating Minister for Maritime Affairs, Rizal Ramli, however, recommends to build the facility on-shore. Rizal stressed among others the possibility of the integration of the plant with petrochemical industries if the plant is built on-shore on the Aru Island. The on-shore option is also supported by the people of Maluku who believe that the on-shore option will boost the regional economy and lead to further development.
F/AK – nsnbc 16.03.2016
Source Article from http://nsnbc.me/2016/03/16/indonesian-defense-analyst-stresses-risk-of-proxy-war-with-australia-over-masela-gas-block/
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