Jakarta. Japan's Inpex will postpone developments of the Masela Abadi LNG plant in Maluku by at least two years, following indecision from the government on the companies floating plant proposal.
Inpex in September submitted a plan to build a floating LNG plant capable of making 7.5 million metric tons of the fuel each year.
The proposal is supported by Energy and Mineral Resources Minister Sudriman Said, but Coordinating Minister for Maritime Affairs Rizal Ramli argued the company would contribute more to the economy of the surrounding regions by building the plant on land.
The disagreement — which escalated to heated bickering between the two ministers on social media — has undermined the ability of Inpex to reach the projects' final investment decision (FID), on which engineering, procurement and construction of the project would based on, by the end 2018.
"Inpex has said they cannot reach FID with the remaining time," Amien Sunaryadi, SKK Migas chairman, said in a press conference late on Wednesday (16/03).
The company will need additional years to asses the political risk of the project, relating to the potential results of 2019's presidential election, he said.
"Even if the plan is approved now, the FID would finish by 2020, thus pushing Masela block operations from 2024 to 2026," Amien said.
The development would further delayed if the government decides to build the LNG plant on land, further delaying much needed investment and jobs opportunities in one of the poorest provinces in Indonesia, he said.
The Masela block is located near Indonesia's border with northern Australia. Inpex owns 65 percent in the block with the remaining 35 percent held by Royal Dutch Shell.