TEMPO.CO, Jakarta - Satya Yudha, deputy chairman of House of Representatives Commission VII overseeing energy, called on the government to thoroughly reviewed contract clauses drafted for the liquefied natural gas (LNG) refinery operation in the Masela Block, Maluku.
“The content of the contract is important because it’s related with the state sovereignty,” Satya said in Jakarta on Saturday, January 2, 2016.
Satya highlighted cost differences between offshore and onshore refinery operations. According to Satya, operating an onshore refinery would be more costly than operating an offshore one. In addition, the international LNG prices had fluctuated, exposing the state to bear more losses in an event of cost overrun.
Aussie Gautama, a former deputy for planning at the Upstream Oil and Gas Regulatory Special Taskforce (SKK Migas), said that a cost overrun during a refinery development was common. Aussie added that a plan of development that had been previously prepared would be a subject of changes and could result in a cost overrun by 90 percent.
“What’s important is whether the project has economic value or not,” he said.
The government is currently reviewing a scheme for an LNG refinery operation at the Masela Block. Coordinating Maritime Affairs Minister Rizal Ramli proposed an onshore refinery, while Energy Minister Sudirman Said suggested an offshore refinery. President Joko “Jokowi” Widodo earlier said that the Masela Block operation must have a huge economic impact on the people in Maluku.