5 Latest Facts About the Masela Block in Maluku, the Giant Gas Project Now Expected to Find Buyers

Kapanlagi.com - The Masela Block, one of the largest liquefied natural gas (LNG) projects in Indonesia, has gone through a winding journey since its discovery in 1998. Strategically located in the Arafura Sea, Maluku, this project holds tremendous potential to enhance national energy production and promote gas downstreaming for the domestic industry. However, the journey towards realizing this project has not been smooth.

Since being designated as a National Strategic Project (PSN), the development of the Masela Block has been hindered by various challenges, ranging from changes in management schemes, policy tug-of-war, to investor turnover that has left it in limbo.

Now, the government through SKK Migas aims for LNG from the Masela Block to find buyers by 2025. Inpex Corporation, as the project operator, is also urged to promptly finalize gas sales contracts to ensure investment sustainability. So, what is the latest news from the Masela Block? Check out the interesting summary compiled by Kapanlagi.com from various sources on Sunday (16/2/2025).

1. LNG Sales Target for the Masela Block in 2025

After years of stagnation, SKK Migas is now aiming for an important achievement: securing gas buyers for the Masela Block by 2025! With the ongoing construction tender process, namely the Front-End Project Engineering, Procurement, and Construction (FPCI), all steps are being taken to accelerate the final investment decision.

SKK Migas Chief, Djoko Siswanto, emphasized that this phase is crucial for the project to launch soon. Moreover, SKK Migas is urging that the cooperation between Inpex and PT Pupuk Indonesia, which has been established since 2020, be elevated from a Memorandum of Understanding (MoU) to a Head of Agreement (HoA).

If all these plans come to fruition, production at the Masela Block, scheduled to begin operations in 2029, could accelerate even faster!

2. Threat of Revocation of Concession for Inpex if No Progress

The Minister of Energy and Mineral Resources, Bahlil Lahadalia, is not remaining silent in the face of the slow progress of the Masela Block project. He firmly issued the First Warning Letter (SP-1) to Inpex, stating that the government is committed to ensuring that this project does not face further delays.

Inpex is now faced with the challenge of urgently seeking gas buyers, finalizing contract agreements, and accelerating development so that the grand vision for the Masela Block can be realized according to the established targets.

3. Benefits of the Masela Block for Indonesia

In addition to being an energy source, the Masela Block has a strategic impact on the national economy. Some of its benefits include:

Gas Supply for Domestic Industry

With a production capacity of 1,600 million standard cubic feet per day (MMSCFD), the Masela Block has the potential to supply LNG to domestic industries such as power plants and fertilizer factories.

Increasing Investment and Job Opportunities

The development of this project is expected to absorb thousands of workers in the oil and gas sector and other supporting infrastructure.

Increasing State Foreign Exchange

The estimated value of the project reaches USD 19.8 billion (approximately IDR 285 trillion), and LNG exports from the Masela Block could become one of the largest sources of foreign exchange for Indonesia.

Therefore, the government continues to encourage the swift realization of this project without obstacles.

4. Shell's Acquisition by Pertamina and Petronas: Could It Accelerate the Project?

In 2023, Pertamina Hulu Energi (PHE) together with Petronas Masela successfully acquired 35% of Shell's shares in the Masela Block. With this new ownership distribution:

• Inpex Corporation (Japan) → 65%
• Pertamina Hulu Energi (Indonesia) → 20%
• Petronas Masela (Malaysia) → 15%

Pertamina and Petronas are expected to accelerate the development of the Masela Block by introducing new technologies, including Carbon Capture and Storage (CCS) to support a more environmentally friendly LNG production.

5. Challenges Still Facing the Masela Block

Despite positive developments, several challenges still loom over this project, including:

Prolonged FID Process

FID is a crucial stage in oil and gas projects. If not decided soon, the project could face further delays.

Need for Supporting Infrastructure

The Masela Block is located in a remote area in the Arafura Sea, requiring significant investment to build ports, gas pipelines, and other facilities.

Fluctuations in Global LNG Prices

Price instability of LNG in the international market could affect the project's attractiveness to potential buyers.

The government hopes that with pressure on Inpex and the participation of Pertamina-Petronas, all these challenges can be addressed in the near future.

6. People Also Ask

When will the Masela Block start operating?

The Masela Block is targeted to start operating in the fourth quarter of 2029, with hopes that production can begin sooner if the investment process goes smoothly.

What is the impact of the Masela Block on the Indonesian economy?

The Masela Block has the potential to increase domestic gas supply, create thousands of jobs, and contribute foreign exchange from LNG exports.

Who manages the Masela Block?

Currently, the Masela Block is managed by Inpex Corporation (65%), Pertamina Hulu Energi (20%), and Petronas Masela (15%) after the acquisition of Shell's shares in 2023.

Why has the Masela Block been delayed for so long?

The main factors are the change in management scheme from offshore to onshore, investment issues, and the slow process of finding LNG buyers.

(kpl/rmt)