REPUBLIKA.CO.ID, Jakarta -- An expert said it would be a big loss by selling natural gas only in the form of liquefied natural gas (LNG) from the Abadi gas field in the Masela Block, in the Arafura sea, Maluku.

Abdulrachim an expert at the office of the Coordinating Minister for Maritime Affairs and Resources, said Indonesia has sold LNG to Japan and China at cheap prices not proportional with the production cost.

In Japan, LNG after re-gasification, is processed into petrochemical feed stock as basic materias to produce various petrochemical derivatives like ammonia, methanol and plastic, he said.

He said LNG has no much value unless it is processed in petrochemical industry, adding, "but now we have to import plastic in various forms worth up to Rp100 trillion.

"Gas would have greater economic value in petrochemical industry as the added value is much higher than the value of LNG. Therefore, we suffer high potential loss by producing only LNG," he said.

Coordinating Minister for Maritime Affairs Rizal Ramli has also suggested development of integrated industry by building petrochemical industry utilizing the gas.

Therefore, Rizal Ramli strongly recommended to build the facility onshore such as on the nearby island of Aru.

The contract for the development of the Masela gas block, which is believed to hold one of the largest gas reserves in the world, has been awarded to Japan's Inpex Corporation.

Inpex has proposed to build the LNG plant off shore saying the cost is much cheaper.

Based on the feasibility study by Inpex, building the LNG plant offshore, would cost only about US$14.8 billion, as against US$22.3 billion if it is to be built onshore.

Additional cost would be needed for around 60 kilometers of gas pipes under the sea if the plant is to be built on the island of Aru.

Apart from additional cost, the pipes would be vulnerable to destruction by earthquakes that frequently hit that area.

Independent consultants, citing risk of earthquake, have also recommended development of the LNG plant offshore as proposed by Inpex and Shell the operators/investors of the Masela block.

Officials, experts and observer are split in preference on the location of the plant, which will have an annual capacity of 7.5 million tons.

The Upstrem Oil and Gas Regulator (SKK Migas) already approved the proposal but President Joko Widodo (Jokowi) needs more time to make the final decision.

However, Coordinating Minister for Maritime Rizal Ramli strongly recommended to build the facility onshore.

Rizal spoke of the possibility of integration of the plant with petrochemical industry if the plant could be built on the Aru island.

The people of Maluku also want the plant to be built onshore hoping to gain more from trickle down effect on the economy of region, which is among the poorest in the country.

Charles Anidla from the Southwest Maluku association of intellectuals (ICMBD) said the operation of the plant on Aru is expected to serve as a milestone bringing modernity to the region and reducing the poverty.

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