Economy and Business

Shell Withdraws From Masela LNG Project

In 2016 Indonesia switched the Masela LNG project to an onshore processing facility over the objections of its international partners, Shell and Inpex. Its inexperienced President believed he would be created more local jobs and the firms would go along. At the time, many resisted this notion and now we know they were correct. (Editor’s Note).

(Reuters) Royal Dutch Shell is moving to sell its stake in Indonesia’s $15 billion Abadi liquefied natural gas (LNG) project, industry and banking sources said, following on from an asset disposal program that has raised more than $30 billion. Shell, the world’s largest buyer and seller of LNG, is raising cash to help pay for its $54 billion purchase of BG Group in 2015 and hopes to raise around $1 billion from the sale of its 35 percent stake in the project, the sources said.

Shell’s decision to sell out of the Abadi project in the Masela block, operated by Japanese oil and gas firm Inpex Corp which holds the remaining stake, highlights the difficulty Southeast Asia’s largest economy has in attracting energy investment. Shell, Inpex and an official with Indonesia’s Energy and Mineral Resources all declined to comment. Construction was due to start in 2018, but in 2016 was delayed until at least 2020 after Indonesian authorities instructed a switch from an offshore to an onshore facility

Unemployment Reaches New Low

Indonesia has recorded its lowest unemployment rate in more than a decade this year, though a wide gender wage gap has proved to be harder to shift. The unemployment rate dropped to 5.01 percent in February from 5.13 percent in the same month last year, according to new Central Statistics Agency (BPS) data released on Monday. In numbers, 6.82 million Indonesians out of a total working population of 136 million remained unemployed in February, compared to 6.87 million a year ago, the data showed. BPS head Suhariyanto said unemployment rate has continued to decline in the past four years, despite millions of new workers entering the job market each year. (Jakarta Globe)

Plan to Move the Capital

President Jokowi made headlines when he revived a plan to move the nation’s capital out of Java, perhaps to Kalimantan. The plan makes some sense as it could ease congestion and help the city cope with the a rising water table that combined with predicted sea level rises could flood large sections of Jakarta. Before everyone gets too excited its good to hear from he agency tasked to pay for it. (Editor’s Note)

The Finance Ministry has announced that a plan to move the capital from Jakarta was still in its early phases as the ministry was currently waiting for further details from the National Development Planning Agency (Bappenas). According to Finance Minister Sri Mulyani, discussions in the Cabinet have not reached the point of measuring how long it would take to build the new capital, but they have instead focused on why such a plan was needed and the various criteria the city must meet. The relocation plan is intended to turn Jakarta into a more livable city and ensure equal economic growth across Indonesia. “Bappenas needs to finalize the details, and then we will talk about planning and budgeting […] We currently still do not know the engineering details and the exact location [for the new capital],” Sri Mulyani on the sidelines of the 52nd Asian Development Bank (ADB) annual meeting held in Fiji on Saturday. She conceded that the budget needed to build a new capital would be huge.