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INPEX to build $18bn LNG project in Indonesia



Japan’s biggest oil and gas explorer INPEX has announced this week that it has signed a ‘Heads of Agreement’ with the Indonesian government to build an $18bn onshore LNG project in the eastern province of Maluku.

The Abadi LNG project, which is expected to have an annual production capacity of 9.5 million tons, will be one of the largest to be operated by a Japanese company.
INPEX to build $18bn LNG project in Indonesia
(Image via INPEX Corp.)

The prospect of such a plant in Indonesia has been on the cards for some time. Construction for the project was originally scheduled to commence in 2018, however in 2016 INPEX and its project partners made the decision to delay the project after Indonesia authorities instructed that the plant should switch from offshore to onshore.

The signing of the Heads of Agreement (HOA) between INPEX and the Indonesian government acknowledges agreement of a revised POD (Plan of Development) that is sufficiently economically competitive. The next steps for INPEX will involve submitting the revised POD for approval as well as amending and extending the Masela Block production sharing contract (PSC).

“The execution of the Heads of Agreement, which follows a series of constructive discussions with the Indonesian government, positions the Abadi LNG project as an economically competitive project by international standards. INPEX appreciates and values the proactive intervention of His Excellency Ignasius Jonan, Minister for Energy and Mineral Resources and the Indonesian government, and looks forward to maintaining close and cooperative relations,” said Takayuki Ueda, President & CEO of INPEX, who attended the signing of the HOA.

Utilising the knowledge and experience gained through operating the Ichthys LNG project, INPEX will continue to work closely with its partner Shell to make the necessary preparations to commence FEED work after receiving approval of the revised POD and reaching an agreement with the authorities on the PSC amendments and extension.
The HOA signing ceremony for INPEX's Abadi LNG project in Indonesia
(The HOA signing ceremony. Image via INPEX Corp).

Commenting on the signing, Clare Harris, Shell’s Executive Vice President, Venture Development, said:

“The Heads of Agreement is a significant milestone in the development of the Abadi project, an important economic opportunity for Indonesia. We look forward to continuing our collaboration and support of INPEX as the Joint Venture aims to develop a competitive project.”

 The Abadi LNG project will be the first large-scale integrated LNG development project operated by INPEX in Indonesia and follows on from the INPEX-operated Ichthys LNG project in Australia. The Abadi gas field features excellent reservoir productivity and has one of the world’s largest reserves, raiding expectations of efficient development and stable LNG production operations over the long-term.

Should everything proceed as planned, it is expected that the Abadi LNG facility will go online in the last 2020s.

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INPEX to build $18bn LNG project in Indonesia - Time to read 3 min
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