Japan’s INPEX Obtains Approval for Development of LNG Project in Indonesia

Jul 2019

Japanese oil exploration and production company, INPEX, through its subsidiary INPEX Masela (51.93% held by Inpex), received official approval on 16 July from the Indonesian government authorities for its revised development plan for the Abadi Liquefied Natural Gas (LNG) project. The revised proposal had been submitted on 20 June 2019 after the Indonesian government had instructed the project developers in 2016 to move from the floating LNG platform in their initial proposal to onshore LNG development.

INPEX is the majority shareholder in the project with a 65% stake, while Shell’s subsidiary owns 35%. The project involves developing the Abadi gas field in the Masela Block located in the Arafura Sea in Indonesia and is anticipated to produce 9.5 million tons of LNG annually and cost between USD 18-20 billion. Apart from the approval for the revised plan, the authorities also approved a seven year additional time allocation and a 20-year extension to the Production Sharing Contract (PSC) for Masela, extending its term until 2055. 

INPEX will work closely with its partner, Shell, to begin the necessary preparations to commence FEED (Front End Engineering Design), mainly consisting of the mobilization of operational personnel and bidding-related work for the selection of contractors undertaking FEED work. Production is expected to start in the latter half of the 2020s

The project will be the first large-scale integrated LNG development project operated by INPEX in Indonesia and follows on from the INPEX-operated USD 40 billion Ichthys LNG project in Western Australia with Total as a minority partner. The Abadi gas reservoir shows strong productivity and boasts one of the world’s largest resources. Expected efficiency and long-term LNG production is anticipated to bring significant contributions to Indonesia, particularly for its eastern region.

(Sources: Oilprice.com; INPEX corporation)


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