Inpex gets government approval for revised Abadi LNG project

July 22, 2019

Japan’s Inpex Corp. has received swift official approval from the Indonesian government for the revised development plan for the company’s Abadi LNG project on the Masela block in the Timor Sea. The revised plan was submitted on June 20.

The Indonesian authorities also approved Inpex’s application for an additional 7 years to work on the development concept along with a 20-year extension to the production-sharing contract for the Masela block, extending the term of the PSC until 2055.

The project’s development plan has been changed from a floating LNG (FLNG) scheme to an onshore LNG scheme.

Inpex Pres. and Chief Executive Officer Takayuki Ueda said the company was confident that the economics of the project based on the revised scheme were now sufficiently strong for Inpex and partner Royal Dutch Shell PLC to work within the given PSC term. Ueda said sufficient financial conditions have now been secured following a series of discussions with Indonesian authorities.

Inpex, as operator, will continue to work towards a project start-up date timed for the latter half of the 2020s.

The joint venture will now begin the preparations for the front-end engineering and design stage. The preliminaries will mainly comprise the mobilization of operational personnel and bidding-related work for the selection of contractors to undertake the FEED work.

Abadi is Inpex’s first large-scale integrated LNG project in Indonesia. Abadi field, first discovered in December 2000, lies 150 km offshore Saumlaki in the Tanimbar Islands. Water depth over the field is 400-800 m.

The development of the offshore find was delayed first by Inpex, which had its initial FLNG development plan approved by the government in 2010, only for the company to revise the plan in 2015 and propose a larger capacity (7.5 million tonnes/year) FLNG development following the increase of estimated reserves at the field.

In April 2016, however, the Indonesian government decided the FLNG scheme was no longer an option. It asked Inpex to devise a plan for the Abadi field development via an onshore LNG plant to increase local content and community benefits.

Inpex in late 2018 completed a feasibility study for a 9.5 million-tpy onshore plant at an undisclosed location. In addition, there will be production of about 35,000 b/d of condensate. Total recoverable gas reserves for the field have been estimated at about 20 tcf.

Inpex holds 65% interest. Shell has the remaining 35%.

Separately, Inpex was awarded 100% of new exploration permit AC/P66 in the Timor Sea south of Laminaria field and west of Bayu-Undan field in Australian waters.

The permit covers an area of 3,460 sq km and lies in 60-500 m of water.