Indonesia approves Inpex floating LNG plant plan

Indonesia has tentatively agreed to a proposal by Inpex Holdings Inc. for the construction of a floating LNG plant, intended primarily for use at Abadi natural gas field in the Timor Sea.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Jan. 11 -- Indonesia has tentatively agreed to a proposal by Inpex Holdings Inc. for the construction of a floating LNG plant, intended primarily for use at Abadi natural gas field in the Timor Sea.

"In principle we have agreed to [the] Inpex proposal, but we are still evaluating the economic value of the project," said Evita Legowo, director general of oil and gas at the Indonesian energy ministry.

"We hope to give the approval in March or April," she said, adding that, "The plant is expected to produce LNG in 2016."

Inpex spokesman Keisuke Yano confirmed the government statement saying: "We proposed to the government a floating terminal as the best option," and "They have implicitly agreed with us."

Last year, as a condition of developing Abadi field, the Indonesian government insisted that Inpex build a floating terminal within the country's territorial waters instead of laying a subsea pipeline to Australia and liquefying the gas there.

Inpex acquired its 100% stake in Abadi-1 from Indonesia's state-owned PT Pertamina in November 1998 and started test drilling in October 2000 through its subsidiary Inpex Masela.

Since then, according to Yano, Inpex has drilled several test wells in the reserve and eventually expects to produce some 4.5 million tonnes/year of LNG for at least 30 years, based on available data.

According to Inpex, Abadi field contains 10 tcf of natural gas reserves, which—if confirmed—would make it Indonesia's second-largest new gas field after the 14.4 tcf Tangguh project.

Inpex currently is sole operator of Abadi field, which lies on the Masela Block in eastern Indonesia, but Indonesia's state-owned PT Pertamina is seeking a 30% stake in the project.

The 30% figure represented a sharp uptick in Pertamina's anticipated interest. Earlier, Pertamina upstream director Karen Agustiawan had said the Indonesian state firm was seeking just a 10% stake in the field.

"We have sent a letter to Inpex for the gas field…if we get 30%, it is better," said Pertamina Pres. Director Ari Soemarno in December 2008, adding that, "Pertamina is ready to prepare financing for that field if it [becomes] involved."

Contact Eric Watkins at hippalus@yahoo.com.

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