The agreement signing ceremony - Photo: privacy.

JAKARTA (TheInsiderStories) – Indonesian government and Japan’ Inpex Corporation have signed a basic agreement regarding a revised plan of development (POD) for Abadi liquefied natural gas (LNG) project, the company’ announced on Monday (06/17).

The project involve the developing the Abadi gas field in the Masela Block located in the Arafura Sea in Indonesia. INPEX, as the operator of the Project and on behalf of the contractors with the endorsement of Shell Upstream Overseas Ltd. (Shell), has been engaged in discussion with the authorities with the aim of submitting the revised POD.

The project is 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 Project is expected to produce approximately 9.5 million tons of LNG per year. The Abadi gas field features excellent reservoir productivity and has one of the world’s largest reserves, raising expectations of efficient development and stable LNG production operations over the long-term.

The Project will provide significant contributions to Indonesia and bring multiplier effects to the country particularly in the eastern region. The impact of this matter on the company’s consolidated financial results for the year ending December 2019 is nil.

Inpex President Takayuki Ueda said the Japanese company, which owns a 65 percent stake in the project, said they plan to submit a development plan for the project within several weeks to the Indonesian government and aim to make a final investment decision within 2-3 years.

“The execution of the 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,” said Ueda, who attended the signing.

The signing ceremony took place on the sideline of a meeting of Group of 20 (G20) energy and environment ministers in Karuizawa, Japan which Indonesia’s Energy and Mineral Resources Minister Ignasius Jonan is attending.

Commenting on the signing, Clare Harris, Shell’ Executive Vice President, Venture Development said the 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, Harris adds.

The remaining stake in the Abadi project, situated in the Masela block, is owned by Royal Dutch Shell, the world’ largest buyer and seller of LNG.

But Shell is moving to sell its stake in the Abadi project, industry and banking sources said in May, following on from an asset disposal program that has raised more than $30 billion.

Their sharing contract for the project, which is aimed to start operation between 2025 and 2030, reportedly was extended by 27 years to 2055. The agreement includes estimated costs, targeted project period and fiscal conditions.

Construction for this project 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.

In March 2018, Inpex began preliminary front-end engineering design (Pre-FEED) for the project with an annual LNG processing capacity of 9.5 million tonnes.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com