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    Inpex, Indonesia Ink Abadi LNG HoA

Summary

Japan’s Inpex Corporation June 16 signed a heads of agreement (HOA) with Indonesian government regarding a revised plan of development (POD)...

by: Shardul Sharma

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Inpex, Indonesia Ink Abadi LNG HoA

Japan’s Inpex Corporation June 16 signed a heads of agreement (HOA) with Indonesian government regarding a revised plan of development (POD) for the Abadi LNG project, it said June 17.

The HoA, which was signed in Tokyo, outlines the terms agreed upon with the authorities following discussions held after the completion of pre-Feed work on a revised POD to achieve an economically competitive project, Inpex said. The cost estimation in the revised POD of the project which will include the construction of onshore LNG plant, gas pipeline, and offshore facilities, is contained in the agreed terms of the HOA, Inpex said without offering any details. 

The project involves 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 project’s contractors (Inpex and Shell), has been engaged in discussions with the authorities with the aim of submitting the revised POD.

Inpex said it will now start the process of submitting the revised POD for approval as well as amending and extending the Masela block production sharing contract (PSC). Last month, Indonesian oil and gas regulator SKKMigas and Inpex agreed on the final plan of development for the Masela block.

The Masela block contract was signed in 1998, and Inpex as operator owns 65% share in the block while Shell owns the rest 35%.

“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,” said Takayuki Ueda, CEO of Inpex, who attended the signing.

Inpex said it 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 project is the first large-scale integrated LNG development project operated by Inpex in Indonesia. It is expected to produce approximately 9.5mn mt/year of LNG. In March 2016, the country's president Joko Widodo said production facilities of the LNG project will be built onshore, instead of offshore as Inpex had proposed. As a result, the Japanese company had to review its plans.