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Inpex gets approval for Abadi LNG project

Jul 17, 2019
3 min read
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Japan's Inpex has announced that it has received the official approval from the Indonesian government the revised Plan of Development (POD) for the Abadi LNG Project and for a 20-year extension to the production sharing contract.

The notice of approval was delivered to Inpex, as the operator of the Project on behalf of the Joint Venture (INPEX Masela and Shell Upstream Overseas) by Ignasius Jonan, Minister for Energy and Mineral Resources of the Republic of Indonesia, in the presence of Joko Widodo, President of the Republic of Indonesia.

In addition to the revised POD, the authorities also approved the application for a seven-year additional time allocation and a 20-year extension to the Production Sharing Contract (PSC) for the Masela Block, extending the term of the PSC until 2055.

“The approval of the revised POD by the authorities is a significant milestone for the Abadi LNG Project. While the project’s development concept has been changed from a floating LNG scheme to an onshore LNG scheme, I am confident that the economics of the Project based on the revised POD are now sufficiently strong for Inpex and Shell given the PSC term until 2055 and sufficient financial conditions have been secured following a series of constructive discussions with the authorities. Inpex aims to make this Project competitive and will continue to work toward the production startup scheduled in the latter half of the 2020s.” said Takayuki Ueda, president & CEO of Inpex.

Inpex said it will continue to work closely with its partner Shell to begin the necessary preparations to commence FEED (Front End Engineering Design).

Preparations will mainly consist of the mobilisation of operational personnel and bidding-related work for the selection of contractors undertaking FEED work. A final investment decision (FID) is subject to a series of subsequent evaluations including FEED work.

Commenting on the POD Approval, Clare Harris, Shell’s Executive Vice President Venture Development said, “Obtaining approval for the Plan of Development is an important achievement and Shell appreciates the constructive partnership of the authorities that has enabled progress on this major milestone. As the Joint Venture moves to the next phase of the Abadi project, we look forward to continuing our close collaboration with Inpex in delivering a globally competitive onshore LNG development that will benefit the country for decades to come.”

The Abadi gas field features excellent reservoir productivity and has one of the world’s largest resources, raising expectations of efficient development and stable LNG production operations over the long-term.

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