The Indonesian government on Tuesday (16/07) handed over the approved revised Plan of Development (POD) for the Abadi Field LNG Project to Japan’s giant oil and gas company Inpex Corporation through its subsidiary INPEX Masela, Ltd.
The revised PoD was submitted by Inpex to the Indonesian government on June 20, 2019 following the signing of the Heads of Agreement (HoA) on June 16, 2019.
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 the Indonesian Minister for Energy and Mineral Resources (MEMR) Ignasius Jonan 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,” Takayuki Ueda, President & CEO of Inpex, said.
The Abadi LNG project has been delayed after the Indonesian government instructed Inpex to move the LNG plant facilities to onshore, instead of initial floating LNG (FLNG) facility.
This prompted Inpex to restart the whole process of FEED and PoD.
“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,” Ueda said.
“Inpex aims to make this project competitive and will continue to work toward the production startup scheduled in the latter half of the 2020s,” he added.
Moving forward, Inpex will continue to work closely with its partner Shell to begin the necessary preparations to commence FEED (Front End Engineering Design), it said.
Preparations will mainly consist of the mobilization 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 PoD 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,” Harris said.
The Abadi LNG 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 will provide significant contributions to the Republic of Indonesia and bring multiplier effects to Indonesia particularly in the eastern region. (*)