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Japan's Inpex to launch engineering design for $20B Indonesian LNG plant

Japan’s Inpex Corp plans to start front-end engineering design (FEED) on the $20 billion Masela gas project in Indonesia next year, Chief Executive Takayuki Ueda said, with LNG production at the giant field due to start by 2027-2028.

Abadi LNG
Source: EWA

Inpex had secured the Indonesian government’s approval for the plan, as well as the company’s application for a 20-year extension to the production sharing contract (PSC) for the Masela project, Ueda told reporters in Jakarta.

The project will focus on meeting Indonesia’s gas demand in future, but the company is also looking at buyers from Japan, China and other Asian markets, Ueda said.

“Authorities also approved the application for a seven-year additional allocation and 20-year extension to the production share contract (PSC) for the Masela block,” he said, adding that will extend the contract term until 2055.

The $20 billion Masela project, also known as the Abadi LNG plant, had been delayed for years after Indonesia asked the Japanese company to shift it from an earlier offshore facility.

Indonesian President Joko Widodo witnessed the approval handover, Ueda said, adding that Widodo had “requested me to increase gas supply to Indonesian industry.”

Inpex plans to start liquefied natural gas production from Masela by around 2027-2028, said Nico Muhyiddin, vice-president at unit Inpex Masela Ltd.

The Japanese oil and gas company also aims to wrap-up its final investment decision (FID) in three to four years, Ueda said.

“There is potential to accelerate the FID and we are discussing with SKK Migas on how to accelerate it,” he said, referring to Indonesia’s upstream oil and gas regulator.

Under the revised plan, Inpex, which controls 65% of the project, will produce 9.5 million tonnes of LNG every year from the block, as well as distribute 150 million standard cubic feet per day (mmscfd) of gas through its pipeline.

Inpex is yet to decide on how to finance the project, but Ueda said the company is considering a trustee-borrowing scheme. (Writing by Fransiska Nangoy, Editing by Kenneth Maxwell, Ed Davies and Sherry Jacob-Phillips)


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FEATURED COLUMNS

Editorial Comment: The Future of FLNG: Less is More?
-Adrienne Blume
Global LNG export capacity is expected to increase by 45% between 2017 and 2022, to more than 400 metric MMtpy, with 90% of the new capacity coming from sanctioned projects in the U.S. and Australia. By 2050, this capacity is anticipated to exceed 700 MMtpy. Regasification capacity is anticipated to increase even more sharply.
Executive Viewpoint: Back to production: Where we’re going, we don’t need pipelines
-Mark Casaday
What if a cost-effective way existed to extract and distribute natural gas, regardless of proximity to pipeline, and bring those assets back to production? What if the industry went in a direction that did not need pipelines? For those looking to monetize unproductive natural gas assets or bring unproductive wells back to production, it would be revolutionary.
Regional Focus:Australia to boost LNG exports despite domestic gas shortage
-Eugene Gerden
Australia is planning further increases in LNG production and exports over the next decade, despite quickly depleting reserves and a looming supply shortage in the domestic market.


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