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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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