Indonesia Approves Abadi LNG Project

Offshore Facility and Onshore LNG Plant

The government of Indonesia has progressed plans for the development of the Abadi LNG Project, with the approval of a proposed offshore production facility and linked onshore liquefied natural gas plant.
The approval comes almost two decades after Japanese energy firm INPEX first discovered gas at the field in the Arafura Sea, midway between Indonesia and Australia.
The Indonesian energy ministry said “a number of strategic points were successfully agreed upon, which should enable this giant gas field to be developed,” calling the agreement a “win-win solution.”

First Gas 2028
If successfully developed, the Abadi field promises great potential for breakbulk activity in the region as operators INPEX and Shell plan investment of US$20 billion to construct a 9.5 million tonnes per annum LNG plant.
"The revised plan of development details amendments to the Masela production sharing contract to improve the commercial viability of the project, including a 20-year extension, a further seven years to compensate previous delays, and enhanced fiscal terms. INPEX aims to take final investment decision within three years, and we expect first gas in 2028,” said Andrew Harwood, research director at Wood Mackenzie.
At peak, the Abadi field is expected to contribute 180,000 barrels of oil equivalent per day (towards INPEX’s long-term production target of 1 million barrels of oil equivalent. It will also support an increase in domestic LNG demand which is forecast to rise to 13 million tonnes per annum by 2030.

Gas Pricing

To tackle this demand rise, the Ministry of Energy and Mineral Resources is also aiming to take strategic steps to create competitive Indonesian gas prices.

"These strategic steps need to be taken in order to gain efficiency, which ultimately better gas prices for investors, commercial enterprises and customers," the Head of the Communication, Public Information Service and Cooperation Ministry of Energy stated.

in addition to maintaining the economics of upstream gas prices, the revised legislation is expected to boost the downstream trade system for natural gas via adjustment of national subsides and trading systems.