Indonesian regulator says Inpex to postpone Abadi LNG project

Japan’s Inpex will delay the development of its multi-billion Abadi LNG project in Indonesia by at least two years, the Indonesian energy regulator SKK Migas said on Wednesday.

According to Amien Sunaryadi, Chairman of  SKK Migas, Inpex notified the regulator that it plans to downsize its workforce in Indonesia of around 400 by at least 40 percent as an agreement on the revised Masela plan of development (POD) had not yet been reached.

Shell engineers working on the giant LNG project had also been told to look for other work within the company, he said.

Inpex pushed the final investment decision on the project until 2020, meaning that the LNG project will not be operational until at least 2026, around two years before the companies’ contract is due to expire.

The Japanese company submitted to SKK Migas of Indonesia in November last year a revised plan of development of the Abadi LNG project, as a result of a greater volume of natural gas reserves being confirmed.

The revised plan envisions the adoption of a floating LNG plant with an annual processing capacity of 7.5 million tons, bigger then Shell’s Prelude FLNG.

However, the Indonesian government has still not approved the plan as it is considering whether the LNG project should go ahead as an offshore facility or be moved onshore.

It was recently reported that $6 billion could be saved by Inpex and Shell if Indonesia opts to build the Masela Abadi LNG facility on land instead of offshore.

Maritime affairs coordinating ministry official Haposan Napitupulu said that a land-based LNG facility would cost $16 billion while an offshore facility would be in the region of $22 billion.

Contrary to the Maritime affairs ministry, SKK Migas believes a floating LNG facility would cost around $14.8 billion, $4.5 billion less than an onshore facility.

Inpex currently has a 65 percent operating interest in the Masela block, while Shell holds the remaining 35 percent.

LNG World News Staff