Japan's Inpex Corporation said on Monday that it had signed a heads of agreement with Indonesia's government to develop a US$20-billion liquefied natural gas (LNG) project in Indonesia after changing the development plan-potentially reviving a project that has already faced years of delays.
The Abadi LNG Project has been delayed by at least two years and the government of Indonesia has instructed the project developers to change their initial proposal for a floating LNG platform to onshore LNG development. Inpex Corporation is the operator and the majority holder with a 65-percent stake in the project, while a subsidiary of Shell owns the other 35 percent.
As early as in March 2016, the Indonesian energy regulator said that Inpex would be delaying the final investment decision on the project until 2020, meaning that the project would not come online until 2026 at the earliest.
In March last year, Inpex said that it was about to begin pre-FEED work for the project and will draft a detailed revised plan of development after the authorities instructed the company in 2016 to change its plans from floating LNG platform to onshore LNG development.
After discussions with the Indonesian government, Inpex signed today the heads of agreement with the endorsement of Shell after "the completion of Pre-FEED work on a revised POD to achieve an economically competitive project."
The Abadi project is expected to have annual production of 9.5 million tons of LNG and to cost between US$18 billion and US$20 billion, Indonesia's energy ministry said.
The final investment decision for the Abadi project is expected in two or three years, with potential production start-up in the latter half of the 2020s, Bloomberg quoted INPEX's president and chief executive Takayuki Ueda as telling reporters on Sunday.
Last year, Inpex started production and exports from the US$40-bllion Ichthys LNG project offshore Western Australia, in which France's major Total is a minority partner.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More