Inpex Eyes Mid-Year Bids for $21B Indonesia LNG Project

Abadi LNG project concept diagram (Credit: Inpex)

Japanese oil and gas explorer Inpex said it aims to start the tender process for engineering for its Abadi gas project in Indonesia in the middle of this year, as Jakarta pledged to remove bureaucratic snags to help expedite the $21 billion development.

The Abadi liquefied natural gas (LNG) project in Indonesia's Masela block has faced years of delays following a request by the previous administration to move the plant onshore from an earlier offshore design, and as the company drew up new development plans to include a carbon storage facility.

Finance Minister Purbaya Yudhi Sadewa on Tuesday chaired a "debottlenecking" meeting with Inpex and its Abadi partners, Indonesia's Pertamina and Malaysia's Petronas, alongside Indonesian officials, to discuss issues faced by the project.

Inpex "has made some good progress" recently, including obtaining approval for an environmental impact study and a forest-use permit, and aims to start the tendering phase for engineering, procurement and construction (EPC) in the middle of this year, Jarrad Blinco, Inpex's Abadi project director, told the meeting.

Finance Minister Purbaya said the government will help remove obstacles to speed up the permitting process, and offered to relax some requirements, including on local content requirements.

"This is important for us also," Purbaya said.

Djoko Siswanto, head of Indonesia's upstream regulator SKK Migas, told the meeting that construction of basic infrastructure such as roads will start in early April.

The Abadi LNG project is expected to require around $21 billion investment, including for building an LNG plant with annual capacity of 9.5 million metric tons.

Inpex has conducted initial talks with potential customers but has not decided on the split between domestic and international buyers, Blinco said.

Djoko said SKK Migas expects 40% of the output to be supplied to Indonesia's domestic market.

(Reuters - Reporting by Fransiska Nangoy; Editing by Kevin Buckland)