Inpex Masela Ltd. is planning to utilize a trustee borrowing scheme (TBS) as part of the financing strategy for the Abadi LNG project in the Masela Block, which is aiming for onstream operations by the end of 2029.
Akihiro Watanabe, Managing Executive Officer and Senior Vice President of Asia Projects at INPEX, said that this financing scheme, widely used in Indonesia’s oil and gas industry, is considered robust, despite recent trends of financial institutions reducing their portfolios in the fossil fuel sector.
“This financing scheme has been successful in Indonesia, used in Bontang, Tangguh, and Arun before. We plan to use the same financing scheme, and it is currently in the process,” Watanabe said after the Kick-Off of PMT Abadi Masela LNG Project in Jakarta on Thursday.
This financing scheme, known as a loan mechanism with project yield collateral to mitigate business risks in the domestic oil and gas industry, involves lenders bearing some of the risks.
Additionally, Watanabe expressed optimism about securing a robust loan from financial institutions as the Abadi Masela LNG Project has officially incorporated carbon capture storage (CCS) into its development plan.
“We have heard that financial institutions are comfortable because we have CCS; that’s why CCS is crucial,” he added.
On another note, Watanabe mentioned that Inpex is currently focused on securing gas buyers from the Masela Block. Inpex has gathered interest from both domestic and international buyers, with a total gas requirement of approximately 25 million tons per year (mtpa).
Several buyers have already signed letters of intent (LoI), memoranda of understanding (MoU), and head of agreements (HoA) regarding potential gas purchases from the Abadi Field.
“We believe that gas from Masela will be in high demand in the market,” he stated. Earlier reports from the Ministry of Energy and Mineral Resources revealed that the investment and operational costs for the development of the Abadi LNG Project in the Masela Block amounted to USD 34.74 billion, equivalent to IDR 535.96 trillion.
The estimated development costs include investment costs, excluding sunk costs, of USD 20.94 billion (including CCS investment of USD 1.08 billion), operational costs of USD 12.97 billion, and Abandonment and Site Restoration (ASR) costs of USD 830 million.
This estimate emerged after Minister of Energy and Mineral Resources Arifin Tasrif approved Revision 2 of the First Field Development Plan (POD I) for the Abadi Field WK Masela on November 28, 2023.
“Inpex can carry out the development activities of the Abadi Field according to the POD,” said Tutuka Ariadji, Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources.
Specifically, Inpex will conduct design and engineering (FEED) for OLNG, FPSO, GEP, and SURF in 2024, site preparation in 2025, and drilling preparation in 2026.
The Masela Block cooperation contract was signed on November 16, 1998, for a 30-year period and has received a 7-year time compensation and a recent 20-year extension. Consequently, the contract for the Abadi gas field will expire on November 15, 2055.
The current participating interest holders in the Masela Block are Inpex Masela Ltd (65%), PT Pertamina Hulu Energi Masela (20%), and Petronas Masela Sdn. Bhd (15%).
The Masela Block is one of the largest oil and gas prospects in Indonesia, with expected production reaching 1,600 million cubic feet per day (MMscfd) of gas or 9.5 million mtpa, along with 150 MMscfd of pipeline gas and 35,000 barrels per day (bcpd) of condensate.
