The Japanese oil giant, Inpex Corporation, is currently seeking long-term gas buyers for the Abadi LNG project in the Masela Block.
Inpex, along with partners PT Pertamina Hulu Energi Masela and Petronas Masela Sdn. Bhd., has recently been focusing on the growing LNG market in Asia, projected to significantly expand until 2040.
President & CEO of Inpex, Takayuki Ueda, said that they have received initial interest from several buyers in Asia, outlined in letters of intent (LoI). The potential gas demand gathered so far amounts to approximately 25 million tons per year (mtpa).
“So the challenge ahead is how, together with Pertamina and Petronas, we must convert this non-binding interest into binding gas sales agreements,” Takayuki said during the 2023 financial results press conference on Thursday, February 15, 2024.
He mentioned that the LNG market in Asia has recently shown promise in absorbing liquefied natural gas supplies from the Masela Block. Inpex has been coordinating with Pertamina and Petronas regarding the possibility of long-term LNG contracts from the Abadi gas field. “Without long-term LNG sales contracts, the financing of the [Masela Abadi] project will face difficulties in the future, so we are looking for contracts that extend over 10 years,” he added.
Earlier reports from the Ministry of Energy and Mineral Resources (ESDM) disclosed that the investment and operational costs for developing the LNG Abadi project in the Masela Block amounted to approximately US$34.74 billion, equivalent to Rp535.96 trillion. The cost estimate for the development plan includes non-sunk investment costs of US$20.94 billion (including CCS investment of US$1.08 billion), operating costs of US$12.97 billion, and abandonment and site restoration (ASR) costs of US$830 million.
This new estimate emerged after Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif approved Revision 2 of the First Field Development Plan (POD I) for the Abadi Masela Field on November 28, 2023.
“Inpex can carry out activities for the development of the Abadi Field according to the PoD,” Director General of Oil and Gas at ESDM, Tutuka Ariadji, said last December. Specifically, Inpex will conduct design and engineering or front-end engineering and design (FEED) for OLNG, FPSO, GEP, and SURF in 2024, site preparation in 2025, and drilling preparation in 2026.
The cooperation contract for the Masela Block was signed on November 16, 1998, for a period of 30 years and has received a 7-year time compensation and a recent 20-year extension. Therefore, the contract for the Abadi gas field will expire on November 15, 2055. The current holders of participating interest in the Masela Block are Inpex Masela Ltd (65 percent), acting as the operator, PT Pertamina Hulu Energi Masela (20 percent), and Petronas Masela Sdn. Bhd (15 percent).
The Masela Block is one of the largest oil and gas prospects in Indonesia, with production estimated to reach 1,600 million cubic feet per day (MMscfd) of gas or equivalent to 9.5 million mtpa of LNG and 150 MMscfd of pipeline gas, as well as 35,000 barrels of condensate per day (bcpd).
