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The Abadi LNG Project is based on an onshore LNG development scheme that INPEX as the operator is preparing for development alongside Shell in the Masela Block offshore Indonesia. The project is expected to produce approximately 9.5 million tons of LNG per year and up to approximately 35 thousand barrels of condensate per day.
The project will also supply 150 million cubic feet of natural gas per day via pipeline to address local demand for natural gas. INPEX acquired a 100% interest in the Masela Block in November 1998 through an open bid conducted by the Indonesian authorities. INPEX subsequently conducted exploration activities as the operator, discovering the Abadi Gas Field through the first exploratory well drilled in 2000. Following exploration, evaluation activities and development studies, INPEX conducted Pre-FEED work from March to October 2018 based on an onshore LNG development scheme envisaging an annual LNG production capacity of 9.5 million tons.
INPEX submitted a revised plan of development in June 2019 and received approval from the Indonesian authorities in July 2019. Alongside the approval of the revised development plan, the Indonesian authorities also approved an extension of the term of the Masela Block Production Sharing Contract (PSC) until 2055. Subsequently, detailed survey work in the planned construction site for the LNG plant and its surrounding areas was underway until it was suspended due to the impact of the COVID-19 pandemic.
Considering the need to contribute to a net zero carbon society, INPEX is conducting a comprehensive study of measures such as the introduction of CCUS to make the project cleaner and further reduce costs and promote the project as a competitive and clean project with the aim of commencing production in the early 2030s.
INPEX Signs MOU on Strategic Collaboration with PT Pertamina (Persero)
TOKYO, JAPAN - INPEX CORPORATION (INPEX) announced it has signed a memorandum of understanding (MOU) with PT Pertamina (Persero) (Pertamina) on a strategic collaboration to proactively pursue the implementation of the Abadi LNG Project in a new partnership following the execution of a sales and purchase agreement (SPA) between Shell Upstream Overseas Services (I) Limited and Pertamina Hulu Energi (PHE), a subsidiary of Pertamina, and Petronas Masela Sendirian Berhad (Petronas), a subsidiary of Petronas, concerning the transfer of joint venture partner Shell’s participating interest in the Abadi LNG Project to PHE and Petronas. The transfer is subject to the fulfillment of certain joint venture procedures and conditional to the approval of the Indonesian government. Through its subsidiary INPEX Masela, Ltd., INPEX is currently preparing the Abadi LNG Project for development as operator in the Masela Block in the Arafura Sea in Indonesia.
Through the MOU, INPEX and Pertamina will seek to collaborate strategically on a wide range of fields with a focus on the Abadi LNG Project’s value chain. Specifically, the companies will pursue opportunities to collaborate on the offtake and transportation of LNG and other products, the production of hydrogen and ammonia and the provision of the needs of local stakeholders. INPEX and Pertamina will also seek to secure the long-term competitiveness and sustainability of the Abadi LNG Project as well as further improvement of project value while generating synergistic effects.
Upon completion of the transfer of Shell’s participating interest to the new partners, INPEX plans to resume project activities, including on-site reparation activities, etc. As announced on April 4, 2023, INPEX submitted a revised Plan of Development (POD) for the Abadi LNG Project incorporating a carbon capture and storage (CCS) component to Indonesian government authorities, and plans to revise the production sharing contract (PSC) to reflect the incorporation of CCS following approval of the POD. Going forward, INPEX will proceed with preparations required to reach a final investment decision (FID), including front-end engineering and design (FEED) work as well as marketing and financing activities, while ensuring investability.
The project’s annual LNG production volume is expected to reach 9.5 million tons, equivalent to more than 10 percent of Japan’s annual LNG imports. The Abadi Gas Field has world-leading gas field properties and plentiful reserves enabling efficient development. By adopting CCS, INPEX will aim to secure a stable supply of clean energy over the long term, and contribute to improving energy security in Indonesia, Japan, and other Asian countries.
Furthermore, the project is expected to contribute to the much needed economic development in the eastern part of Indonesia as well as the Indonesian government’s goal of reaching net zero CO2 emissions by 2060.
Shell to sell its participating interest in Indonesia’s Masela Block
25 Jul 2023
Shell Upstream Overseas Services (I) Limited (“SUOS”), a subsidiary of Shell plc, has agreed to sell its participating interest in Indonesia’s Masela Production Sharing Contract (“Masela PSC”) to Indonesia’s PT Pertamina Hulu Energi (“PHE”) and PETRONAS Masela Sdn. Bhd (“PETRONAS Masela”). The sale concerns SUOS’ participating interest of 35% in the Masela PSC, which includes the Abadi gas project. SUOS acquired interest into the Masela PSC back in 2011.
The base consideration for the sale is $325 million in cash with an additional contingent amount of $325 million to be paid when the final investment decision (FID) is taken on the Abadi gas project. The transaction has an effective date of January 1, 2023 and is targeted to be completed in Q3 2023, subject to completion of conditions, which include among others, regulatory approval to be obtained from the Indonesia’s Ministry of Energy and Mineral Resources.
“The decision to sell our participation in the Masela PSC is in line with our focus on disciplined capital allocation,” said Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director. “We wish to thank all stakeholders, especially the Government of Indonesia for their support throughout the sales process. Shell remains active in Indonesia and continues to contribute to the country’s energy transition journey.”
INPEX Corporation (“INPEX”) holds 65% operating interest in Masela PSC and is the operator of the Abadi gas project. This is located in the Masela Block, 150 kilometers offshore Saumlaki in Maluku province, Indonesia.
INPEX Receives Approval for Revised Plan of Development for Abadi LNG Project, Masela Block, Indonesia
5 Dec 2023
TOKYO, JAPAN - INPEX CORPORATION (INPEX) announced today it received written approval for the revised Plan of Development (POD) for the Abadi LNG Project (Project) on behalf of the joint venture composed of INPEX Masela, Ltd. (INPEX Masela), PT Pertamina Hulu Energi Masela (PHE Masela) and PETRONAS Masela Sdn. Bhd. (PETRONAS Masela). INPEX, which operates the Project through its subsidiary INPEX Masela, submitted a revised POD to Indonesian government authorities (authorities) on April 4, 2023, incorporating a carbon capture and storage (CCS) component to the existing POD. This marks the official approval of the authorities for the revised POD.
The Project is the first in which CCS-related costs are eligible for recovery based on the production sharing contract (PSC) scheme that governs crude oil and natural gas upstream operations in Indonesia. The approval of the revised POD paves the way for INPEX and its partners to fully mobilize the Project as a clean project in support of the energy transition.
Going forward, INPEX and its partners will pursue the revision of the PSC to incorporate CCS into the contractual scope of work and resume Project operations including on-site activities and prepare for FEED work. Thereafter, the joint venture will implement the Project with the aim of reaching a final investment decision (FID) and production startup at an early stage after completing the necessary preparations including marketing and financing activities.
The Project’s annual LNG production volume is expected to reach 9.5 million tons, equivalent to more than 10 percent of Japan's annual LNG imports. The Project is expected to contribute to improving energy security in Indonesia, Japan and other Asian countries and generate a stable supply of clean energy over the long term, based on its world-leading gas field properties and plentiful reserves enabling efficient development as well as the Project’s CCS component.
In addition, the Project is expected to contribute significantly to the much-needed economic development of the eastern part of Indonesia in particular, and to achieving Indonesia’s goal of reaching net zero CO2 emissions by 2060.
