Inpex signs LNG, piped gas supply MOUs for Abadi LNG project

Singapore — Japan's Inpex Corp. said Thursday it signed memorandums of understanding with Indonesian state-owned companies, PT PLN and PT Pupuk Indonesia, for long-term domestic LNG and pipeline natural gas supply from the Abadi LNG project.

The agreements were signed by its subsidiary Inpex Masela on behalf of joint venture partner Shell Upstream Overseas, Inpex said in a statement.

Firm supply contracts will allow the project partners to obtain the necessary financing and take a final investment decision.

Inpex said discussions will now commence on sales and purchase agreements for long-term LNG and natural gas supply from the Abadi project. The LNG will be supplied to a gas-fired power plant operated by state utility PLN and a co-production plant to be built by state fertilizer and petrochemical producer Pupuk Indonesia.

"The long-term supply of LNG and natural gas from the project is consistent with the Indonesian government's focus on optimizing domestic natural resource utilization," Inpex said, adding that Abadi will contribute to Indonesian gas demand in the eastern region.

"The Abadi gas field features excellent reservoir productivity and contains significant resource volumes, raising expectations of efficient development and stable LNG production operations over the long-term," Inpex said.

The Abadi LNG project is an onshore project with a planned capacity of 9.5 million mt/year of LNG, local pipeline gas supply and 35,000 barrels of condensate per day.

It is tapping gas reserves in the offshore Masela Block and is aiming for production startup in the latter half of the 2020s.

The Indonesian government said domestic companies had shown interest in utilizing LNG from Masela.

State utility PLN is expected to absorb about 2-3 million mt/year a year and Pupuk Indonesia is expected to require 150 million cu ft/d of natural gas over a 20-year period, energy and mines minister Arifin Tasrif said Thursday.

Separately, PLN's president director Zulkifli Zaini said that using LNG as a generation fuel is more efficient than traditional fuel like coal in its power plants.

"PLN is generally interested in absorbing gas (LNG) from Masela, in accordance with the needs of the PLN electricity system," Zaini said.