INPEX signs HOAs with Indonesian companies for long-term sale, purchase of Abadi LNG, gas

INPEX Masela, along with its partners, signed three non-binding heads of agreement on May 21 covering potential long-term sales and purchases of LNG and pipeline gas by Indonesian companies from its Abadi LNG Project in Indonesia, the subsidiary of Japan's INPEX said.

The signing of HOAs with PLN (Persero), Perusahaan Gas Negara and Pupuk Indonesia (Persero) took place on the sidelines of the IPA Convention and Exhibition.

"These agreements allow INPEX to further strengthen its presence in the Indonesian energy market. The LNG and natural gas from the Abadi LNG Project are important to support the domestic energy needs while also supporting the transition toward cleaner energy, in line with the government's energy resilience program," INPEX Masela said in a statement.

INPEX operates the Abadi Gas Field with a 65% stake, alongside partners Pertamina Hulu Energi Masela (20%) and Petronas Masela (15%).

The Abadi LNG Project is also set to become Indonesia's first LNG project to implement carbon capture and storage from the outset, a move that will play a vital role in supporting the country's national decarbonization targets, it said.

The Abadi Gas Field, located about 180 kilometers offshore from Yamdena Island in the Arafura Sea within the Masela Block, boasts Indonesia's largest gas reserve.

The project's revised plan of development, approved at the end of 2023, targets an output of up to 9.5 million mt/year of LNG, along with significant volumes of gas and condensate.

To achieve this, the project will deploy advanced infrastructure, including subsea drilling systems, a floating production storage and offloading unit, a 175-kilometer subsea pipeline and a state-of-the-art onshore LNG plant -- showcasing one of Indonesia's most ambitious energy ventures.

Domestic use

In a separate statement on May 22, PGN said it will utilize LNG from the Masela Block to complement the domestic natural gas supply and meet local demand.

"Gas supply from the Masela Block is expected to further strengthen PGN's commitment to continuously provide natural gas for its customers," PGN CEO Arief Setiawan Handoko said.

Apart from INPEX, other signings included Indonesia's Medco, which signed several gas agreements. Medco E&P Natuna Ltd., part of the West Natuna Supply Group, together with Medco E&P Grissik Ltd., formalized deals with major players such as Pertamina, Premier Oil Natuna Sea B.V., Star Energy (Kakap) Ltd. and others.

These agreements involve swapping gas volumes supplied to Singapore for volumes redirected to domestic consumption through PGN, addressing potential gas supply shortfalls expected in the second half of 2025.

Under the coordination of upstream regulator SKK Migas, these multiparty discussions aim to secure Indonesia's domestic gas supply without resorting to imports, the statement said.

Strategic agreements

Besides Medco, PGN also signed two strategic agreements -- the domestic swap agreement and a gas sales agreement -- with the West Natuna Group on May 21.

These two agreements govern several gas volumes previously supplied to Singapore by the West Natuna Group, which will be redirected and utilized by PGN to meet domestic needs, PGN said in a statement.

"Government support for fulfilling domestic natural gas needs remains consistent. Following the signing of the gas swap agreement, PGN will receive a new gas supply with a volume of more than 71.83 billion Btu/day, secured through the signing of six previous agreements," PGN said.

According to Djoko Siswanto, head of SKK Migas, the domestic gas swap is being implemented immediately as a concrete step to address the potential supply deficit in the country.

So far, imports can still be avoided, so the government has prepared a gas swap mechanism with suppliers from the Natuna area, PGN said.

On May 20, PGN secured over 71.83 billion Btu/d of gas supply through six previous contracts with new agreements and amendments involving Pertamina subsidiaries. On that occasion, PGN also signed an HOA with Petronas Bukit Panjang to obtain a gas supply of up to 31 billion Btu/d.

The HOA marks the beginning of a strategic collaboration for PGN to explore gas supply opportunities from new sources. Both parties will remain attentive to government provisions regarding the allocation that can be utilized, it said.