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Inpex plans to increase Indonesian Masela LNG plant to 9.5 mil mt/year


Japan's Inpex plans to increase the capacity of its Indonesian Abadi LNG project, known as the Masela block, to 9.5 million mt/year, almost four times the company's original plan of 2.5 million mt/year.

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It is part of its strategy to make the project economically viable after the Indonesian government decided to change it from floating offshore as planned to an onshore development, an official said Wednesday.

"We respect the Indonesian government decision. We have told the government that there are some issues that have to be met to allow the project to be investable, such as increasing the capacity to 9.5 million mt/year," Inpex Indonesia's spokesman Usman Slamet said, adding that the company is currently carrying out the pre-front end engineering design before submitting the Masela's revised development plan to the government.

Masela block contains proven reserves of 10.7 Tcf with prospects that it may larger, Slamet said.

Article Continues below...

Meanwhile, the oil and gas director general at the energy and mines ministry, I Gusti Wiratmaja Puja, said the government was still studying Inpex's plans. He also said that Indonesia does not necessarily intend all of the gas in the Masela to be dedicated for LNG.

"We expect some of the gas to be allocated for a petrochemicals project," Puja said.

Indonesian president Joko Widodo decided in March that the Masela block should be an onshore development rather than floating as planned by the operator previously, as the onshore model was considered to have a greater potential impact for the domestic economy, S&P Global Platts reported earlier.

The former maritime coordinating minister Rizal Ramli, who oversees the energy ministry, had said that an onshore plant would cost an estimated $15 billion compared with $19.3 billion for an FLNG plant, Platts reported.

The energy and mines ministry had approved Inpex's original plan of development in 2010, which involved a 2.5 million mt/year FLNG plant and 8,400 b/d of condensate production capacity.

However, Inpex revised the capacity of the FLNG plant to 7.5 million mt/year and condensate production to 24,000 b/d after it discovered additional gas reserves in the area and submitted this new capacity for approval in September last year, Platts reported.

Indonesia's upstream regulator SKK Migas has seen that the project may be delayed to around 2025 or 2026.

That would be up to eight years later than the original targeted start-up date of 2018, which was also expected to be missed, and 26 years after Inpex discovered the Abadi gas field -- a record length in time between discovery and commercial start-up even for Indonesia where the upstream sector is fraught with bureaucratic hurdles.

If the development plan is approved this year and if the government favors the FLNG concept, the project may come on stream by 2025.

If the onshore concept gets approved, then the project completion could be delayed to 2026 as it will take Inpex at least one year to study the option, Platts reported earlier.

--Anita Nugraha,
--Edited by Maurice Geller,