Inpex Expedites $20 Billion Abadi LNG Project Development in Indonesia

(Reuters) — Inpex Corp., Japan's top oil and gas explorer, is set to accelerate development of its $20 billion Abadi Indonesian LNG project, with the aim of starting operations as soon as late this decade, its CEO said on Thursday.

The launch timing would be slightly ahead of its previous target to make a final investment decision in the latter half of this decade and start production in the early 2030s.

"The Indonesian government has expressed a very strong hope for accelerating the project," Inpex CEO Takayuki Ueda told Reuters in an interview.

Inpex, which owns a 65% stake in the project, could start the front-end engineering design (FEED) at the end of this year or the beginning of next, Ueda said.

"From there it will be 2 years plus 4 years for engineering, procurement and construction (EPC)," he said, adding that production could start in the late 2020s or early 2030s.

"Nothing has been finalized ... but we want to do this on an accelerated schedule as much as possible," he said.

Abadi LNG, led by Inpex, will use gas from the Masela block to produce 9.5 million metric tons per year of LNG at its peak, which will be shipped from the proposed terminal for domestic industry and overseas customers.

The project has faced years of delay after various changes in planning, and more recently, Shell's withdrawal. Last year, Indonesia's Pertamina and Malaysia's Petronas became Inpex's new partners after taking over Shell's 35% interest.

As it begins initial design work, Inpex, which is around 20% owned by Japan's industry ministry, plans to start signing binding contracts with Asian buyers of the super-chilled fuel, including Japanese buyers.

"We believe that LNG is very important as a transitional energy source and that there will be sufficient demand until about 2050, especially in Asia," Ueda said.

The project will be built with carbon capture and storage (CCS) and could be used to produce blue hydrogen and ammonia in the future.

Abadi will be Inpex's second pillar LNG project after the Ichthys project in Australia, which is expected to reach a targeted LNG output of 9.3 million metric tons this year.

In late 2022, Inpex signed a 20-year agreement with U.S.-based Venture Global to buy 1 million tons per annum (MTPA) of LNG from CP2 LNG, which is awaiting approval from the U.S. Federal Energy Regulatory Commission (FERC).

On the possibility of adding more U.S. LNG contracts, Ueda said "there is room to consider" it, as that would offer advantages such as low geopolitical risk, flexible contracts without destination clauses and Henry Hub-linked pricing.

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