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Inpex proposes to increase Abadi field FLNG design capacity to 7.5 MTA

JAKARTA (rambuenergy.com) – Japan’s giant oil and gas company Inpex Corporation has proposed to increase the production of Abadi field project within Masela block to 7.5 million metric tons per annum (MTA) of LNG from a proposed 2.5 MTA previously, following the discovery of additional natural gas reserves.

Early, Inpex has proposed to develop the Abadi field project with a target to produce 2.5 MTA by utilizing a floating LNG (FLNG) scheme. However, if the design capacity of the FLNG is increased to 7.5 MTA per annum, that would make the FLNG as the biggest in the world.

Deputy Chairman for Operation Control of the Special Task Force Upstream Oil and Gas Business (SKK Migas) Muliawan was quoted by state news agency Antara as saying that the discovery of additional natural gas reserves is being assessed and certified by an oil and gas research agency (Lemigas) of the Energy and Mineral Resources Ministry (ESDM).

He however he does not know yet how much the investment increase will be if the capacity of the project is raised.

Inpex, he said, is revising the plan of development (POD) of the Abadi field project before submitting the Energy and Mineral Resources Ministry (ESDM) for approval. The submission of POD would include a request by the company (Inpex) to extend its contract beyond 2028.

Inpex holds 65 percent participating interest in the Masela Block, while Shell holds 35 percent. Currently, the government and Inpex are still in talks to divest 10 percent participating interest in Masela Block to local governments in Maluku – province and regency governments.

Under phase one Plan of Development (POD-1), Inpex develops the Abadi field project by utilizing Floating LNG (FLNG), with a target production of 2.5 million tons per year of LNG and 8,400 barrels of condensate per day.

The commercial production from the Abadi field is expected to begin in 2019, delayed from initial plan of 2017. Inpex secured a 30-year production sharing contract for the Masela block in 1998. The existing contract will expire in 2008.

In September 2013, the CEO of Inpex Corporation met former president Susilo Bambang Yudhoyono, and demanded that the Japanese oil company be given a contract extension in the gas-rich Masela block, in the Arafura Sea, south of Papua.

With 15 years to go, the Inpex CEO wanted the Indonesian government to guarantee the future of the development of the block. Assuming that the gas production from Abadi field would start in 2019, Inpex only has nine years to recover its investment in the block.

The Indonesian government has yet to agree on the request because under the existing regulation, a PSC contractor is only allowed to seek extension ten years before the contract expires.

The Masela block is estimated to have 18.47 trillion cubic feet of proved and probable gas reserves. The reserves were certified by DeGolyer & MacNaughton Consultants from Texas in the US. The Abadi LNG project is one of largest gas projects that is being developed in Indonesia.

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