Indonesian Acting Energy Minister Says Abadi LNG Remains a Priority Project

Indonesia's Acting Energy and Mineral Resources Minister Luhut Binsar Pandjaitan said the government continues to view Japan's Inpex Corp.-operated Abadi liquefied natural gas (LNG) development in the Masela Production Sharing Contract (PSC) in the Arafuru Sea in eastern Indonesia as a priority project despite the dismissal of Arcandra Tahar as the minister earlier this week, according to a local daily Thursday.

Luhut, who is the Coordinating Maritime Affairs Minister, told Jakarta Post that he would monitor all priority projects, including Abadi and the producing Mahakam gas project in east Kalimantan, until a new energy and mineral resources minister has been appointed.

"What Candra (Arcandra) has done is very good as he was able to cut many (project) costs. He also asked for more transparency in structural costs. I understand these things because I’m also a businessman," Luhut said, as quoted by Jakarta Post.

During his short stint as Energy and Mineral Resources Minister, Arcandra said it was possible to cut the cost of the $16 billion Abadi LNG project further by $1 billion to $15 billion.

President Widodo had in March opted for an onshore development of the Abadi project instead of using an offshore floating LNG (FLNG) facility favored by Inpex and its partner Royal Dutch Shell plc. When developed, the Abadi LNG project will be Indonesia’s largest deepwater development, with a processing capacity of 7.5 million tons per annum.

Archandra was removed from his ministerial post just weeks after being appointed to replace Sudirman Said in a cabinet reshuffle by President Joko Widodo. The dismissal followed allegations that he had breached the law in Indonesia by holding dual U.S.-Indonesian citizenship.

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