Differences Surface in Indonesian Government on Abadi Gas Project Concept

Differences surfaced recently within the Indonesian government on the field development approach to take for the Masela Production Sharing Contract (PSC) in the Arafuru Sea in eastern Indonesia, according to local daily The Jakarta Post Friday.

Japan's Inpex Corp. submitted Sept. 3 a revised plan of development (POD) of the Abadi gas field in Masela PSC to the country's upstream regulator Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) after finding more natural gas reserves.

Together with its project partner Royal Dutch Shell plc, Inpex -- the field operator -- plans to develop the Abadi liquefied natural gas (LNG) project with a floating LNG (FLNG) plant with an annual LNG processing capacity of 7.5 million tons. Inpex's initial POD for the Abadi field, approved by the Indonesian authorities in 2010, comprised a FLNG plant with a yearly processing capacity of 2.5 million tons.

The Ministry of Energy and Mineral Resources (MEMR) supported the idea of developing the Abadi gas project with a FLNG facility and Minister Sudirman Said defended an initial plan for an offshore facility after Indonesia's Coordinating Maritime Affairs Minister Rizal Ramli had earlier suggested that an onshore facility would more efficient and sensible, according to the The Jakarta Post.

The MEMR Minister argued that a FLNG plant would accord with the administration’s maritime vision as the project would boost Indonesia’s maritime infrastructure.

“We have a vision to support the maritime industry. Building the FLNG plant will offer an opportunity for the shipping industry and national capacity will be increased,” Sudirman said, alluding to President Joko Widodo’s vision to make Indonesia the world’s maritime axis.

Sudirman's stance contradicted Rizal, who argued that the gas field should be developed using an onshore LNG plant on Aru island instead in order to save on development spending. The Indonesian Coordinating Maritime Affairs Minister proposed that a 373-mile (600-kilometer) pipeline be built to connect Abadi gas field with the Aru LNG plant. Such a plan would result in cost savings as the onshore development scheme would cost between $14.6 and $15 billion, compared to $19.3 billion for the FLNG scheme, and produce multiplier effects for the development of Aru island and the overall eastern part of the country, Rizal said, as quoted by The Jakarta Post.

SKK Migas has however provided a different development cost for the Abadi project, with the upstream regulator estimating that the FLNG concept will cost $14.8 billion in investment, below more than $19 billion for the onshore scheme.


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