Indonesia Expects Study on Abadi LNG Project to Complete by Year-End

Indonesia's Ministry of Energy and Mineral Resources (MEMR) expected an independent assessment on the development plan for the Abadi liquefied natural gas (LNG) project in the Masela Production Sharing Contract (PSC) in the Arafura Sea, eastern Indonesia to be completed by the end of this year as any delays would hurt gas supplies in the country, a senior official said, as quoted by local daily The Jakarta Post Saturday.

Poten and Partners, appointed as consultant following a tender for the $380,000 (IDR 3.8 billion) assessment project, has been given the deadline to finish the study by December, MEMR Director for Upstream Oil and Gas Djoko Siswanto said, who revealed that work is scheduled to start early this week.

“All (assessment work) must be completed by December. If we finish after December, we won’t be able to realize budgets, either under the state budget or under the contractor’s work plan. And, the budget that has been approved and the planning will be useless,” he added.

MEMR Director General for Oil and Gas, Gusti Nyoman Wiratmaja Puja told Rigzone Oct. 28 on the sidelines of an industry conference that Indonesia was looking for a consultant to complete the study for the Abadi LNG project by year end, which would enable the government to make a decision on the development option for the project in February or March 2016.

The Ministry turned to an independent study for the Abadi project after differences emerged within the Indonesian government in early September over the development option. Partners in the Masela PSC – comprising Japan's Inpex Corp. and Royal Dutch Shell plc – have proposed a floating LNG (FLNG) facility, which was supported by Minister for Energy and Mineral Resources Sudirman Said. Indonesia's Coordinating Maritime Affairs Minister Rizal Ramli however supported an onshore LNG plant on Aru island for the Abadi project, arguing that it could result in cost savings.

According to The Jakarta Post, there have been a wide difference in the calculation of the investment cost for developing the Masela PSC, which is poised to be the next largest deepwater gas project in Indonesia. The sum ranges from $14 billion to $19 billion.

The Masela PSC partners had submitted Sept. 3 a revised plan of development (POD) – after the initial plan was approved in 2010 – to Indonesia's Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) following the discovery of bigger gas resources, with the offshore block now holding around 10.7 trillion cubic feet in proven resources.

Meanwhile, the government's 2015 upstream oil and gas investment goal of $20.4 billion is expected to miss the target as year-to-date investment is around $10 billion.

“The figure was less than 50 percent but we are expecting that there will be many programs realized in the third and fourth quarter,” SKKMigas Spokesperson Elan Biantoro told The Jakarta Post.


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