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Indonesia approves Abadi LNG
PoliCy
THE Indonesian Ministry of Energy and Min- eral Resources approved the revised plan for the Abadi LNG plant, on July 12. e minister, Igna- sius Jonan, signed o on the new development following discussions about the cost recovery. e next step is a nal investment decision (FID).
The Abadi LNG plan involves a proposed 9.5mn tonne per year (tpy) plant, costing an esti- mated $18.5-19.8bn. Japan’s Inpex is the operator with a 65% stake, while Royal Dutch Shell has the remaining 35%. In addition to the LNG produc- tion, the project will also produce 35,000 barrels per day (bpd) of condensate.
wood Mackenzie’s research director, Andrew Harwood, said the revised plan included amend- ments to the Masela production-sharing con- tract (PSC). is includes a 20-year extension and improved scal terms. e Japanese com- pany intends to reach FID within three years and produce rst gas in 2028.
“Post Jokowi’s election win, the government has shown greater exibility on scal terms. In addition to the PSC extension, the government has agreed to an enhanced contractor pro t split, investment credit and indirect tax exemptions which will provide for a post-tax contractor pro tshareof50%,”Harwoodsaid.
A er approving the Abadi LNG plan, Jonan visited Indonesian President Joko widodo to explain the project. e minister said construction would create as many as 30,000 jobs. A statement noted the PSC would now run until 2055.
An SKK Migas’ executive, Dwi Sucipto, noted that while negotiations had been tough they had nally been concluded. “ is is very meaningful forIndonesia,”theo cialsaid.SKKexpectspro- duction to begin in 2027 for the project, which will tap resources from the Arafura Sea.
Inpex’s president and CEO, Takayuki Ueda, noted the change of plan from a oating LNG (FLNG) plant to the onshore.
Harwood noted the importance of domestic LNG demand, which wood Mackenzie has pre- dicted will rise to 13mn tpy by 2030.
while the project is “crucial” for Inpex’s next step, it forms a more minor part of Shell’s portfo- lio. “Despite rumours surfacing in May that the major was seeking to exit, we think a divestment unlikely until the project gets closer to invest- ment sanction,” he said.
ere are challenges ahead for the project, Harwood said. “Firstly, the partners are likely to face a crowded EPC market due to the record number of LNG projects vying for sanction over the same period. Secondly, Inpex will have to line up buyers for 9.5mn tpy of LNG as competing sources of supply enter the market. Finally, the operator must navigate technical challenges. eserangefromtheremotenessoftheonshore facility to laying 150 km of pipeline.”
Inpex submitted the revised plan of devel- opment on June 20. is followed a revised pre- front-end engineering and design (pre-FEED) study.
austRalasia
BHP issues LNG transport tender
inVEstmEnt
BHP has issued a tender for the world’s first LNG-fuelled bulk carrier, on July 15. e Aus- tralian miner said this would be for the trans- portation of up to 27mn tonnes of iron ore. e company noted the importance of eliminating NOx and SOx, while also reducing CO2 emis- sions. “we recognise we have a stewardship role, working with our customers, suppliers and oth- ers to in uence emissions reductions across the full life cycle of our products,” said BHP’s mar- itime vice president, Rashpal Bhatti. “ rough this tender, we are seeking potential partners who share our ambition of lowering emissions to the maritime supply chain.”
e company said the tender was open to a select group of bidders. In addition to seeking LNG-fuelled transportation for up to 10% of its iron ore, BHP said it was also examining other ways of lowering emissions and increasing pro- ductivity in the freight sector.
“while LNG may not be the sustainable
homogenous fuel of choice for a zero-carbon future, we are not prepared to wait for a 100% compliant solution if we know that, together with our partners, we can make signi cant progress now,” Bhatti said. “ is new tender adds to the work BHP is doing with customers, suppliers and parties along our value chain to in uence emissions reductions from the transport and use of our products.”
e Australian miner has recently signed an agreement to work with Mitsubishi Develop- ment in pursuing a reduction in emissions. e BHP Mitsubishi Alliance (BMA) is Australia’s largest coal producer.
In a May strategy briefing, the company noted the growing market for gas in the medium term and that there were “abundant new supply options”, in order to demonstrate BHP’s invest- ment plans. where this might put the company o from investing in gas production, it does also seem like a good reason to exploit this feedstock as a transport fuel.
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