Japan’s Inpex has signed a memorandum of understanding with Indonesia’s Perusahaan Gas Negara for domestic LNG supply from the Abadi LNG project.
Inpex signed the deal on behalf of its joint venture partner, Shell Upstream Overseas (Shell).
In its statement, Inpex noted that discussions will now commence regarding sales and purchase of the LNG supply from the project to PGN.
PGN is the largest national gas company that owns and manages the majority of domestic gas infrastructure and is responsible to carry out a gasification program in Indonesia.
The LNG supply from the project is consistent with the Indonesian government’s focus on optimizing domestic natural resource utilization. It will also provide significant contributions to Indonesia where gas demand continues to grow, including multiplier effects that will benefit the country, particularly in the eastern region.
The project is the first large-scale integrated LNG development project operated by Inpex in Indonesia and follows on from the Inpex-operated Ichthys LNG project in Australia.
The Abadi gas field features excellent reservoir productivity and contains significant resource volumes, raising expectations of efficient development and stable LNG production operations over the long-term.
The project would see the development of a 9.5 mtpa onshore LNG plant with an estimated cost of $20 billion.
Shell owns a 35 per cent stake in the project, however, earlier this year Shell was reportedly looking to find a buyer for its stake.