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Indonesia grants Shell & Inpex a 27-year extension for Abadi gas field

The government of Indonesia has approved a 27-year contract extension to Inpex and Shell to develop and operate the Abadi gas filed in the Masela block. The Masela Block Production Sharing Contract (PSC) amendment includes a 7-year additional time allocation and a 20-year extension for the Abadi LNG project. The PSC will now expire in November 2055.

The Masela block is located in the Timor Sea near Indonesia’s border with northern Australia and is owned by Inpex (65%) and Shell (35%). Inpex acquired a 100% interest in the Masela Block in 1998 through an open bid conducted by the Indonesian government. In 2010, Indonesia approved an initial floating LNG (FLNG) plan with an annual capacity of 2.5 Mt/year, which was raised to 7.5 Mt/year in 2015. However, in 2016, the Indonesian government rejected the initial US$15bn FLNG plan, saying an onshore plant would be US$6bn cheaper and more beneficial for the local economy. The authorities instructed Inpex to re-propose a plan of development based on onshore LNG instead, delaying the anticipated start of production from the field until the late 2020s.

In July 2019, the Ministry of Energy approved the revised development plant for the Masela LNG project, consisting of a 9.5 Mt/year onshore gas liquefaction plant, gas pipelines and offshore facilities. Inpex is now expected to make a final investment decision (FID) on the project, which could start operation in 2027.

 

 

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