The upstream oil and gas authority SKK Migas and Inpex Masela Ltd, operator of the giant Abadi gas field in the Masela block, Maluku Province, held on Thursday the project management team (PMT) kick-off event in a bid to help accelerate the development of the Abadi LNG project in the hope that it could be on-stream in the fourth quarter of 2029 as targeted by the government.
SKK Migas said in a statement that the PMT kick-off event was held following the recent approval by the government of the second revision of the plan of development I (POD I) of the Abadi LNG project to include a US$1 billion carbon capture facility (CCS) in the project, the cost of which will be covered through the cost recovery mechanism of the Masela production sharing contract.
Head of SKK Migas Dwi Soetjipto said in the statement that the Abadi LNG PMT kick-off event marks the start of a very massive national strategic project. "The investment in the Abadi Masela project is very large, reaching US$20.9 billion (including for CCS). It is equivalent to Rp 324 trillion or almost three times the value of the investment in the Jakarta-Bandung high-speed train (project)," he said.
Dwi expressed gratitude that challenge after challenge could be overcome one by one. He said that the project's forward movement began with the entry of new partners, namely Pertamina and Petronas, and in November 2023, the Indonesian government, in this case the Minister of Energy and Mineral Resources, issued the Second Revision Approval for POD I of the Abadi Field in the Masela Working Area. This project will generate government revenue of US$37.8 billion or equivalent to Rp 586 trillion.
Read also: Government approves revised PoD of Masela LNG project
The Abadi LNG project is also proof of Indonesia's commitment to increasing production while reducing emissions as the Abadi gas field also has the potential for CO2 storage and even becoming a CCS Hub with CO2 injection capability of 71-80 million tons and a storage capacity of 1.2 gigatons.
“The CCS Hub in the Abadi Masela project adds to the list of CCS projects being built in the upstream oil and gas industry while reaffirming the industry's alignment and contribution to reducing carbon emissions and supporting the government in achieving net-zero emissions by 2060,” said Dwi.
Dwi emphasized the importance of this PMT kick-off event in synchronizing a collective resolve to accelerate the completion of the project for the onstream target in the fourth quarter of 2029.
He stated that if the Abadi Masela project could be accelerated, it has the potential to expedite the receipt of revenue from this project, which amounts to about US$5 billion; conversely, if there is a delay, it could potentially increase project costs by about US$1 billion each year, excluding additional labor costs.
“Today's kick-off is an important milestone, and I ask the SKK Migas and Inpex Masela teams to continue seeking potential activities to expedite the project. If the Abadi Masela project can be completed sooner, then the impact will be enormous in terms of accelerating state revenue and additional gas supply to support domestic needs,” he said.
“The progress of the Abadi LNG Project is eagerly awaited by the Indonesian government and society, as it is one of the mainstays to achieve the 2030 production target of 1 million barrels of oil per day (BOPD) and 12 billion cubic feet of gas per day (BSCFD),” concluded Dwi.
Meanwhile, INPEX's Managing Executive Officer, Senior Vice President of Asia Projects, Akihiro Watanabe, stated, "INPEX greatly appreciates the support from SKK Migas and the Indonesian government in revising the POD to include CCS, which is a good momentum for us. Going forward, INPEX, along with JV partners, will seriously implement the POD revision through the support and guidance of SKK Migas and the government."
The annual LNG production volume of the Abadi LNG project is estimated to reach 9.5 million tons and is expected to contribute to enhancing energy resilience in Indonesia, Japan, and other Asian countries, as well as providing a stable supply of clean energy in the long term, based on the world-leading gas field characteristics and abundant reserves that allow for efficient development, along with the CCS component of the Project.
Moreover, this project is specifically expected to significantly contribute to the much-needed economic and social development in the eastern part of Indonesia, as well as to achieve Indonesia's goals related to the zero CO2 emissions target by 2060.
Inpex holds a 65% interest in the Masela block as the operator, while partners PT Pertamina and Petronas, respectively, hold a 20% and 15% interest.
The Abadi LNG project includes the production of 9.5 million tons of LNG per annum, 150 mmscfd of pipeline gas, and 35,000 bpd of condensate.
Editing by Reiner Simanjuntak
