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Indonesian LNG plant location to be decided soon

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LNG Industry,

According to Reuters, the President of Indonesia, Joko Widodo, will soon make a decision on whether to build the US$15 million Masela Abadi LNG plant offshore or opt for an onshore alternative. Although the main project investor, Inpex Corp., submitted its development plan to the Indonesian government in September 2015, Reuters reports that internal disagreement has led to a lack of a decision.

Although SKKMigas says that an offshore LNG plant would cost US$4.5 billion less than an onshore plant, Reuters reports that a senior member of Widodo’s cabinet is arguing that the government could build an onshore facility for US$6 billion less.

This also follows a recent announcement by Inpex that there would be job cuts and delays regarding investment by a minimum of two years to 2020, leading to at least 40% of its 400 Indonesian employees losing their jobs.

Reuters reports that the delay means that the project will not be operational until at least 2026, which is approximately two years before the companies’ contract will expire.

Despite Shell engineers being told that they should seek other work within the company, Haviez Gautama, a spokesman for Shell (which is jointly developing the project) in Indonesia, said: “Shell and Inpex remain committed to developing the Abadi gas field and to use Floating LNG technology as we believe it is the best, most cost-effective and beneficial option.”

If the FLNG unit is confirmed, it will have a capacity of 7.5 million tpy – the largest in the world.

Edited from various sources by David Rowlands

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