The memorandum of understanding (MoU) on the sale of the LNG was signed in Jakarta on Wednesday by the president director of Inpex Masela, Kenji Kawano, the president director of PLN, Zulkilfi Zaini, and the president director of Pupuk Indonesia Aas Asikin Idat.

Speaking following the signing of the MoU, Energy and Mineral Resources Minister Arifin Tasrif said PLN planned to purchase between 2 and 3 million tons of LNG per year to supply its power plants, which at present are fueled with diesel.

Meanwhile, PT Pupuk Indonesia, the holding company of state-owned fertilizer producers, intends to buy 150 million standard cubic feet per day (mmscfd) of gas for 20 years to supply its fertilizer plants.

After years of delays, Inpex secured a final approval from the government in July 2019 to develop a US$20 billion LNG plant in the Masela Block in the Arafura Sea. The plant, which is expected to start commercial production in 2027, will produce 9.5 million tons of LNG per annum.

During the MoU signing ceremony, Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) head Dwi Soetjipto gave an assurance that the licensing process for the Abadi project had been going “smoothly”, and expressed hope there would be no further delays.

“So far, we have obtained a location permit from the local government, and the licensing process with the Environment and Forestry Ministry is going smoothly,” he said

He added that of the $20 billion needed for the Abadi project, around $5.6 billion would be spent on purchasing local content, which would spur economic growth.

Dwi said in December that about 26 percent of goods and services for the LNG project should be procured from local companies. He expected the goods and services value to reach Rp 73 trillion ($5.3 billion).

The Abadi LNG project, 150 kilometers off the Saumlaki coast in Maluku province, is operated by Japanese oil and gas company Inpex Masela Ltd., which has a 65 percent stake in the project. The remaining 35 percent stake belongs to British-Dutch oil and gas company Shell Upstream Overseas Ltd.

It is expected to be able to produce 9.5 million metric tons of LNG per annum (mtpa) and up to 35,000 barrels of condensate per day.

Dwi said that 60 percent of the total production would be sold on the domestic market and the other 40 percent in overseas markets. (mpr)

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia