Abadi LNG Terminal

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Abadi LNG Terminal, also referred to as the Masela LNG Project, is a liquefied natural gas (LNG) export terminal proposed in Indonesia.

Location

The terminal is proposed to be located in Masela Block, Adabi gas field, Indonesia.

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Project details

• Operator: INPEX Masela Ltd
• Owner: INPEX Masela Ltd
• Parent company: Inpex (65%), Pertamina (20%), Petronas (15%)
  • Formerly Inpex (65%), Shell (35%)
• Location: Masela Block, Adabi gas field, Indonesia
• Coordinates: -9.082283, 131.319732 (approximate)
• Capacity: 9.5 mtpa, 1.36 bcfd
• Cost: US$20 billion.
• Status: Proposed
• Type: Export
• Start year: 2030
• Cost: US$20 billion
• Financing: Mizuho Bank is the project's financial advisor
• FID status: Pre-FID (projected by 2027)

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Background

In December 2010, Indonesian authorities approved the initial plan of development deploying a floating LNG (FLNG) plant with an annual processing capacity of 2.5 million tons. In September 2015 Inpex submitted a revised plan to the Indonesian authorities for an FLNG plant with an annual processing capacity of 7.5 million tons. In April 2016, Inpex received a notification from the Indonesian authorities instructing it to re-propose a plan of development based on onshore LNG.

The Indonesian government's instructions to re-purpose the plan for an onshore LNG terminal came right after Inpex announced they are delaying development of the project by at least two years. Inpex delayed the final investment decision on the project to 2020, ultimately delaying the project's operation date until at least 2026. In July 2019 Inpex announced that it had received government approval for the revised plan of development (POD) for the Abadi LNG Project submitted on 20 June 2019. The project will cost an estimated US$20 billion.

In February 2020, Inpex announced memorandums of understanding (MOU's) with PT PLN Persero and PT Pupuk Indonesia for the purchase of gas from the Abadi FLNG Terminal. In March 2020 Inpex began a review of its investment plans for the terminal and other gas projects because of the global oil price collapse caused in large part by the Covid-19 pandemic. One upshot of this review may be a delay on the project's final investment decision (FID). IJGlobal reported that the FID date may be pushed back from mid-2021 to mid-2022. Sumitomo Mitsui Banking Corporation has been appointed as the project's financial advisor.

Following Shell's July 2020 announcement that it planned to exit the project and divest its 35% stake, IJGlobal reported in May 2021 that the Indonesian government was actively looking for investors to acquire Shell's stake in Abadi gas field and LNG terminal by the end of 2021. According to a government official, the project would likely face further delays if Shell's divestment did not happen. As of June 2023, Pertamina and Petronas plan to jointly purchase Shell's stake.

In August 2021, Inpex said that it would delay FID to 2024-2025 due to the Covid-19 pandemic and considerations related to climate change, such as redesigning the facility to include carbon capture and storage (CCS).

In May 2022, Inpex announced that it would delay FID again to the latter half of the decade. Shell is still trying to sell its 35% stake in the project.

In April 2023, Inpex revised the development plan to include a carbon capture and storage (CCS) component. The project has also been revised from a floating facility to an onshore one. In July 2023, Inpex said it was hopeful of receiving approval from the Indonesian authorities for its latest project development plan. A statement from the company said: “We are now working towards reaching a final investment decision in the latter half of the 2020s and starting production in the early 2030s.”

In July 2023, Shell sold its 35% stake in the project to Indonesia's Pertamina and Malaysia's Petronas. Pertamina will own a 20% stake and Petronas will own a 15% stake.

In January 2024, Inpex said it was trying to accelerate the development of the Abadi LNG Terminal, targeting a FID in the latter half of the decade and production in the early 2030s. Reuters reported that "the project has faced years of delay after various changes in planning, and more recently, Shell's withdrawal." The project's CCS component is still under consideration, and the developers said that it could incorporate blue hydrogen and ammonia in the future. The same month, the terminal was granted government approval.

In May 2024, Arifin Tasrif, Minister of Energy and Mineral Resources, confirmed that as per approval in the national development plan, the Abadi LNG project will start production by January 1, 2030. The approved plan involves a CCS component for the project. Tasrif also said that Inpex had agreed to supply at least 2 mtpa of LNG from Abadi for the domestic market.

In August 2024, it was reported that the project partners were targeting a revised and accelerated FID date before the end of 2025.

In February 2025, Inpex disclosed that the project's FID date had been delayed until 2027. The company said that front-end engineering design was planned to begin in 2025, with the aim being to start production at the terminal in the early 2030s.

Financing

In September 2024, Inpex appointed the Japanese bank Mizuho as the financial advisor for the project. According to sources familiar with the project, the operator is looking to secure up to $14 billion in project financing from commercial lenders and export credit agencies (ECAs). Inpex has received preliminary support indications from lenders such as SMBC, Mitsubishi UFJ Financial Group, and Mizuho after a market-sounding exercise. The Japan Bank for International Cooperation is also expected to contribute to the financing. According to the sources, ECAs will provide approximately US$5 billion, while international commercial banks are anticipated to lend US$6 billion, with Indonesian banks financing an additional US$3 billion. The sponsors intend to negotiate better pricing with contractors before initiating project financing in 2025, as contractors have recently focused more on the busy U.S. market, affecting their availability for Asian projects. Front-end engineering design work for the Abadi project is still ongoing, as the operator prepares for the next steps in project development and financing arrangements.