A US$6 billion could be saved by Japan’s Inpex and Shell if Indonesia opts to build the Masela Abadi LNG facility on land instead of offshore, according to a government official.
Maritime affairs coordinating ministry official Haposan Napitupulu told Reuters that a land-based facility would cost $16 billion while an offshore facility would be in the region of $22 billion.
Indonesia’s president Joko Widodo is expected to make a decision soon, however, the administration is still undecided on which would be the preferred option.
Napitupulu added that it is not the cost, that is the major issue, but the resulting benefits to the regional economy that could be the deciding factor.
He noted that constructing an onshore plant would result in a growth in construction of petrochemical and fertilizer plants the province of Maluku.
In September last year, Inpex submitted a revised Abadi LNG project development plan to SKK Migas, Indonesia’s regulator.
The revised plan envisions the adoption of a floating LNG plant with an annual processing capacity of 7.5 million tons.
Contrary to the Maritime affairs ministry, SKK Migas believes a floating LNG facility would cost around $14.8 billion, $4.5 billion less than an onshore facility.
If Inpex’s revised plan is approved, the construction could start in 2024, however, should the government opt for the land-based option, SKK Migas warns it could delay the project for up to three years.
Masela block, where the Abadi gas field is located, near Indonesia’s border with northern Australia, is 65 percent owned by Inpex and 35 percent owned by Shell.
LNG World News Staff