Japan’s Inpex has signed a preliminary deal to supply Indonesian utility PT Perusahaan Gas Negara Tbk (PGN) with LNG from its planned Abadi development.
Inpex Masela, a unit of the Japanese firm, signed the memorandum of understanding with PGN on Friday during a virtual ceremony.
Inpex said it would now start talks with PGN to agree and finalize the terms of the domestic LNG sales and purchase deal.
PGN is the largest national gas company which owns and manages the majority of domestic gas infrastructure and is responsible to carry out a gasification program in
Indonesia.
The LNG supply from the Abadi project is consistent with Indonesia’s focus on
optimizing domestic natural resource utilization, Inpex said.
Additionally, it will provide significant contributions to Indonesia where gas demand continues to grow, including multiplier effects that will benefit the country, particularly in the eastern region, the firm said.
Inpex is developing the Abadi LNG project with energy giant Shell. However, Indonesian upstream regulator SKK Migas has confirmed earlier this year that Shell was in talks to withdraw from the proposed Abadi LNG export project.
The Inpex-operated project has seen many changes over the years and initially the development of the Masela offshore block involved a floating LNG plant.
The latest revised plan includes a 9.5 mtpa onshore LNG plant with an estimated cost of $20 billion.
Japan’s Inpex has a 65 percent stake in the development while the Hague-based Shell owns a 35 percent stake.