INTERVIEW: Indonesia's Abadi LNG to start by Jan 2030 as INPEX supplies at least 2 mil mt/year for domestic: minister

Indonesia's Abadi LNG project will start production by Jan. 1, 2030, as approved in its development plan, as project operator INPEX has agreed to supply at least 2 million mt/year of LNG for the domestic market, according to Minister of Energy and Mineral Resources Arifin Tasrif.

Speaking in an interview in Tokyo with S&P Global Commodity Insights May 22, Tasrif said the production schedule was "already stated in the plan of development."

INPEX said Dec. 5 it had received written approval from the Indonesian government for the revised development plan, incorporating a carbon capture and storage component for its operated Abadi LNG project, and aimed for a final investment decision and production startup "at an early stage" after completing marketing and financing activities.

Stakeholders in the 9.5 million mt/year Abadi LNG project will have the right to lift product corresponding to their shares, with INPEX at 65%, Indonesia's Pertamina at 20% and Malaysia's Petronas at 15%, Tasrif said.

However, the minister added that the Abadi LNG shareholders "must fulfill the local demand first and then they are allowed to export excess [volumes]."

Tasrif also said INPEX had signed a memorandum of understanding with Indonesian state electricity company PLN to supply 2 million mt/year of Abadi LNG and was in talks about providing additional unspecified volumes to gas company Perusahaan Gas Negara for the domestic market. PGN is the gas subholding company under state-owned Pertamina.

An INPEX spokesperson said May 23 that it had signed an MOU with PGN as one of multiple potential buyers of Abadi LNG supply as the Japanese operator was now looking to start Abadi production "around 2030", with Indonesia aiming to meet its 2030 gas output target of 12 Bcf/d.

The Abadi project, which is being developed in the Masela Block offshore Indonesia, is also expected to supply 150 MMcf/d of natural gas via pipeline to the domestic market, to be used by an Indonesian fertilizer company to produce fertilizer or even ammonia if there is a market for it, Tasrif said.

Gas exploration

Indonesia, meanwhile, is accelerating its transition away from coal and diesel for power generation to gas and renewable energy, Tasrif said.

"That's why we are currently carrying out massive exploration to find more sources, and then we believe we still have some potential source from 128 basins in the country," Tasrif said. "Currently, only half of it is already done. We still have the rest to be explored more, especially in the eastern part of Indonesia."

Noting that the energy transition would be gradual, Tasrif said the country's coal-fired power plants, if run contractually, would see the last unit "operated [until] 2055."

"But we don't extend it anymore. And then -- the answer for that is that we use natural gas as a priority and then under renewables," he said. "Natural gas is very important to back up the intermittency of renewables."

With the country's early retirement program for coal-fired power, Tasrif said Indonesia's retirement of coal-fired power would be "probably faster than 2055."

Indonesia currently has estimated recoverable gas reserves of about 54 Tcf, with an aim to double it following exploration activities, Tasrif said.

By 2027 or 2028, Indonesia expects to see new gas production starting up following a number of major gas discoveries, including Eni's Geng North and Mubadala Energy's South Andaman in Indonesian deepwaters. The gas from Geng North could also potentially be enough to "operate again the LNG plant in Bontang," Tasrif said.

CCS hub

With the implementations of CCS regulations in the country following a presidential decree in January, Tasrif said: "Our regulations allow for 30% of the total volume of the reserve of the operating reservoir" to be available for imported CO2.

"And 70% will be prioritized for domestic CO2," he said, adding that the country was in the process of discussing its mechanism.

"Well, currently, there is already a memorandum of understanding between Indonesia and Singapore to use our basin as a hub," Tasrif said, adding that Indonesia was in talks with Japan as "there are a number of pilot projects of CCS led by some Japanese companies."

It would be up to Indonesia to open up access for its CCS hub as well as for the CO2 cross-border transport, Tasrif said.

Tasrif also said that BP was currently proceeding with the country's first CCUS project this year in Tangguh, Papua province.

The BP-operated Tangguh LNG EGR/CCUS project had been expected to reach a final investment decision in 2023, with the project coming on stream in 2026/27, with three injection wells, one offshore injection platform, one offshore CO2 pipeline, and onshore facilities for CO2 removal, processing and compression, according to BP.

Indonesia is expected to have a storage potential of 572 gigatons of CO2 in saline aquifers and an additional 4.85 gigatons of CO2 in depleted oil and gas reservoirs for CCS initiatives, the Indonesian energy minister said earlier this year.

"Easy enough to capture all CO2 in Indonesia, and then we still have room [for other countries]," Tasrif said.