Inpex, Shell Secure Abadi LNG Extension

Japan’s Inpex and partner Shell have secured an extension from Indonesian authorities for the Masela production-sharing contract (PSC), where the pair are developing the Abadi LNG project.

The two developers have been awarded a 20-year extension to the PSC and a further seven years to compensate for previous delays, Inpex said in a statement on October 11, pushing back its expiry date to 2055. The PSC amendment comes after Shell and Inpex agreed with Indonesia’s government on a revised development plan for Abadi LNG in July. In addition to extending the contract's duration, Jakarta offered the pair better fiscal terms, including a larger share of profits, investment credit and indirect tax exemptions.

Inpex owns a 65% stake in the Masela block while Shell holds the remaining 35% interest. The partners are preparing to start front-end engineering design (Feed) work at Abadi LNG, which will export up to 9.5mn mt/yr of LNG, in order to take a final investment decision (FID). Wood Mackenzie forecasts the $20bn project to yield its first gas in 2028.