Indonesia President Joko Widodo has torpedoed Japanese player Inpex's floater plans for the Abadi field, instead opting for an onshore liquefied natural gas plant in the country, according to reports.
The apparent rejection of Inpex's revised development plan for the field in the Masela production sharing contract comes hot on the heels of reports that the operator and partner Shell have significantly scaled back the number of workers they have working on the FLNG project.
An Inpex spokesman told Upstream that the company is aware of the current reports but has not received any official notification that the floater project has been ditched, and as such would not comment on the reports.
A Shell spokesperson added: "We are unable to comment now as we are waiting to receive a formal letter from the government of Indonesia. We look forward to better understanding and discussing the implications of the decision with the relevant government agencies."
A decision to go with an onshore liquefaction facility would make it a bad day for FLNG, after Australian independent Woodside Petroleum and its partners announced on Wednesday that they have decided not to proceed at the moment with the Browse FLNG project off Western Australia amid the current "economic and market environment".
Abadi has proved a large bone of contention between Indonesia's government and the project partners, with the Jakarta administration stalling over the revised development plan for some time.
Inpex and Shell last September submitted a revised development plan for a scaled-up Abadi FLNG project capable of processing 7.5 million tonnes per annum of LNG.
Director General of Oil & Gas, I Gusti Nyoman Wiratmaja Puja, recently claimed that it would take at least one year for Inpex and partner Shell to file a development plan for an onshore LNG project for Abadi.
Wiratmaja also said such a development would take two years longer to come into operation than an FLNG solution, not least because of land acquisition issues.
Last week the country's upstream regulator SKK Migas reveled that Inpex and Shell had scaled back their respective workforces on Abadi, shifting many employees to other projects in their portfolios.
The Inpex spokesman would not comment on the reports of the worker scaleback.
Shell last week would also not comment directly the comments from SKK Migas, but a spokesperson said at the time: “Shell and Inpex remain committed to developing the Abadi gas field and to use FLNG technology as we believe it is the best, most cost effective and beneficial option for the Eastern region of Indonesia and Indonesians.
“We hope the Government of Indonesia will reach a decision soon and support our revised plan of development.
“In the meantime, we are working with Inpex to review resourcing requirements pending approval of the revised plan of development, to ensure that preliminary work on the project continues and we can then move as quickly as possible once the approval is granted.”
SKK Migas had been in favour of the FLNG solution.
Inpex already had the authorities’ approval for a 2.5 million tpa FLNG solution that would have been the first in a phased development of the field’s 10 trillion-plus cubic feet of gas reserves.
However, the Abadi co-venturers wanted to utilise a large-scale FLNG vessel based on Shell’s Prelude unit under construction at Samsung Heavy Industries.
The existing Masela PSC expires in 2028, while the partners expect the field to produce from 2024 through 2048, based on the FLNG plan awaiting approval.
Inpex holds a 65% stake, with Shell on 35%. State player Pertamina, however, wants a stake of at least 10%.