Masela operator Inpex and Indonesia's national energy company Pertamina have agreed on a strategic collaboration intended to finally get the long-delayed Abadi liquefied natural gas project off the drawing board.

Inpex and Pertamina will seek to secure the long-term competitiveness and sustainability of the Abadi LNG project as well as further improvement of project value while generating synergistic effects.

Specifically, the companies will pursue opportunities to collaborate on the offtake and transportation of LNG and other products, the production of hydrogen and ammonia, and the provision of the needs of local stakeholders.

The Japanese operator on Tuesday confirmed it had signed a memorandum of understanding with Pertamina to “proactively pursue” implementation of the Abadi LNG project “in a new partnership” following Shell’s departure.

The UK supermajor earlier that same day had signed a $650 million sale and purchase agreement to divest its 35% equity in Abadi to partners Pertamina (gaining 20%) and Petronas (gaining 15%).

“Through the MoU, Inpex and Pertamina will seek to collaborate strategically on a wide range of fields with a focus on the Abadi LNG project's value chain,” said the Tokyo-headquartered operator.

Upon completion of the transfer of Shell's participating interest to the new partners, Inpex plans to resume project activities, including on-site preparation activities.

The company in April submitted a revised Plan of Development for the Abadi LNG project incorporating a carbon capture and storage (CCS) component to the Indonesian government authorities and plans to revise the production sharing contract to reflect the incorporation of CCS following approval of the POD.

Inpex said it would proceed with preparations required to reach the final investment decision including front-end engineering and design work, as well as marketing and financing activities, while ensuring so-called invest-ability.

The project’s LNG production volume is expected to reach 9.5 million tonnes per annum, equivalent to more than 10% of Japan’s annual LNG imports.

“By adopting CCS, Inpex will aim to secure a stable supply of clean energy over the long term, and contribute to improving energy security in Indonesia, Japan and other Asian countries,” added the company.

The LNG project also is expected to contribute to the much needed economic development in the eastern part of Indonesia as well as the Indonesian government’s goal of reaching net zero carbon dioxide emissions by 2060.

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