Japan’s Inpex Corporation expects the final investment decision on its Abadi liquefied natural gas project in Indonesia will be delayed because the coronavirus pandemic has disrupted survey work, while the development plan might need to be revised due to climate change concerns.

Inpex managing executive officer, Daisuke Yamada, during Tuesday’s earnings briefing with media said: “There will be some delay in the FID although I can’t say when.”

In July 2019, Inpex said it planned to enter the front-end engineering and design phase for the 9.5 million tonnes per annum grassroots Abadi LNG project in 2020.

However, preparatory work ahead of FEED was slowed last year because of the Covid-19 pandemic in Indonesia.

“Also, given the growing global push toward decarbonisation, we may need to consider redesigning the Abadi project with carbon capture and storage, or carbon capture utilisation and storage,” Reuters quoted Yamada as saying.

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Inpex had originally envisaged moving into the construction phase by 2024 and starting commercial operations in 2027 or 2028.

One year ago, the operator had been formalising bidders for the FEED contracts for Abadi's floating production, storage and offloading vessel and onshore liquefaction plant that will exploit the 10 trillion cubic feet-plus gas reserves in the remote Masela block.

The Abadi FPSO is envisaged with capacity to handle 1.8 billion cubic feet per day of gas and to process 36,000 barrels per day of condensate.

In addition to the two-train liquefaction project, Abadi will supply 150 million cubic feet of gas via pipeline to local customers.

The project’s Environmental Impact Assessment (EIA) — known locally as Amdal — was about 40% shy of completion in August 2020, according to local media.

Logistical challenges

The EIA was scheduled for completion before the end of 2020, but it is not known whether this has yet been finished because of Covid-related logistics challenges.

Another issue that could also impact the project is that Inpex’s sole partner — Anglo-Dutch supermajor Shell, which has a 35% interest — is looking to divest its stake.

However, despite initial interest from a Chinese player — believed to be Sinopec — Shell has been unable to find a buyer.

Indonesia’s upstream regulator SKK Migas still hopes, perhaps unrealistically, that Shell could yet complete divestment of its stake within 2021 so that Abadi, which is designated a project of national strategic interest, can continue to progress.

Yamada stressed that Inpex remains committed to developing Abadi because it wants to build another pillar to its Ichthys LNG project in Australia, although there is no firm schedule.

Inpex posted a 51.98 billion yen (US$469.6 million) net profit for the first half of this year versus a 120.80 billion yen loss one year before, while it increased its 2021 net profit forecast by 21% to 170 billion yen.