Japanese operator Inpex is progressing its potential $20 billion Abadi liquefied natural gas project off Indonesia where the offshore facilities will have a large gas floating production, storage and offloading vessel as a centrepiece.

The Abadi FPSO is envisaged as being able to handle 1.8 billion cubic feet per day of gas and have capacity of 36,000 barrels per day of condensate.

Officials from recently re-elected Indonesian President Joko Widodo's government said agreement had finally been reached with Inpex on Monday over terms to exploit the 10 trillion cubic feet-plus of gas reserves at Abadi, which is located on the remote Masela production sharing contract.

Inpex has also initiated market enquiries for the front-end engineering and design contracts for key elements of the 9.5 million tonnes per annum LNG project, which comes with estimated capital expenditure of $18 billion to $20 billion including development drilling.

Four FEED contracts are expected soon to be officially up for grabs — the FPSO, onshore liquefaction facilities, gas pipeline and the subsea umbilicals, risers and flowlines package.

The onshore LNG plant is expected to be the subject of a parallel FEED competition, as was BP’s Tangguh Train 3 project, also in Indonesia, with the successful contractor or consortium subsequently being awarded the engineering, procurement and construction job.

This contracting strategy — FEED rolling into EPC — will likely also be employed for the FPSO, although not necessarily for the gas trunkline, said sources.

An earlier contractor meeting regarding the large FPSO is understood to have attracted potential bidders including SBM, Modec, BW Offshore and McDermott, according to industry sources.

However, because of possible cabotage and local content issues, some players may ultimately tie up with Indonesian contractors or those with yards in the republic to bid, one source said.

Japanese contractors JGC and Chiyoda could well be interested in vying for the FEED-EPC for the LNG plant, likely in partnership with local outfits.

Abadi’s offshore and onshore spoils are also expected to tempt the likes of Italy’s Saipem, which could carry out fabrication at its Karimun Island yard.

US contractor McDermott also has its own Indonesian facility — a 119-hectare yard on Batam Island — that would help it to meet local content requirements.

Indonesia’s upstream regulator SKK Migas is hoping the revised Plan of Development for Abadi can formally be signed at the upcoming G20 meeting in Osaka, Japan on 28 to 29 June.

Local media claimed that the Indonesian government would get at least 50% profit split from the LNG project but this could not be confirmed independently as Upstream went to press.

The greenfield LNG project is currently forecast to come into operation in 2027 — one year before the current Masela PSC is due to expire. Inpex will want to have a new contract before taking the final investment.

Meanwhile, despite earlier public denials from SKK Migas, reliable sources this week confirmed a prior Reuters report that Shell — Inpex’s sole partner at Abadi — is intending to divest its 35% stake.

There are already said to be parties interested in acquiring Shell’s interest, which comes with a touted $1 billion price tag.

“The Abadi project is the cornerstone of a vibrant economy in the Maluku region and its surroundings, and is expected to boost the economy in eastern Indonesia," said an upbeat Indonesian government official after Monday’s landmark agreement with Inpex.

Abadi was discovered in December 2000, two years after Inpex was awarded 100% of the Masela block.

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Inpex on the front foot at Abadi project