Japanese upstream firm Inpex may have to reduce its stake in the planned 9.5mn t/yr Abadi LNG export project in southern Indonesia, despite finally entering the front-end engineering and design (FEED) phase.
Inpex is the operator and owns a 65pc share in the Abadi LNG project, with Indonesia's state-owned Pertamina holding 20pc and Malaysia's state-owned Petronas having the remaining 15pc. Abadi LNG is designed to source gas from the 340bn m³ Masela gas block offshore Masela island about 500km north of Darwin, Australia. Inpex has been involved in exploring the gas field since 1998 and developing the LNG project since 2019 when it secured local government approval to do so.
Inpex has to transfer some of its stakes to a local company, upon a request from the Indonesian government, a spokesperson told Argus on 14 August, adding that it is still unclear what the exact ratio of the sell-down would be, or target dates and potential buyers. But Inpex president Takayuki Ueda hinted earlier this month during the announcement of the firm's financial results that the figure may be around 10pc. In this case, Inpex's shares will fall by 6.5pc to 58.5pc, the spokesperson said.
Inpex is looking to issue minority shares in the Abadi LNG project to potential buyers, like what it did for the Ichthys LNG project in Australia, which it operates. Inpex' shares in the Abadi project could eventually end up at around 50pc, Ueda said. The reduced share could result in lower risk, the spokesperson added.
The company is also mulling increasing its shares in its subsidiary Inpex Masela, which is developing the Abadi LNG project. Inpex Masela is roughly equally owned by Inpex and Japanese government-backed energy agency Jogmec. Inpex can take further risks once a final investment decision (FID) for the Abadi project is made, as this would bring it a step closer to production and there would be no more risks related to exploration, Ueda said.
Inpex remains optimistic about the Abadi LNG project, despite repeated delays and growing pressure from the Indonesian government to revoke its concession to develop the Masela block. The company has finally entered the FEED stage for gas production and the LNG facility earlier this month, and aims to reach FID in 2027.
Inpex expects the Abadi LNG project to attract Asian buyers, as they would benefit from its proximity and low geopolitical risk. The company has already received non-binding letters of intent from potential buyers exceeding the planned production volume, Ueda said, adding that it will try to reach long-term binding contracts in parallel with the FEED process. The company also plans to allocate ¥400-600bn ($2.7bn-4.1bn) during 2025-27 to continue developing Abadi LNG, assuming it would hold around a 50pc share in the project.
