Investment-starved Indonesia is wooing the Inpex Corp.-led consortium to develop the delayed Abadi gas field in the offshore Masela Block with offers ranging from extension of the production-sharing contract (PSC) to compensation for changes in development of LNG facility.

During a meeting with Inpex CEO Toshiaki Kitamura recently, the country’s energy and mineral resources minister offered to extend the company’s contract to operate the Masela concession by an additional 20 years once it expires in 2028.

The minister also has offered the operational rights of an additional seven years as compensation for making changes in the development plan from the offshore liquefaction facility to onshore for Abadi gas.

“This Inpex-related decision ... will give a 20-year extension to Inpex because their contract is almost over, with an additional seven years as compensation for changing the refinery development scheme from floating to land-based,” the minister said in a statement.

He further stated the operator would have the freedom to select the location of the onshore LNG facility.

“The Indonesian government hopes that Inpex can immediately start the gas field project,” the statement said.

Discovered in 2003, the Abadi gas field remains undeveloped, despite having estimated gas reserves of about 283 Bcm (10 Tcf), due to the differences on the location of developing the associated LNG plant for the gas to be produced. The operator has proposed developing the field with a floating LNG (FLNG) facility near the producing wells, while the Indonesian government is seeking to build an onshore LNG unit in the south Mukulu province.

Yet To Respond

The Japanese company, however, has not responded to the latest proposals made by the Indonesian minister. An Inpex official told Reuters that it continued to hold discussions with the Indonesian government regarding the extension of the Masela PSC but declined to provide further details.

Indications were that a final call on development of the field would be taken after the fresh pre-FEED studies are completed.

The fresh pre-FEED is focusing on drilling 18 development wells, building an onshore LNG facility with a capacity of 9.5 million tonnes per annum (mtpa) and subsea pipeline of about 100 km (62 miles) with a capacity of 150 million standard cubic feet per day (MMscf/d) to transport the produced gas to the onshore processing facility.

Inpex is cautious on disclosing its plans for field considering doubts raised by some analysts on the viability of development of the field with an onshore LNG facility and laying about 100 km subsea gas pipeline in the prevailing lower global prices for gas.

In September 2015 the company proposed a field development plan for the Abadi gas field with 18 development wells and an FLNG facility with a capacity of 7.5 mtpa after the subsea, umbilical, riser and flowline and FLNG FEED studies.

The company said the FLNG concept would be appropriate for the Masela concession considering the limited supporting facilities available around.

However, Indonesia president Joko Widodo rejected the proposal for an FLNG facility to exploit the field, instructing the company instead to submit a new plan based on an onshore LNG plant to be located either on the remote Tanimbar or Aru islands. He said the onshore plant will help the economy of the less-developed southern Maluku province.

Development Studies

The operator has indeed prepared two development studies for the Abadi gas field—one with an offshore LNG project and another onshore.

The offshore concept envisages building a 500 by 82 m (1,640 ft by 269 ft) FLNG facility with a capacity of 7.5 mtpa near the gas producing wells. The FLNG facility will carry out the entire gas and condensate processing from purification to separation to liquefaction and load the produced condensate and LNG to the ships offshore.

The onshore concept suggests transport of gas from the subsea facilities to an onshore LNG plant via a subsea pipeline. A 330 m by 65 m (1,083 ft by 213 ft) FPSO facility is proposed to purify and separate gas condensate. The gas will be transported to the onshore LNG plant via pipeline. The gas will be liquefied onshore.

This plan includes laying a 24-in. diameter, 100-km subsea pipeline from the FPSO unit to the onshore LNG facility at Pulau Yamdena.

The field development proposes drilling 18 directional production wells from five subsea manifolds. The production rate from these wells are expected to be up to 1,200 MMscf/d and 24,460 bbl/d of condensate.

The initial development drilling plan is to focus on the northern part of the field, where most of the reserves are concentrated. Drilling will target the reservoirs in Middle Jurassic Plover Formation at depths ranging from 3,700 m to 3,900 m (12,139 ft to 12,795 ft). The reservoir contains shallow-marine, highly mature, quartzose sandstones.

The total recoverable of Masela Block is about 304 Bcm (10.73 Tcf) of gas and 209 MMbbl of condensate.

The Japan-based company said it is weighing both development options for the Abadi gas and LNG project and will select the cost-effective one after consulting with the Indonesian government.

“We will maintain our policy of aiming for the early startup of development and implementing the [Abadi] project in the most economically and technically rational way and will proceed with the project,” Inpex CEO said in the company’s latest annual report.

Inpex holds a 65% participating interest of the Masela concession with the rest held by Shell (35%).

—Ravi Prasad