Japanese oil and gas firm INPEX has secured approval from the of Indonesian government authorities for a revised plan of development (POD) of the $15bn (£11.8bn) Abadi LNG project in Indonesia.

The revised POD calls for the development of an onshore LNG project with an annual production capacity of 9.5 million tonnes of LNG.

Abadi LNG project  details

Being executed through subsidiary INPEX Masela, the project will involve the development of the Abadi gas field contained in the Masela Block in the Arafura Sea.

The Abadi gas field is said to possess excellent reservoir productivity and has one of the world’s largest resources.

In 2015, INPEX proposed to develop a floating LNG plant with a capacity to process 7.5 million tonnes of LNG annually.

However, a year later, the Indonesian authorities asked the firm to resubmit a new development plan for the project, based on an onshore development scheme.

INPEX president and CEO Takayuki Ueda said: “While the project’s development concept has been changed from a floating LNG scheme to an onshore LNG scheme, I am confident that the economics of the Project based on the revised POD are now sufficiently strong for INPEX and Shell given the PSC term until 2055 and sufficient financial conditions have been secured following a series of constructive discussions with the authorities.

“INPEX aims to make this Project competitive and will continue to work toward the production startup scheduled in the latter half of the 2020s.”

INPEX is the operator of the integrated LNG project with a 65% stake. The remaining 35% stake is held by Royal Dutch Shell.

The Indonesian authorities have also approved the INPEX’s application for a seven-year additional time allocation and a 20-year extension to the production sharing contract (PSC) for the Masela Block. The approval extends the PSC term until 2055.

INPEX will now work closely with its partner to commence Front End Engineering Design (FEED). The final investment decision (FID) on the project is subject to a series of subsequent evaluations including FEED work.