INPEX CORPORATION (INPEX) announced today it received written approval for the revised Plan of Development (POD) for the Abadi LNG Project (Project) on behalf of the joint venture composed of INPEX Masela, Ltd. (INPEX Masela), PT Pertamina Hulu Energi Masela (PHE Masela) and PETRONAS Masela Sdn. Bhd. (PETRONAS Masela). INPEX, which operates the Project through its subsidiary INPEX Masela, submitted (1) a revised POD to Indonesian government authorities (authorities) on April 4, 2023, incorporating a carbon capture and storage (CCS) component to the existing POD. This marks the official approval of the authorities for the revised POD.

The Project is the first in which CCS-related costs are eligible for recovery (2) based on the production sharing contract (PSC) scheme that governs crude oil and natural gas upstream operations in Indonesia. The approval of the revised POD paves the way for INPEX and its partners to fully mobilize the Project as a clean project in support of the energy transition.

Going forward, INPEX and its partners will pursue the revision of the PSC to incorporate CCS into the contractual scope of work and resume Project operations including on-site activities and prepare for FEED work. Thereafter, the joint venture will implement the Project with the aim of reaching a final investment decision (FID) and production startup at an early stage after completing the necessary preparations including marketing and financing activities.

The Project’s annual LNG production volume is expected to reach 9.5 million tons, equivalent to more than 10 percent of Japan's annual LNG imports. The Project is expected to contribute to improving energy security in Indonesia, Japan and other Asian countries and generate a stable supply of clean energy over the long term, based on its world-leading gas field properties and plentiful reserves enabling efficient development as well as the Project’s CCS component.

In addition, the Project is expected to contribute significantly to the much-needed economic development of the eastern part of Indonesia in particular, and to achieving Indonesia’s goal of reaching net zero CO2 emissions by 2060.

Items raised in this announcement have no impact on INPEX’s consolidated financial results.

PSCs generally stipulate that an oil and natural gas development company undertakes exploration, development and production work at its own cost as a contractor of the government of an oilproducing country and is entitled to the recovery of the exploration, development and production cost during the production stage in the form of a portion of the produced hydrocarbons. The remaining portions are then shared between the oil-producing country and the contractor in accordance with a predetermined allocation ratio.

In Indonesia, government approval is required when determining the extent of allowable cost recovery, where a greater extent leads to improved cash flow and project economics for the contractor.

(1) INPEX Submits Revised Plan of Development for Abadi LNG Project, Masela Block, Indonesia
(2) Cost recovery in production sharing contracts (PSCs)

About INPEX

INPEX CORPORATION is Japan’s largest exploration and production (E&P) company, and is currently involved in projects across multiple continents, including the Ichthys LNG Project in Australia as Operator. By thoroughly making its oil and gas business cleaner while expanding its 5 net zero business areas, INPEX aims to provide a stable supply of diverse and clean energy sources including oil, natural gas, hydrogen and renewables as a pioneer in energy transformation.