Finance Ministry clears new funding scheme for Abadi LNG project

By Bernard Loebs

Indonesia’s Finance Ministry has approved the use of alternative funding sources beyond traditional bank loans, as well as a change in the carbon capture and storage (CCS) financing structure to a Trustee Borrowing Scheme (TBS), for the development of the Abadi onshore LNG (OLNG) project in the Masela Block operated by Inpex Corporation.

“Initially, the entire OLNG project financing was to come from bank loans. Then INPEX approached us, stating that they wanted to secure funding from sources other than banks, such as bonds, loans from INPEX headquarters and other instruments,” said Djoko Siswanto, Head of upstream oil and gas regulator SKK Migas, on Tuesday (February 24).

The total investment required by Inpex and its partners — PT Pertamina (Persero) and Petroliam Nasional Berhad (Petronas) — to develop the Abadi OLNG project and its CCS component is estimated at US$20.9 billion. Of that amount, around US$1 billion is allocated for the CCS facility.

The final investment value will be confirmed upon the project’s Final Investment Decision (FID), which is targeted for completion by December 2026.

Read also: Consortium nears banking deal for Masela LNG project funding

Djoko said Inpex requires regulatory certainty from the government, particularly regarding the sanctity of contract, to proceed with the TBS scheme.

“For example, under the current regulation on Export Proceeds (DHE), funds must be placed in Bank Indonesia for three months. Going forward, this must continue to be respected even if new regulations are introduced,” Djoko said.

He noted that there has been discussion within Bank Indonesia about extending the mandatory onshore placement of export proceeds to one year. “INPEX needs certainty — sanctity of contract — because this involves a TBS scheme,” he added.

Inpex holds a 65% participating interest in the Masela Block, located in Maluku Province, while Pertamina and Petronas hold 20% and 15%, respectively.

The Abadi LNG project is designed to produce 9.5 million tons of LNG per year, along with 150 million standard cubic feet per day (mmscfd) of pipeline gas and 35,000 barrels per day of condensate. Production is expected to begin in the fourth quarter of 2029 or early 2030.

The project also includes the development of a US$1 billion CCS facility aimed at reducing carbon emissions from gas processing operations.

Editing by Reiner Simanjuntak