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Japan’s Inpex sees lower Indonesia LNG plant cost

JAKARTA, Jan 22 - Japan’s Inpex Corp <1605.T> said on Thursday the cost of a proposed floating LNG plant in Indonesia’s Timor Sea would be around $10 billion, half an earlier government estimate due to lower infrastructure costs.

Indonesia has in principle agreed the Inpex plan to build the liquefied natural gas plant, which Indonesia’s oil watchdog estimated previously would cost $19.6 billion.

The project is expected to be on stream in 2016.

“Now I recognise the oil price is going down, also the steel price is going down now…so maybe reflects the lower price, lower capex ,” Shunichiro Sugaya, Inpex senior general manager of the Masela project, told reporters.

“We expect around $10 billion figure,” he said.

Sugaya said the firm had not decided whether to look for other companies to join the Masela block project.

“We have not yet decided any farm out policy now,” he said adding that under the production sharing contract there is 10 percent participation for Indonesia and 90 percent for Inpex.

Inpex estimates there is more than 10 trillion cubic feet of natural gas reserves in its Abadi field in the Timor Sea, potentially one of Indonesia’s top fields.

If confirmed, it would make the project the second-biggest new gas field after the Tangguh project in Papua, which has combined reserves of 14.4 tcf.

Indonesia’s energy watchdog BPMIGAS has said previously that Inpex will build one LNG train with a capacity of 4.5 million tonnes a year.

Sugaya said the main target for the LNG is Japanese buyers, while the Indonesian government also wants some supply for the domestic market.