Inpex and Shell could save $6 billion if Indonesia LNG plant sited on land: Government official

Japan’s Inpex and Royal Dutch Shell could save as much as $6 billion if Indonesia builds the Masela Abadi LNG plant on land rather than offshore, a maritime affairs official said on Friday.

President Joko Widodo is expected to soon decide on the site of what will be one of Indonesia’s biggest LNG plants, but his administration is divided on whether a land or floating facility would better suit Southeast Asia’s largest economy.

“Onshore will be cheaper,” said Haposan Napitupulu, an official of the maritime affairs coordinating ministry that oversees energy, who estimated an onshore project would cost $16 billion, against $22 billion for an offshore plant.

“But the most important thing is not the costs, but which one gives the most benefit for the regional economy.”

He added that an onshore plant would also spur construction of petrochemical and fertilizer plants in the eastern prvoince of Maluku, an impoverished area with little development.

Both companies have declined to comment on which project would be more economical.

Last year, Inpex submitted a plan to develop the Masela block by building a floating LNG plant with the capacity to produce 7.5 million tonnes of the fuel each year. If approved, production could start as early as 2024.

Indonesia’s energy regulator, SKK Migas, has estimated a floating LNG plant, at a cost of $14.8 billion, would be $4.5 billion cheaper than a land-based one, contradicting the findings of the maritime affairs ministry.

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