Inpex to Decide Indonesia LNG Plant Site by Year-End

By Yuji Okada and Shigeru Sato

Oct. 6 (Bloomberg) -- Inpex Corp., Japan's largest energy exploration company, said it will decide the location by the end of the year for a liquefied natural gas plant to process fuel from the Abadi area of the Masela field in Indonesia's Timor Sea.

``A floating plant is most likely,'' Inpex Spokesman Kazuya Honda said today by telephone. ``We are holding negotiations with the Indonesian government.''

The 4.5 million-tons-a-year Abadi plant would be the world's first floating LNG facility, and it may cost as much as 1 trillion yen, ($9.6 billion) the Nikkei newspaper reported Oct. 5, citing President Naoki Kuroda. It will be Inpex's second LNG project, after the proposed $20 billion Ichthys plant in Darwin, Australia, with almost twice the capacity.

``Inpex still has another option: building a pipeline from the Abadi field to their proposed LNG plant site in Darwin,'' said Lalita Gupta, an energy analyst at Morgan Stanley in Tokyo.

Inpex said last month the company and partner Total SA will start commercial output at the Ichthys project, with more than 8 million-tons-a-year of capacity, in late 2014 or early 2015. Commercial operations at the Abadi plant is slated to begin by the end of 2016, Honda said.

To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net.