Jakarta. Japanese gas exploration and production company Inpex Corporation and state-run oil company Pertamina on Tuesday signed a memorandum of understanding on a "strategic collaboration" to manage the Abadi LNG project at the Masela gas block in eastern Indonesia.

Inpex has projected the Abadi gas project to produce 9.5 million tons of LNG a year, equivalent to more than 10 percent of Japan’s annual LNG imports.

Inpex currently holds a 65 percent operating interest in the Masela production-sharing contract and is the operator of the Abadi gas project.

The agreement between Inpex and Pertamina came on the same day after oil giant Shell gave up a 35 percent participating interest in the Abadi gas project to a consortium comprising Pertamina Hulu Energi, a subsidiary of Pertamina, and Petronas Masela, a subsidiary of Malaysia’s Petronas.

“Through the MoU, Inpex and Pertamina will seek to collaborate strategically on a wide range of fields with a focus on the Abadi LNG Project’s value chain. Specifically, the companies will pursue opportunities to collaborate on the offtake and transportation of LNG and other products, the production of hydrogen and ammonia and the provision of the needs of local stakeholders,” Inpex said in a public filing.

“Inpex and Pertamina will also seek to secure the long-term competitiveness and sustainability of the Abadi LNG Project as well as further improvement of project value while generating synergistic effects.”  

The company said it will proceed with the preparations required to reach a final investment decision, including front-end engineering and design (FEED) work as well as marketing and financing activities.