Japan’s largest oil and gas exploration and production company Inpex has been given environmental approval from the Indonesian government for its Abadi LNG project, the firm announced on February 20.

The environmental approval also covers drilling operations, construction and operation of production and processing facilities, in addition to the LNG plant.

The announcement moves the project forward another step as Inpex targets 2027 for final investment decision (FID). The project is currently in the front-end engineering and design (FEED) stage, which it began in August.

Upon completion, the Abadi LNG project would be one of southeast Asia’s largest LNG facilities with a production capacity of 9.5mn tonnes per year (tpy), equivalent to about 10% of Japan’s annual LNG imports. The facility will also produce domestic gas supply and about 35,000 barrels of condensate per day.

Amid rapidly rising domestic gas demand in Indonesia, the government is keen to fast-track the long-delayed project. Start-up of the facility is scheduled for the early 2030s.

Indonesian officials have been advocating to bring the facility online by 2029, however, Inpex has pushed back stating that such a timeline for the project would be very difficult. Inpex will now begin preparatory work at the project site.

While the project is crucial for improving energy security for both Indonesia and Japan, it will also play a key role in Indonesia’s climate target goals as it engages in fuel switching from coal to LNG as part of its energy transition. Indonesia has set a target of reaching net zero by 2060.

As operator of the project, Inpex holds a 65% stake, while Indonesia’s state-run Pertamina has a 20% interest, and Malaysian state-owned Petronas holds the remaining 15% stake.

Inpex also operates the Ichthys LNG project located offshore the northwestern coast of Australia.