Indonesia aims to start floating LNG production in 2016

Indonesia in the race to be first floating LNG producer

* Abadi's final investment decision could come in 2012

* Indonesia looks to develop floating projects in Natuna field

Indonesia aims to bring a floating liquefied natural gas (LNG) project off the Timor Island online by 2016, two years earlier than expected, an official from the country's oil and gas regulator said on Wednesday. 

"The official date is 2018, but we are looking to accelerate that to 2016," Agoes Sapto Rahardjo, senior manager of LNG at BPMigas told Reuters on the sidelines of an industry conference in Singapore. 

An earlier start date puts Indonesia in race with Australia and Malaysia to be the first country to produce LNG from a floating plant. Rising energy consumption in the world's fastest-growing major economies China and India is prompting exporters to ramp up output to feed demand. 

Inpex Corp , Japan's top oil and gas developer, in December said it expected LNG production from the Abadi gas field it operates in the Masela block to start in 2018.

The project's final investment decision (FID) could come as early as next year, Rahardjo said. Inpex had set an end-2013 deadline for the FID. 

Indonesia approved an initial development plan for the Abadi plant at the end of last year. The floating LNG project will have a capacity of 2.5 million tonnes per year (tpy), lower than a previously proposed 4.5 million tonnes. 

"After evaluating the risks and the financing structure we decided to go with 2.5 million tonnes. If we see an opportunity later we might expand, but now we're focussed on this first project," said Rahardjo. 

Inpex has a 90 percent stake in the Masela block in Maluku province, while PT Energy Mega Persada , a unit of the Bakrie Group, holds the rest.

Indonesia is also looking at opportunities for developing floating LNG project in other fields such as the huge Natuna gas field, Rahardjo said. 

State oil and gas firm PT Pertamina signed agreements last year with Exxon Mobil , Total and Petronas as partners in the development of the Natuna.

The gas industry has its hopes pinned on floating LNG production to unlock stranded resources in far-flung fields as demand for the fuel soars.

Royal Dutch Shell (RDSa.L) expects to start production at its 3.6 million tpy Prelude plant offshore Australia, the first floating LNG project to be sanctioned, by 2017. Source: Reuters