With Hormuz shut, buyers are queuing for Indonesian gas, Inpex says

Japan's Inpex says more buyers want gas from the Abadi field in eastern Indonesia, and the reason sits thousands of kilometres away. The Strait of Hormuz, the narrow sea gate that most Middle East oil and gas has to pass through, is closed after the war with Iran. Speaking to Nikkei Asia in Bangkok, the company's president said supplies that reach Asian customers without crossing that strait are worth more now. Abadi is designed to make 9.5 million tonnes of LNG a year, more than a tenth of Japan's yearly LNG imports.

LNG means liquefied natural gas: gas cooled until it turns into a liquid, so it can be carried by ship instead of sent through a pipeline. That is why the map matters here. A cargo loaded in eastern Indonesia sails to Japan, Korea or China without going anywhere near the Gulf, so a buyer worried about the strait can plan around it. Inpex broke ground on the $21 billion plant in July, decades after it first won the rights to the field.

Interest is not the same as a signed contract, and the report stops short of saying deals are done. A plant this size usually needs customers committed years before the first cargo leaves, which is why buyer demand now decides how smoothly the build goes. That demand also comes from a crisis, and crises end. If the strait reopens, cheaper Gulf gas competes again, while Abadi still has to be built and paid for.

Why it matters

For Maluku, this is construction work now and plant work later, in a part of the country that rarely sees investment of this size. For everyone else, gas exports bring in foreign money that helps hold the rupiah up and feeds state revenue, while the same closed strait pushes up what Indonesia pays for imported fuel. Watch whether the interest turns into long-term supply contracts, because those, not headlines about demand, are what fix the income.