Japan's Inpex starts building $21 billion gas plant in eastern Indonesia

Japan's biggest oil and gas company, Inpex, broke ground on Thursday on a huge natural gas project in eastern Indonesia. The Abadi plant will cost about $21 billion and become Indonesia's second-largest LNG project. LNG means liquefied natural gas: gas cooled until it turns to liquid, which makes it small enough to load onto ships and sell abroad. The plant sits in the Arafura Sea, near the Tanimbar Islands in Maluku, and Nikkei Asia reports it will be one of the largest gas facilities in Asia once it runs.

The project has waited years to start. Inpex first won the rights decades ago, but disputes over cost and ownership kept pushing the date back. Getting it moving now is a real signal: a large Japanese firm is willing to put $21 billion into Indonesia for a plant that will take years to build and pay off. Inpex's chief called the project "extremely important" for energy security across the Indo-Pacific, because it gives Japan and its neighbours another steady gas supplier close to home.

For Indonesia, the money and the gas both matter. The government earns a share of what the plant sells, and a project this size brings construction work and local spending to Maluku, one of the country's poorer regions far from Jakarta. A win like this also tells other foreign investors that big, long-term bets in Indonesia can still get built. The gains are not instant, though. Production is still years away, and the past delays are a reminder that large energy projects here can stall.

Why it matters

If you live in Maluku or work in construction or energy, this project could mean jobs and business for years to come. For the wider economy, steady foreign investment helps support the rupiah and government revenue, which affects prices and public spending that touch everyone. Watch whether Inpex keeps to its timeline this time, because Indonesia has seen big projects promised and then delayed before.