TANGERANG, Indonesia (Reuters) -Indonesia’s Pertamina and Malaysia’s Petronas signed an agreement with Shell on Tuesday to buy its 35% stake in the Masela natural gas block for up to $650 million, moving the project forward after years of delay.
Pertamina Hulu Energi (PHE) will take 20% and Petronas Masela Sdn Bhd will take a 15% stake in the Indonesian gas block, the companies said at a signing ceremony at the Indonesia Petroleum Association conference.
The base consideration for the sale is $325 million with a contingent amount of $325 million to be paid when the final investment decision is taken on the Abadi liquefied natural gas (LNG) project, Shell said in a statement.
Abadi LNG, led by Japan’s Inpex Corp, will use gas from the Masela block, located 150 km (93 miles) offshore of Saumlaki in Maluku province, to produce 9.5 million metric tons per year of LNG at its peak which will be exported from the proposed terminal.
The transaction should be completed in the third quarter, subject to several conditions, including regulatory approval from Indonesia’s Ministry of Energy and Mineral Resources, Shell added.
“The decision to sell our participation in the Masela PSC is in line with our focus on disciplined capital allocation,” said Zoe Yujnovich, Shell’s integrated gas and upstream director.
Pertamina CEO Nicke Widyawati said in a statement that purchase of the stake was intended to ensure adequate oil and gas supply for national energy needs.
She touted the experience of upstream unit PHE in the exploration, development and production of gas fields, including its operation of the Badak LNG plant.
Petronas group CEO Tan Sri Tengku Muhammad Taufik said the deal marked an significant milestone for its portfolio expansion in Indonesia.
Don't miss out on any breaking news or insightful opinions!
Subscribe to our free newsletter and stay updated on the go!
By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email.
“Our participation underscores the commitment in supporting Indonesia’s production target to achieve one million barrels of oil per day and 12 billion standard cubic feet per day of gas by 2030,” he said.
Indonesia’s oil and gas production has declined in recent years as reserves are depleting, and as some major new projects, such as Masela and Indonesia Deepwater Development (IDD), are facing delays as majors such as Shell and Chevron Corp exit projects to reflect changes to their global strategy.
“Indonesia still has a huge potential of natural gas source, so we are in the race to explore, exploit, to make it as a big bridge to support our energy transition,” Indonesian Energy Minister Arifin Tasrif said in his opening remarks at the conference.
Nicke said Pertamina aims for the final investment decision (FID) to be concluded in 2026, but said authorities wanted the timeline to be moved ahead.
SKK Migas chief Dwi Soetjipto told Reuters on the sidelines that the revised development plan for the Masela block is expected to be approved in the second half, and targeted the FID to be reached by the end of 2024.
Arifin told Reuters last month that Petronas and Pertamina had planned to take over Shell’s Masela stake.
(Reporting by Fransiska Nangoy, Bernadette Christina Munthe; Writing by Florence Tan; Editing by Muralikumar Anantharaman, Christian Schmollinger and Kim Coghill)
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.
