Asset/portfolio management

Shell Sells Stake in Masela PSC to Petronas and Pertamina

Petronas and Pertamina purchase 35% stake in offshore Indonesia parcel which contains the Abadi gas project.

Shell said the Masela PSC sale was in line with the company's focus of "disciplined capital allocation."

Shell Upstream Overseas Services (SUOS) is selling its participating interest in Indonesia’s Masela Production Sharing Contract (PSC) to Indonesia’s PT Pertamina Hulu Energi and Petronas for up to $650 million.

The sale includes SUOS’ entire 35% participating interest in the PSC, which includes the Abadi gas project. Petronas said it is acquiring a 15% interest while Pertamina is taking a 20% stake.

The base consideration for the sale is $325 million in cash with an additional contingent amount of $325 million to be paid when the final investment decision is taken on the Abadi gas project. The transaction has an effective date of 1 January 2023 and is targeted to be completed in the third quarter of 2023, subject to completion of conditions, which include among others, regulatory approval to be obtained from the Indonesia’s Ministry of Energy and Mineral Resources.

“The decision to sell our participation in the Masela PSC is in line with our focus on disciplined capital allocation,” said Zoë Yujnovich, Shell’s integrated gas and upstream director. “Shell remains active in Indonesia and continues to contribute to the country’s energy transition journey.”

Japan’s Inpex holds the remaining 65% operating interest in the PSC and is the operator of the Abadi gas project. The field, located in the Masela Block, 150 km offshore Saumlaki in Maluku province, Indonesia, is estimated to hold nearly 10 Tcf of recoverable natural gas reserves.

SUOS acquired interest into the PSC in 2011.

“Petronas is excited to participate in the Masela Block, which is one of the country’s key strategic projects,” said Tan Sri Tengku Muhammad Taufik, president and group CEO of Petronas. “Our participation underscores the commitment in supporting Indonesia’s production target to achieve 1.0 million BOPD and 12 billion scf/D of gas by 2030. The project also provides an opportunity for Petronas to contribute our technical expertise in the development and monetization of the block and will further strengthen our global LNG portfolio towards meeting growing demand for lower-carbon energy from Indonesia and across the region.”

Earlier this year, Inpex submitted a revised development plan to Indonesian government authorities for the Abadi LNG project incorporating a carbon capture and storage component.

Inpex expects the Indonesian project's LNG production volume to reach 9.5 mtpa at its peak, equivalent to more than 10% of Japan’s annual LNG imports.