Indonesia’s Pertamina is reportedly the sole company left in the frame to acquire Shell’s stake in the Masela offshore production sharing contract, which hosts the giant Abadi gas field that operator Inpex plans to exploit via a grassroots liquefied natural gas project.
National oil company Pertamina is now in talks with UK supermajor Shell on the pricing and terms to take over its 35% interest in the Masela PSC, with a deal expected to be formalised this year.
Local media D-Insights quoted Indonesia’s Minister of Energy & Mineral Resources, Arifin Tasrif, as saying the divestment process had entered the final stage.
“It has been finalised with Pertamina. Pertamina is currently the sole candidate as it entered first,” Arifin said.
The ministry’s Director General of Oil & Gas, Tutuka Ariadji, added Pertamina would soon submit a binding offer to Shell. However, he did not reveal how much it was prepared to offer.
“That is confidential. But the process continues; it means that both [the seller and buyer] agree to proceed to the next process for a binding offer,” Tutuka said.
Upstream had reported last September that Pertamina had its sights on Shell’s stake in the Inpex-operated proposed Abadi 9.5 million tonnes per annum LNG mega-project in Indonesia’s remote eastern area.
“Yes, that is the plan. It is not yet [a done deal], we are still evaluating — but yes,” a Pertamina official told Upstream at the time.
Whether the Jakarta administration would provide any funds to support Pertamina taking up an interest in Abadi remains to be seen — the government has designated Abadi as a project of national strategic interest.
Shell paid a reported $875 million to acquire its 35% stake in Masela and has subsequently spent a further $700 million trying to get the Abadi LNG project off the drawing board. Shell came on board when floating LNG was the preferred — and ministerially approved — development concept, but this 7.5 million tpa project was ultimately scuppered by Indonesia’s President Joko Widodo in favour of onshore liquefaction plus domestic pipeline gas.
The proposed Abadi project has an estimated price tag of $12 billion while the related planned carbon capture and storage scheme could add another $1.2 billion to $1.3 billion to the capital expenditure.
Meanwhile, in December the government’s Commission VII, which oversees energy issues, summoned senior officials of upstream regulator SKK Migas together with Inpex’s relevant local subsidiary to a closed-door meeting to discuss development of the Masela block against the backdrop of a new partner coming on board, local media Bisnis.com reported.
Last year, Japan’s Inpex, which holds the majority 65% stake in the Masela PSC, confirmed the final investment decision would not be taken until the second half of the 2020s with production start-up expected in the early 2030s.