Bisnis, JAKARTA — PT Pertamina, together with the Malaysian oil company Petroliam Nasional Berhad (Petronas), has finally taken over 35 percent participating interest (PI) from Shell Upstream Overseas Ltd. on the Abadi liquefied natural gas (LNG) project in the Arafura Sea, Maluku.
The acquisition of 35 percent of Shell's shares in one of the national strategic projects that have been stalled for over 20 years was marked by the signing of a sales and purchase agreement for the acquisition of ownership of Shell Upstream Overseas Services (I) Limited (SUOS) in the Masela Block.
With this signing, PT Pertamina Hulu Energi (PHE) will manage 20 percent of ownership while Petronas Masela Sdn. Bhd. (Petronas Masela) will hold 15 percent.
Thus, the LNG project with immense gas potential is expected to proceed shortly. Moreover, Inpex Masela Ltd., as the operator of the Masela Block, remains committed to continuing the project, which is expected to boost national oil and gas production.
Pertamina's President Director, Nicke Widyawati, stated that PHE – as Upstream Subholding – boasts extensive experience in exploration, development, and production activities, both in Indonesia and abroad.
Furthermore, PHE, through one of its subsidiaries, has a proven record in the development and operation of the Badak LNG Plant, along with domestic and international LNG marketing.
“PHE's capabilities and reliability are strong evidence that Pertamina, as a state-owned company, can build partnerships with global partners. In the future, Pertamina hopes to engage in strategic business development and other potential collaborations,” Nicke said on Tuesday, July 25, 2023.
A commitment to preserve the upstream gas supply is required to fulfill national energy standards. Nicke emphasized that in addition to managing existing fields, a strategy is needed to develop new fields, including the Abadi Field in Masela Block.
Nicke explained that Abadi Field is expected to employ up to 10,000 workers. The development of Masela Block is expected to accelerate the development of the local area, creating new jobs and absorbing the local workforce.
“This will certainly have a direct impact on the economic development of eastern Indonesia,” Nicke added.
According to Shell's official statement, the divestment value of 35 percent ownership of SUOS was released for $650 million, equivalent to IDR9.75 trillion (exchange rate of IDR15,002 per USD).
“The signing of Shell Abadi Masela, one of which depends on the divestment, has been completed," said the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Dwi Soetjipto, during the IPA Convex event in BSD Tangerang on Tuesday, July 25, 2023.
The divestment transaction is planned to be settled in two payment terms: $325 million in cash and an additional $325 million to be paid by the Pertamina/Petronas consortium upon the final investment decision (FID), targeted to be completed in the third quarter of this year.
Shell Plc reported the transaction to be in effect as of January 2023. Shell aims to complete the divestment transaction this year as part of the company's efforts to reallocate investments in upstream oil and gas. “After the signing, we hope the project will proceed promptly and be completed since it has been delayed,” he said.
The signing of the sales and purchase agreement was carried out directly by PHE's President Director, Wiko Migantoro, Petronas' Executive Vice President and CEO of Upstream, Datuk Adif Zulkifli, and Shell's Director of Finance for Acquisition Divestment and NBD Asia Pacific, Kuo Tong Soo.
The signing took place at the opening ceremony of the Indonesia Petroleum Association (IPA) Convention at ICE, BSD City, Tangerang, Banten, on Tuesday, July 25, 2023, and was witnessed by the Minister of Energy and Mineral Resources (EMR) Arifin Tasrif, Director General of Oil and Gas Tutuka Ariadji, Head of SKK Migas, Dwi Soetjipto, and Pertamina's President Director Nicke Widyawati, as well as Petronas' President and Chief Executive Officer, Tan Sri Tengku Muhammad Taufik.
For context, the Masela Block is one of the largest oil and gas prospects in Indonesia. Its production is estimated to reach 1,600 million cubic feet of gas per day (MMSCFD), equivalent to 9.5 million tons of LNG per year (MTPA), and 150 MMSCFD of pipeline gas, along with 35,000 barrels of condensate per day (BCPD).
The estimated investment cost for the project, amounting to $19.8 billion makes it Inpex's second-largest gas management asset, following the Ichthys LNG Project in Australia. The Masela Abadi Project is expected to cover over 10 percent of Japan's annual LNG imports, in addition to ensuring energy supply security for Indonesia, Japan, and several other Asian countries.
With the signing of the share transfer process from Shell to the Pertamina-Petronas consortium, the development of the Masela project is no longer hindered, especially since PT Perusahaan Gas Negara Tbk. (PGN) is already a prospective buyer for gas production. (Nyoman Ary Wahyudi)