Shell sells Masela stake to Pertamina and Petronas for up to $650 million

Indonesia’s Pertamina and Malaysia’s Petronas will pay up to $650 million to buy Shell’s 35 percent stake in Indonesia’s Masela PSC, which includes the planned Abadi LNG project.

Shell Upstream Overseas Services (SUOS), a subsidiary of Shell, has agreed to sell its participating interest in the PSC to PT Pertamina Hulu Energi and Petronas Masela, according to a statement issued by Shell on Tuesday.

Following completion of the deal, Pertamina will own a 20 percent stake and Petronas will have a 15 percent stake in the PSC.

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 (FID) is taken on the Abadi LNG project, it said.

Shell said the transaction has an effective date of January 1, 2023 and is targeted to be completed in Q3 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,” Zoë Yujnovich, Shell’s integrated gas and upstream director, said.

“We wish to thank all stakeholders, especially the government of Indonesia for their support throughout the sales process. Shell remains active in Indonesia and continues to contribute to the country’s energy transition journey,” Yujnovich said.

Abadi LNG

Japan’s Inpex holds 65 percent operating interest in Masela PSC and is the operator of the Abadi LNG project.

This is located in the Masela Block, 150 kilometers offshore Saumlaki in Maluku province, Indonesia.

Earlier this year, Inpex submitted a revised plan of development to the Indonesian government for the planned Abadi LNG project.

The plan submitted by Inpex Masela on behalf of the joint venture with Shell incorporates a carbon capture and storage (CCS) component.

The Inpex-operated project has seen many changes over the years and initially, the development of the Masela offshore block involved a floating LNG plant, while it now includes a 9.5 mtpa onshore LNG plant with an estimated cost of about $20 billion.

Inpex signs MoU with Pertamina

Inpex said in a separate statement on Tuesday that it has signed a memorandum of understanding with Pertamina on a strategic collaboration to proactively pursue the implementation of the Abadi LNG project in a new partnership.

Moreover, Inpex and Pertamina will seek to collaborate strategically on a wide range of
fields under the deal with a focus on the Abadi LNG project’s value chain, it said.

Specifically, the companies will pursue opportunities to collaborate on the offtake and transportation of LNG and other products, the production of hydrogen and ammonia and the provision of the needs of local stakeholders.

The two firms will also seek to secure the long-term competitiveness and sustainability of the Abadi LNG project as well as further improvement of project value while generating synergistic effects, Inpex said.

Upon completion of the transfer of Shell’s participating interest to the new partners, Inpex plans to resume project activities, including on-site preparation activities, it added.

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