Shell sells its interest in Indonesia’s Masela Block to Pertamina and Petronas for $650m

Shell Upstream Overseas Services (I) Limited (SUOS), a subsidiary of Shell plc, on Tuesday said it has agreed to sell its participating interest in Indonesia’s Masela Production Sharing Contract (Masela PSC) to Indonesia’s PT Pertamina Hulu Energi (PHE) and Petronas Masela Sdn. Bhd (PETRONAS Masela).

The sale concerns SUOS’ participating interest of 35% in the Masela PSC, which includes the Abadi gas project, the company said.

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 gas project, Shell said. The transaction has an effective date of January 1, 2023 and is targeted to be completed in the third quarter of 2023.

Conditions for the completion of the sale include among others, regulatory approval to be obtained from the Indonesia’s Ministry of Energy and Mineral Resources, the company said.

“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 in a statement. “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.”

INPEX Corporation holds 65% operating interest in Masela PSC and is the operator of the Abadi gas project, located in the Masela Block, 150 km offshore Saumlaki in Maluku province, Indonesia. SUOS acquired interest into the Masela PSC in 2011.