Energy and Mineral Resources Minister Arifin Tasrif announced that the sales and purchase agreement (SPA) for a 35 percent participating interest in the Masela Block between Shell Upstream Overseas Ltd and PT Pertamina is set to be finalized by the end of June. Both parties have successfully reached a consensus.
“Inshaallah, we will have finalized the agreement by the end of this month,” Minister Arifin said on Monday (5/6).
Following the transfer of shares, Pertamina and its consortium members Petroliam Nasional Berhad (Petronas) will assume ownership of the shares.
Lower divestment price offered by Shell
Arifin’s statement contradicts his own earlier confirmation that the new consortium responsible for managing the Masela Block will began to be formed in early June.
The process of divesting Shell’s stake in the Masela Block has been delayed due to Shell’s high asking price, causing Pertamina to hesitate in acquiring the company’s shares. Reportedly, Shell demanded US$1.4 billion, double the price it paid when purchasing a 35 percent stake in the oil and gas working area.
However, Minister Arifin further clarified that the divestment price offered by Shell is now considerably lower than US$1 billion, which is a major reduction from the previous offer.
“Acquiring 35 percent and the amount is not that high [US$1 billion]. Far below [US$1 billion],” Minister Arifin said, on Friday (9/6).
Once the Masela Block divestment process is completed, Inpex Corporation as the operator will promptly submit a revised Plan of Development (PoD) to include carbon capture, utilization, and storage (CCUS) facilities in the Masela Block, which contains 4 trillion cubic feet (TCF) of gas.
Previous acquisition costs and prolonged divestment process
Previously, to acquire Shell’s 35 percent participating interest, Pertamina must prepare a minimum fund of US$1.4 billion, equivalent to Shell’s investment in the Masela Block.
Minister Arifin also expressed disappointment with the prolonged process of divesting the 35 percent participating interest in the Masela Block and plans to conduct an auction for the Masela Block if Shell continues to be uncooperative in the divestment process.
This plan was outlined in the initial Plan of Development (PoD) for the Masela Block, signed in 2019. Through this revision, the government has the option to re-auction the Masela Block if there has been no progress in the development of the significant oil and gas project within five years of the PoD’s signing.
