The Ministry of Energy and Mineral Resources (ESDM) expressed its disappointment towards Shell’s slow progress in exiting the management of the Masela LNG Project.
Shell’s negotiations stalled, flexibility questioned
The British oil and gas company has yet to release its 35% participation rights to PT Pertamina.
Tutuka Ariadji, Director General of Oil and Gas at the Ministry of ESDM, mentioned that Shell’s actions negatively affect the government’s efforts to expedite the monetization of the 4 TCF gas field.
Tutuka stated that the government is intending to pursue the Plan of Development (PoD) for the Masela Block, prepared by Inpex Corporation as the operator and majority shareholder.
The Plan of Development will help in gathering information regarding the slow progress of the Masela Block’s development.
“So, the government has lost the opportunity to manage it for a long time. Yesterday, the Minister of Energy and Mineral Resources expressed his disappointment,” said Ariadji, on May 23, 2023.
ESDM Minister Arifin Tasrif stated that the transfer of Shell’s 35% participation rights to Pertamina is still unresolved, with negotiations becoming more difficult.
“It’s still in the negotiation process, it’s a bit tough. Shell should understand better. For Indonesia’s interests, Shell doesn’t want to be flexible,” said Tasrif, on May 19, 2023.
Dwi Soetjipto, Head of SKK Migas, stated that pricing negotiations between the consortium and Shell have hampered the asset transfer process.
Pertamina and Petronas continue negotiations
Pertamina and Petronas consortium continues to negotiate with Shell to acquire 35% participation rights before the government’s deadline in the first half of this year.
In addition, the consortium is in the process of finalizing a joint Plan of Development for SKK Migas containing the implementation of Carbon Capture and Storage (CCS) technology.
The inclusion of CCS facilities has raised the project cost to US$ 1.4 billion or approximately IDR 21 trillion.
