The parties signed a sales and purchase agreement on the transaction on Tuesday.

According to a press release published by Shell on the same day, the base consideration for the block’s sale is $325 million in cash along with an additional contingent amount of $325 million to be paid upon the final investment decision on the Abadi gas project.

The transaction took effect on Jan. 1 this year, as per Shell’s statement, and is expected to be completed by October 2023. The conclusion of the deal is subject to certain conditions, including regulatory approval from the Energy and Mineral Resources Ministry.

Read also: Pertamina to pay for half of Shell’s Masela stake this month

Pertamina is collaborating in the deal with its Malaysian counterpart Petronas according to a press release published on Tuesday by Pertamina.

Pertamina Hulu Energi (PHE), Pertamina’s upstream unit is to manage 20 percent of the block, while Petronas Masela will hold 15 percent, the release adds.

The other 65 percent of the block remains under the control of Japanese oil and gas firm Inpex.

PHE president director Wiko Migantoro said Pertamina aimed to swiftly capitalize on the energy resources in Masela, as reported by Kontan.

“Our focus is on conducting front-end engineering design [FEED] immediately, completing the final investment decision and then carrying out construction and going onstream as soon as possible,” Wiko said on Tuesday, as quoted by Kontan.

Pertamina CEO Nicke Widyawati said the acquisition was a strategic move to develop new fields, meet national energy needs, maintain oil and gas supply and directly impact economic development in the eastern part of Indonesia.

With the potential to employ up to 10,000 workers, she added, Pertamina hoped that the development of the Masela Block could accelerate regional development by creating new jobs for locals.

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The agreement was signed at the Indonesia Petroleum Association (IPA) Convention on Tuesday in a ceremony witnessed by Energy and Mineral Resources Minister Arifin Tasrif, MIGAS director general Tutuka Ariadji, Upstream Oil and Gas Special Regulatory Task Force (SKK Migas) head Dwi Soetjipto, and Pertamina’s Nicke and Petronas president and CEO Tan Sri Tengku Muhammad Taufik.

Indonesia had 49.7 trillion cubic feet (tcf) of gas reserves in 2021, down more than 50 percent from the 100.4 tcf in 2019, according to United States Energy Information Administration (EIA) data. Its reserves are the third-largest in the Asia-Pacific region, after China and Australia.

Meanwhile, the country's natural gas consumption is forecast to more than quadruple to 26,000 million standard cubic feet per day by 2050, SKK Migas data show.