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Pertamina should ‘think twice’ about buying Shell’s Masela Block stake
The government is considering having Pertamina buy Shell’s 35 percent stake in the Abadi liquefied natural gas (LNG) project in the Masela Block, but experts say financial constraints in dealing with multiple giant projects may make that a difficult prospect for the state-owned company.
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This undated photograph shows an offshore oil and gas rig in the Mahakam Block in East Kalimantan. (Pertamina/Pertamina)
T
he government is considering having Pertamina buy Shell’s 35 percent stake in the Abadi liquefied natural gas (LNG) project in the Masela Block, but experts say financial constraints in dealing with multiple giant projects may make that a difficult prospect for the state-owned company.
Moshe Rizal, secretary-general of the Oil and Gas Companies Association (Aspermigas), said Pertamina should “think twice” before buying Shell’s share in the project, given that the company was currently operating two of Indonesia’s most productive oil and gas sites, including the Rokan Block in Riau and the gas-rich offshore Mahakam Block in East Kalimantan, which had stretched its resources thin.
“[The Masela Block] is still in the development stage and has not begun production. Though there has been a discovery and the plan of development has been approved, [the project] requires a long time and an enormous amount of money before it can start producing [gas],” he told The Jakarta Post on Thursday, referring to Shell’s $800 million to $1 billion stake in the project.
Shell’s efforts to divest from the Masela Block have dragged on, creating uncertainty around the stalled development of the Abadi field, which holds 360 billion cubic meters of gas.
Japan’s Inpex controls the remaining 65 percent of the block.
In response, President Joko “Jokowi” Widodo has instructed his government to explore options for Pertamina to buy Shell’s share of the project. Jokowi gave the order during a press conference on July 27 on a trip to Tokyo, where he met Japanese Prime Minister Fumio Kishida to discuss the project’s funding options, including the involvement of the Japan Bank for International Cooperation (JBIC).
$20 billion for Abadi
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